(UBS) - fourth-quarter profits more than tripled

UBS AG (UBS), one of Europe's largest banks, reported that its fourth-quarter profits more than tripled. The company remains optimistic heading into 2006, as deal pipelines are promising. Earnings per share have grown 39.3% over the past five years and are forecasted to grow 17.1% over the next 3-5 years. The company is currently yielding 2.3% and has a five-year average dividend yield of 1.9%. Full Analysis UBS AG engages in advisory services, underwriting, wealth management, investment banking and securities, asset management and retail and commercial banking activities worldwide. UBS also engages in private banking operations. On Feb 14, 2006, UBS AG reported that its fourth-quarter profits more than tripled, thanks in part to the sale of some of its private banking and fund operations to Julius Baer last year. The company said its net profit increased to 6.49 billion Swiss francs ($4.96 billion) in the quarter, compared to 2.08 billion francs during the fourth quarter of 2004. All business units reported higher earnings, with especially strong results in wealth and asset management on solid asset inflows, and at the investment bank due to robust capital markets. For the entire year, UBS posted net earnings from continuing operations of CHF9.8 billion, 24.1% ahead of the CHF7.9 billion earned in 2004. Net revenues advanced 13.5% to CHF50.6 billion. Furthermore, expenses increased less than revenues, leading to a cost/income ratio that improved by 1.3 percentage points from the prior year. Heading into 2006, the company stated that deal pipelines are promising, investors are upbeat and macroeconomic indicators are encouraging. UBS also said it plans to up its performance targets in 2006. The company will target a return on equity of at least 20%, compared to its previous goal of between 15% and 20%. UBS will focus its future efforts on organic growth through attracting new customers and doing more business with existing customers. Company management plans a share repurchase of up to 5 billion francs ($3.82 billion) after the current 3.6 billion franc buyback plan ends in early March. Furthermore, UBS announced it would increase its dividend to 3.80 francs ($2.91) a share from three francs a share in 2004. The company has a current dividend yield of 2.3% and a five-year average dividend yield of 1.9%. The company's return on equity in 2005 was 27.6%, compared to 26.3% a year earlier. This is almost twice that of the industry average of 15%. Earnings per share have grown 39.3% over the past five years and are forecasted to grow 17.1% over the next 3-5 years. UBS is a Zacks #2 Rank (Buy) stock. Zacks #2 Rank stocks have generated an average annual return of 21.6% since 1988. Because the Zacks Rank has a http://www.zacks.com/help/zrankguide.php?p=13 >market cap bias, Growth & Income investors may find a greater number of large-cap stocks by considering both Zacks #1 Rank (Strong Buy) and Zacks #2 Rank (Buy) stocks in their selection criteria. Note: The Zacks Rank is a very sensitive indicator that can change frequently for an individual stock. The ranks are updated every Monday morning on Zacks.com. As such, it is prudent to check the site for the latest Zacks Rank on the stocks highlighted in this section. Simply click the link for the stock or enter the symbol in the ticker entry box in the upper left hand corner of the web site. Content Courtesy: Zacks Investment Research #1 Ranked Stocks Highlight Archive To truly take advantage of the Zacks Rank, you need to first understand how it works. That is why we created the free special report: Zacks Rank Guide: Harnessing the Power of Earnings Estimate Revisions.

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(LG) - Profits spiked in the first quarter

