Wednesday - November 7, 2007
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1. ZACKS RANK BUY STOCKS
Zacks #1 Rank stocks average a 32% annual return. Every day on Zacks.com we highlight four new Zacks Rank Buy stocks based on the four main schools of investing: Aggressive Growth, Momentum, Growth & Income and Value.
Aggressive Growth - DXP Enterprises (DXPE)
DXP Enterprises (DXPE) is capitalizing on the industrial boom in the country. The company is also making several shrewd acquisitions that are helping the bottom line. Over the past month, next year's earnings estimates have increased 27 cents to $3.46 per share. This would represent 27.4% earnings growth over this year. DXPE has exceeded estimates in three of the past four quarters. Analysts project long-term earnings growth of 24.7%. Read the analysis of DXPE now!
Growth & Income - optionsXpress Holdings, Inc.
optionsXpress Holdings, Inc. (OXPS) has a return on equity of 43%, which is well above its industry's average of 14%. The company's 3 - 5 year EPS growth projection of 25% also the tops the industry average of 14%. The company recently reported record third-quarter earnings of 40 cents per share, soaring past last year's 26 cents and exceeding the consensus estimate by 5%. optionsXpress has topped analysts' earnings estimates four times out of the past five consecutive quarters. Its current dividend yield stands at 0.9%, which beats the industry average. Read the full analysis on OXPS now!
Momentum - CF Industries Holdings, Inc. (CF)
CF Industries Holdings, Inc. (CF) recently reported another strong quarter, easily surpassing analyst estimates. The basic materials sector has been very hot lately, producing multiple companies with significant quarterly gains. The stock price is locked into a very nice upward trend and appears well positioned to head higher. Read the analysis of CF now!
Value - Skechers U.S.A. (SKX)
Listen to the audio podcast on SKX through Zacks' Audio Feature.
Skechers U.S.A. (SKX) took its third quarter and ran with it. The company exceeded estimates and guided higher for the full year. Internationally, sales are growing at a double-digit clip. SKX has met or exceeded estimates in four of the past five quarters. Over the past month, this year's estimates have increased 14 cents to $1.68 per share. The stock is cheap at 12.2x next year's estimates and a price/sales ratio of 0.8. Read the full analysis on SKX now!
2. SCREEN OF THE WEEK
Zacks.com offers three unique weekly commentaries that all
further our mission to help you Profit from the Pros. Today is
the latest installment of Screen of the Week from Kevin Matras.
Each week, Kevin shares with you another winning screen he has
discovered using the Research Wizard software from Zacks
Investment Research. Learn more about the Research Wizard.
Energizing Your Portfolio
Back in August, while the market was still correcting, I wrote about a screen that identified which sectors and industries were holding up the best during the recent sell- off.
The idea was: The sector (and the stocks in it) that showed the greatest resiliency, should be the ones that will breakout first.
Back then, it was the Medical Sector.
And not surprisingly, it ended up producing some spectacular picks.
(The title of the article, `Just What the Doctor Ordered,' was derived from the fact that the best sector was the medical sector.)
This time, it's the Oils-Energy Sector (hence the corny title).
The screen starts out with the usual items:
Price >= 5
Volume (Avg. 20 Days) >= 100,000
Then I specifically screen for the Sector with the greatest Relative Price Change over the last 4 weeks. Basically, I'm looking for the sector that performed, on average, the best in comparison to the S&P 500.
From there, I narrow that sector down to only those stocks with a Zacks #1 Rank or Zacks #2 Rank. (The Zacks Rank is one of the best rating systems out there, so this automatically puts the odds in my favor.)
For good measure, I also make sure the stocks have Positive Earnings Estimate Revisions over the last 4 weeks for both Q(1) and F(1). (Studies show that stocks with Rising Earnings Estimates outperform the market.)
Then I narrow that list down even further by looking for the Top 20 stocks within the Top Sector based on the Relative % Change in Price over 4 Weeks. (First I looked for the Best Sector based on the Average % Change in Price over 4 Weeks. Then I zeroed in on the best 20 stocks within that sector.)
Lastly, I cull it down to the Top 10 stocks within that Sectors Medium Sized Industry.
The screen this week produced 20 stocks.
Again, the best Sector was Oils-Energy.
And the Top Medium-Sized Industries within that Sector are:
This screen has produced a lot of exciting new picks.
Instead of the usual three stocks I highlight in this article, here are five new top picks:
CLB Core Labs
You can open this screen up to look for the Top Two Sectors or Top Three Sectors or Top Five sectors or whatever you choose.
