Zacks Bull and Bear of the Day Highlights: Kroger, Gerdau S.A., Exxon, Transocean and Ingersoll Rand

Chicago, IL – June 25, 2009 – Zacks Equity Research highlights Kroger (KR - Analyst Report) as the Bull of the Day and Gerdau S.A. (GGB - Analyst Report) the Bear of the Day. In addition, Zacks Equity Research provides analysis on Exxon (XOM - Analyst Report), Transocean (RIG - Snapshot Report) and Ingersoll Rand (IR - Analyst Report).

Full analysis of all these stocks is available at http://at.zacks.com/?id=2676.

Here is a synopsis of all five stocks:

Bull of the Day:

Kroger (KR - Analyst Report) reported better-than-expected first quarter earnings per share, beating our estimate by $0.04 per share. We are increasing our EPS estimates for this year and next to reflect the first quarter upside.

For fiscal year 2009, Kroger expects identical-store sales of 3% to 4% and earnings per share of $2.00 to $2.05. That said, we still believe that the company may be able to beat its fiscal year 2009 EPS guidance, due to a higher mix of private-label brand sales and continued market share gains.

We reiterate our Buy rating on Kroger shares. Our six-month target price is $28, up from $27.

Bear of the Day:

We are keeping our Sell recommendation on Gerdau S.A. (GGB - Analyst Report) based on poor first quarter results and the worldwide crises. The company successfully renegotiated part of its debt and banks accepted to relieve some covenants.

The company's strategy to grow through acquisitions based on debt created huge leverage and financial debt is expected to increase in the short-term. The huge decline in steel prices and the international economic slowdown creates a more challenging business environment for the steel industry.

The company's strategy to grow through acquisitions based on debt is contributing to the negative news. Moreover, huge exposure to the U.S. market during a recession is a major concern.

Latest Posts on the Zacks Analyst Blog:

Parsing the Fed’s Statement

In the April statement they referred to "inflation could persist for a time below rates that best foster economic growth and price stability in the longer term" which is Fed-speak for deflation. The Fed seems to be indicating that deflation concerns are off the table.

They also have acknowledged the recent rise in commodity prices, most importantly for oil. This sets up a very real possibility for a big divergence between core and headline inflation. If this is the case, then being invested in the oil companies like Exxon (XOM - Analyst Report) or deep-sea drillers like Transocean (RIG - Snapshot Report) would be a good place to be.

The resource slack is apparent in the labor market with an unemployment rate of 9.4% and rising, and in the industrial sector with record low rates of capacity utilization. The low capacity utilization figures means that one wants to avoid firms that make industrial equipment, like Ingersoll Rand (IR - Analyst Report).

Get the full analysis of all these stocks by going to http://at.zacks.com/?id=5507.

About the Bull and Bear of the Day

Every day, the analysts at Zacks Equity Research select two stocks that are likely to outperform (Bull) or underperform (Bear) the markets over the next 3-6 months.

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