Profits spiked in the first quarter of fiscal 2006 for The Laclede Group, Inc. (LG), a Zacks #1 Rank stock. Analysts' earnings estimates for the company's current fiscal year have been trending higher as a result. The Board of Directors raised its quarterly dividend to 35.5 cents per share. LG currently yields 4.3%. The company has a price-to-book (P/B) multiple of 1.8. Full Analysis The Laclede Group, Inc. is a public utility holding company providing natural gas service through its regulated core utility operations, while developing a presence in non-regulated activities that provide opportunities for sustainable growth. The company's primary subsidiary is Laclede Gas Company. LG has topped analysts' earnings estimates in three straight quarters by an average margin of 24.0%. The company recently beat the Street by an impressive 48.2%, with first-quarter fiscal 2006 earnings per share of $1.23. The Laclede Group, Inc. recorded profits of 79 cents per share in the first quarter of fiscal 2005. The company pointed to its non-regulated subsidiaries and off-system marketing efforts as fueling its first quarter profits. LG's profits amounted to $26.2 million, compared to $16.6 million for the same period last year. Operating revenues jumped 55.8% to $689.2 million. The Laclede Group, Inc. has increased revenues for the past three years, most recently by 27.7% in fiscal 2005. The company has also succeeded in growing profits for three years running. On Jan 26, 2006, the Board of Directors of The Laclede Group, Inc. increased its quarterly dividend to 35.5 cents per share from 34.5 cents per share. The company has a very impressive current dividend yield of 4.3%. LG has a five-year average dividend yield of 5.1%. The consensus earnings estimate for fiscal 2006 has increased over the past 60 days. Analysts have upped their forecasts by 12.9% to $2.27 per share. The upward revisions were submitted by two analysts covering the company. LG has been as profitable as its peers. The company's return on equity, along with the industry's, is 13%. The Laclede Group, Inc. is trading at a highly discounted valuation. The company has a price-to-book (P/B) multiple of 1.8. Furthermore, the stock trades at a valuation of 14.2x trailing 12-month earnings and at 14.7x its current fiscal year estimated earnings. Note: The Zacks Rank is a very sensitive indicator that can change frequently for an individual stock. The ranks are updated every Monday morning on Zacks.com. As such, it is prudent to check the site for the latest Zacks Rank on the stocks highlighted in this section. Simply click the link for the stock or enter the symbol in the ticker entry box in the upper left hand corner of the web site. Content Courtesy: Zacks Investment Research #1 Ranked Stocks Highlight Archive To truly take advantage of the Zacks Rank, you need to first understand how it works. That is why we created the free special report: Zacks Rank Guide: Harnessing the Power of Earnings Estimate Revisions.

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(DRIV) - already up 46% this year

Digital River (DRIV) already up 46% this year. Is it headed higher? Background Digital River, Inc. provides comprehensive electronic commerce outsourcing solutions. They are an application service provider that enables its clients to access their proprietary electronic commerce system over the Internet. They have developed a technology platform that allows them to provide a suite of electronic commerce services. The company also provides analytical marketing and merchandising services. They provide an outsourcing solution that allows its clients to promote their own brands while leveraging the company's investment in infrastructure and technology. Full Analysis It's been 49 days since DRIV narrowly missed earnings expectations on Feb 1. Then DRIV reported earnings for the Dec 2005 quarter at 35 cents per share, down from 43 cents in the same quarter last year, and 2.8% below analysts' consensus expectations of 36 cents. Still the stock was setting new 52-week highs as recently as yesterday on heavy trading volume. What gives? To understand why a stock missing consensus estimates might still perform well requires a closer look at the company's history at meeting and/or exceeding earnings expectations. DRIV's narrow miss for the Dec 2005 quarter was preceded by 12 consecutive quarters of beating the Street's estimate. Add to that the miss was very small and you come to understand that investors still have faith in management. Technical Review DRIV is up is up 15.5% for the month to date and 46.2% year to date. How can you possibly justify buying a stock already up 46%? The answer to that question is two fold. First, just as judging why a company that missed on earnings might not suffer in the market required looking at history, so does the question of buying a stock already strongly higher for the year. Some simple review of history will show that DRIV returned 88.3% in 2004 and 84.9% in 2003. Plainly put, DRIV has a history that makes 46% gains look puny. The second answer is that a fundamental tenet of Momentum investing is that we “buy high and sell higher.” As Momentum investors, we aren't looking to buy stocks “cheap” just based on price. Instead, we want to purchase companies with improving fundamentals AT THE SAME TIME THAT THE MARKET itself is recognizing that improvement. Content Courtesy: Zacks Investment Research #1 Ranked Stocks Highlight Archive To truly take advantage of the Zacks Rank, you need to first understand how it works. That is why we created the free special report: Zacks Rank Guide: Harnessing the Power of Earnings Estimate Revisions.

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(WCC) - exceeded earnings estimates for 12 consecutive quarters