Many screeners won't let you screen for the Top Sectors or Industries. But in the Research Wizard you can. Now you can find the top Sectors based on whatever metric you like and then drill down to the best Industries and then on to the best stocks.
Picking winning stocks has never been so easy.
And now you can do it too
Sign up for your two-week FREE trial to the Research Wizard today. Remember the key to successful screening is in discovering those screens that have produced profitable results in the past. And that's exactly what you get with the powerful Screening and Backtesting ability of Research Wizard. You can do it. Try it today for free.
Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.
3. ZACKS EQUITY RESEARCH
Zacks senior European markets analyst Santiago Burgaleta, CFA has been covering stocks throughout Europe for Zacks for years. We wanted to get his perspective on how his coverage seems to be performing during this third-quarter earnings season.
Do you expect the U.S. credit crunch will have an affect on quarterly results from companies in your coverage?
Not really, apart from the basic concept of rising risk premiums attached to this credit theme. Also, the economic fact that as liquidity is drained from the system, global demand for oil, to use one instance, might fall unexpectedly as global GDP slows.
More. . .
The sectors I follow are pretty defensive, or low beta, at least in the recent past. Telecoms tend to perform badly as credit spreads widen, because they hold pretty high levels of debt on their balance sheets. France Telecom (FTE), to cite one example, has a debt-to-equity of 55%, but this time around things have gone in the opposite direction. FTE, our top pick in the space, is up 25% in local terms, including dividends, year-to-date. Syngenta is up 23% year-to-date. Overall, I am pretty comfortable with my coverage, as they can deal with this "credit storm" pretty well.
What are the biggest obstacles right now for growth in European markets?
I think the main problem is going to be the falling dollar. I thought it was going to depreciate this year, but the Dollar Index is down 9% this year and 7% against the euro - ex- carry and not to mention since late 2005 -15% down!!!
I think one way or another Europe is going to suffer from this. Germany, France, etc. are all net exporters, and this is not helping their attractiveness versus the USA. The European Central Bank is doing a good job in controlling inflation, but at the risk of a hard landing is a detriment, courtesy of a rising euro. I think they should lower rates sooner rather than later to join the Fed after two rate cuts; otherwise, our bullish stance on "Euroland" may change.
Aside from this issue, do things otherwise look strong for your companies?
Well, as I mentioned earlier, France Telecom is my favourite stock in the space. Sales rose to 13.5 billion euros ($19.3 billion) from 13.1 billion euros a year earlier as FTE added wireless clients in emerging markets and the U.K. France Telecom now expects stable full-year profit margins, from a previous outlook for a decline.
Wireless services outside France Telecom's main mobile-phone markets of France, the U.K., Spain and Poland were the fastest-growing business for at least the 11th quarter in a row. The company is cutting jobs in mature markets to reduce costs.
France Telecom's gross operating profit, a measure comparable to earnings before interest, tax, depreciation and amortization, gained 4.3 percent to 5.09 billion euros. Profit on that basis had been expected to rise less than 1 percent to 4.93 billion euros, according to analysts' estimates. FTE also raised its forecast for organic cash flow to 7.5 billion euros from 6.8 billion euros previously. The company said its dividend policy remains to pay out 40 percent to45 percent of organic cash flow to shareholders.
Santiago Burgaleta, CFA is a senior analyst covering the European markets for Zacks Equity Research.
Real-time market insights from Zacks Equity Research Analysts. Stocks featured recently include Array BioPharma (ARRY), deCODE Genetics (DCGN), Crocs (CROX) and Becton, Dickinson and Company (BDX). To see their latest posts, click here.
Listen to the audio podcast for the Earnings Preview through Zacks' Audio Feature.
Third-quarter earnings season is rounding third and headed for home - and growth remains strong. More...
4. ZACKS WEALTH MANAGEMENT
Every week, Zacks Wealth Management provides informative articles on how to build and protect wealth. Today’s topic is:
Figuring out how investments in your retirement fund are performing may not be your idea of fun, but you need to know it to make progress and keep track of how your money managers are doing. Whether you are in mutual funds, or separately managed accounts, chances are the companies in which you invest do not report your personal rate of return. This may be the case with your broker as well. The good news is that you can do this on your own. Or you may ask your advisor to help you. Why would you want to do this?
One reason is that reported returns by your money managers are based on a lump sum investment and specific time periods. You may be dollar cost averaging like most folks in a retirement account and/or investing in a fund at a different time from the start of the money manager's reporting period. This is also useful if you are withdrawing money from your account for retirement.