WESCO International, Inc. (WCC) has exceeded earnings estimates for 12 consecutive quarters, with year-over-year growth exceeding 100% several times. All seven analysts covering the stock have increased their numbers for 2006. Over the past 90 days, 2006 estimates have increased 15.1% to $3.28 per share. The stock is attractively valued at 15.9x next year's estimates of $3.84, below the long-term growth rate of 17.33%, giving the stock a PEG ratio of 0.92. Full Analysis WESCO International, Inc. (WCC) is the second-largest supplier and distributor of electrical construction products in the United States. Additionally, the company is a leading provider of electrical and industrial maintenance, repair and operating (MRO) supplies. The total MRO market is currently estimated to be approximately $400 billion. WESCO has an automated electronic procurement and inventory replenishment system, which allows customers to purchase a wide range of products from a single source. Strategically, management intends to make the firm the leading provider in North America and select international markets. Management plans to achieve this by focusing on faster growing sub-segments, making strategic acquisitions and implementing margin improvement initiatives. The company has a competitive advantage in the MRO market, where it is the largest U.S. integrated supplier. This is one of the fastest growing sub-segments within the overall market, with a projected growth rate that doubles every five years. WCC is also expanding into other new vertical markets such as retail, financial services, education and healthcare, both domestically and abroad. The company has supplemented organic growth with 25 acquisitions since 1995. The most recent acquisitions are of Fastec and Carlton Bates. Fastec is an importer and distributor of industrial fasteners, cabinet hardware and locking and latching products. The company has a strong presence in the recreational vehicle and manufacturing and housing markets, and is expected to solidify WESCO’s already strong position in this market. Apart from a nationwide presence, Fastec has several years of experience sourcing goods from China and Taiwan, which is expected to yield strategic advantages and synergies. WCC has exceeded earnings estimates for 12 consecutive quarters, with year-over-year growth exceeding 100% several times. All seven analysts covering the stock have increased their numbers for 2006. Over the past 90 days, 2006 estimates have increased 15.1% to $3.28 per share. The stock is attractively valued at 15.9x next year's estimates of $3.84, below the long-term growth rate of 17.33%, giving the stock a PEG ratio of 0.92. Note: The Zacks Rank is a very sensitive indicator that can change frequently for an individual stock. The ranks are updated every Monday morning on Zacks.com. As such, it is prudent to check the site for the latest Zacks Rank on the stocks highlighted in this section. Simply click the link for the stock or enter the symbol in the ticker entry box in the upper left hand corner of the web site. Content Courtesy: Zacks Investment Research #1 Ranked Stocks Highlight Archive To truly take advantage of the Zacks Rank, you need to first understand how it works. That is why we created the free special report: Zacks Rank Guide: Harnessing the Power of Earnings Estimate Revisions.

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(SIRI) - (XMSR) - (DIS) - (PIXR) - Satellite Radio Subscriber Growth Boosted

Satellite Radio Subscriber Growth Boosted With Mason Leith Mar 21, 2006 Though no industry-wide catalysts have emerged, changes in the media sector have managed to grab headlines over recent months. How are these developments progressing? We spoke with Mason Leith, senior media analyst, for his views on these issues. The addition of Howard Stern to Sirius satellite radio has made news headlines throughout the early part of this year. How are top- and bottom-lines for the satellite radio sector adjusting to such a strong wave of (free) advertising? The subscriber growth in satellite radio has benefited from the publicity generated by big-name additions such as Howard Stern. A significant question for valuation is the growth in expenses. Sirius (SIRI) and XM Satellite (XMSR) have incurred substantial advertising expenses to build its subscriber base. The issue going forward will be how long will it take before the companies bring in enough subscribers to achieve profitability. The industry will need to lower its advertising cost per new customer, while maintaining high subscriber growth rates. Two companies you had covered for awhile-Disney and Pixar-finally agreed on a merger. What do you think of the deal, and will this make for a stronger stock? Disney (DIS) will get improved animated family film production now that it has acquired the talent of Pixar (PIXR). The acquisition is very favorable for Disney, because it allows Disney to continue its relationship with Pixar, and it allows Disney to bolster its historical brand identity for family entertainment, with Pixar's current strong brand identity. Initial reports on the Winter Olympics were that viewership was down. But was it really, when considering the amount of Internet hits and other media on the Games? While the popularity of Olympic coverage through other media may indicate that there is still audience interest in the Olympic games, from the standpoint of television advertising revenue, the lower viewership on television still may lead to lower advertising sales in the future for Olympic television coverage. This implies that valuation multiples of television station companies may continue to face contraction as technology advancements provide alternative distribution options for video entertainment. Mid-term elections are coming up this November, and many predict heated races with lots of money spent on advertising. How do you see this affecting radio and TV companies? Television and radio broadcast companies are anticipating a strong year for political advertising. The good news is that this will help the broadcasting industry rebound from weak revenue growth in 2005. However, the anticipation of revenue and earnings improvements from strong political advertising is largely priced into company valuations. This means that the political spending in the second half of 2006 is unlikely to provide dramatic share price or valuation multiple improvements. Do you have any Buys or Sells in this space that bear particular mention? If so, what about them interests – or disinterests - you? We currently have a Buy rating on IMAX (IMAX). The company has benefited from the success of IMAX films at the box-office as well as new technology lowering the cost of entry into the IMAX business for theater owners. We currently have a Sell rating on Nexstar Broadcasting Group (NXST). Disappointing revenue growth has been a cause for concern. The substantial debt on the company's balance sheet could further restrict the company's growth. We are also concerned that Nexstar had net losses for the past three years, primarily due to amortization of intangible assets and debt service obligations. Finally, what is your outlook overall for the media industry through the end of 2006? We have a neutral outlook of the media industry. While advertising spending has been improving, there are greater concerns for the media industry, from fragmentation of media audience to newer media like video games and the Internet. Alternative technologies for distributing media, like satellite television and radio, also contribute to the uncertainty for traditional media distribution companies. These concerns are likely to encumber media company stock valuations this year. Mason Leith is a senior analyst covering media and restaurants for Zacks Equity Research. About Zacks Analyst Interviews Zacks Equity Research employs 50 stock analysts who are experts in the industries they cover. In these articles you will discover our analyst's current insights on key industries in the news along with their favorite stocks to buy and sell now. Learn More about Zacks Equity Research