You can use either use a financial calculator or a spreadsheet to figure out your annual return.
Let's say that a year ago, your account was worth $500,000. Then you contributed $1,000 a month for the following 12 months and today your portfolio is worth $587,000. What was your return in the past year? You can't just calculate your return based on the difference between $587,000 and $500,000. You must take into account your monthly contributions.
Your annual return or annual percentage yield is 14.83%. Why is the starting portfolio value of $500,000 shown as a negative number and you're $1,000 monthly contributions depicted as negative numbers? You are calculating what your portfolio is worth at the end of the year ($587,000), minus the money you started with in the beginning of the year ($500,000) and invested during the year ($11,000 total or $1,000/month).
That's how you calculate your personal returns. Calculating returns this way allows you to take into account the timing of your deposits or withdrawals. If you need any help with this process, please contact your advisor or you may reach me at the e-mail address listed below.
Jonas Zamora is a Certified Financial PlannerTM professional. You may contact him at firstname.lastname@example.org.
This article is provided for informational purposes only and does not constitute legal or tax advice. Zacks Investment Management, Inc. is not engaged in rendering legal, tax, accounting or other professional services. Publication and distribution of this article is not intended to create, and the information contained herein does not constitute, an attorney-client relationship. Do not act or rely upon the information and advice given in this publication without seeking the services of competent and professional legal, tax, or accounting counsel.
CFP Board, a nonprofit regulatory organization, fosters professional standards in personal financial planning so that the public values, has access to and benefits from competent and ethical financial planning. CFP Board owns the certification marks CFP® Certified Financial Planner™ and federally registered CFP (with flame logo), which it awards to individuals who successfully complete initial and ongoing certification requirements. CFP Board currently authorizes more than 50,000 individuals to use these marks in the United States. For more about CFP Board, visit www.CFP.net.
5. Best of the Zacks $100,000 Challenge
Zacks is conducting a nationwide talent search to find the very best stock pickers. The winner gets a $100,000 dream job with Zacks! Sign up for free to join the competition, or just read what stocks the leading players are trading on the Zacks Challenge Player Blogs.
Here's what the leading players are saying lately:
MackTheKnife (Rank #45 with $182,004
XFMEDIA BOOSTS ITS GUIDANCE ON Q3 REVENUE (XFML)
OIL, COMMODITIES: WHAT A RALLY! (OIH, OIL, USO, DUG, SMN, GLD, GDX, SLV)
SEARS HOLDINGS CORP. AND RETAILERS SHOULD BE BUYS IN A RATE- CUTTING ENVIRONMENT (SHLD)
OTHER TOOLS FROM ZACKS
At the heart of Zacks Investment Research is the Zacks Rank investment philosophy that continues to vastly outperform the market. Our Zacks #1 Rank (Strong Buy) List has generated the following results for investors:
And just as importantly, the Zacks #5 Rank stocks (Strong Sell) list has alerted investors as to which stocks to dump from their portfolios to avoid unnecessary losses.
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Regards and Happy Investing,
Charles Rotblut, CFA
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The performance of the Zacks Rank portfolios shown above for annual and year-to-date periods are the linked monthly total returns (price changes + dividends) of equal weighted hypothetical portfolios, consisting of those stocks with the indicated Zacks Rank, assuming monthly rebalancing and zero transaction costs. These are not the returns of actual portfolios. The hypothetical portfolios were created at the beginning of each month from Jan 1988 forward based on the values of the Zacks Rank available to Zacks' clients before the beginning of each month. The portfolios created monthly from 1988 through September 2006 exclude ADRS and are comprised of stocks that have the indicated Zacks Rank and were covered by at least two analysts at the time of the stocks inclusion in the portfolio. Starting in October 2006 and going forward, the portfolios are comprised of all stocks with the indicated Zacks Rank and do not exclude ADRs, which is more reflective of the list of stocks that customers will find on the Zacks web sites. 2007 returns are for the period of Jan 1 - Jun 30, 2007. These performance numbers have been audited from 1995 through 2003 by Autschuler Melovan, a division of American Express Financial.
The S&P 500 Index is a well-known, unmanaged index of the prices of 500 large-company common stocks, mainly blue-chip stocks, selected by Standard & Poor's. The S&P 500 Index assumes reinvestment of dividends but does not reflect advisory fees. An investor cannot invest directly in an index.
Disclaimer: Past performance does not guarantee future results. Investors should always research companies and securities before making any investments. Nothing herein should be construed as an offer or solicitation to buy or sell any security.
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