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(NNDS) - Overweighting Eurotech is Recommended

Overweighting Eurotech is Recommended With Robert Perri Mar 22, 2006 While the technology industry in the U.S. has slowly rebounded from recent-year lows, we were interested in finding out if similar patterns were emerging overseas, particularly Europe. We spoke with senior Eurotech analyst Rob Perri, CFA for his views on this. What do you see as the main difference between Eurotech and U.S. tech companies these days? The primary difference between U.S. and European tech companies is that in Europe there is very little flexibility for employers to manage their workforce effectively. As many European countries have very stringent work-related regulations in regards to hiring and firing, coupled with heavy penalties for layoffs, Eurotech firms tend to be slower to hire needed personnel in boom times, and slower to commit to layoffs in slow periods. Recently, many of the larger Eurotech firms have begun moving many jobs to Asia, particularly India, to alleviate some of the problems, but Eurotech firms tend to have lower margins when compared to their U.S. counterparts because of this. On the positive side, this has caused Eurotech firms to spend more heavily on research and development (R&D) in order to stay ahead of the curve with more innovative products, where they can charge higher prices. Should investors consider overweighting, underweighting or market-weighting Eurotech stocks at this time? We believe that investors should consider being overweight in Eurotech at this time. While the U.S. market is at the height of a Fed tightening cycle, Europe is just starting to recover. Growth in the European markets has started to pick up, and many of the different governments across Europe are implementing more business-friendly policies, which is allowing these companies to cut-costs and move workers to lower-cost areas, such as Eastern Europe or India. There is also the added bonus of gaining exposure to the Euro, which we expect to strengthen slightly against the U.S. Dollar in 2006. What are some of the trends you are noticing in Europe that investors should keep an eye on? Recently, there has been a wave of cross-border takeover announcements in Europe, which is causing some local governments to take a more protectionist stance. Spain, France and Poland are all fighting potential takeover of some of their larger companies by rivals in other countries. The larger of these deals, German E.On's (EON) unsolicited bid for Endesa (ELE), one of the largest Spanish power companies, has caused the Spanish Government to take defensive measures to try and thwart the deal. While the European Union (EU) has the ability to overturn these types of “local” protectionist measures; just the thought of having to go through this type of process has caused many European companies to avoid these larger mergers. In order for the EU to become the “single market” it is thriving for, national governments need to back off and allow market forces to work undeterred. In the next year we will see which vision of Europe prevails, as these clashes between the EU and local nations unfold. If the more protectionist views prevail, it will set the EU back several years and has the potential to quell growth in the future, while if the “single market” view wins out, the EU will be in a much better position to improve its competitiveness on a global scale. What are your top Buy recommendations these days? Any Sell recommendations you'd care to mention? One stock I like is the NDS Group (NNDS), which creates smart cards, middleware, and other software solutions for set-top boxes that enable broadcast or broadband platform operators and content providers to deliver content securely to subscribers for digital satellite, pay-television, and Internet services. The company is 78% owned by News Corp. (NWS), which means that it has consistent clients in DirecTV in the U.S., BskyB in the U.K., and many other television operators around the globe. NDS has over 61 million smart cards in use right now, and receives a monthly royalty from each user. Another area of growth is interactive gaming, which allows users to interact with their TVs, and NDS is a leader in this space as well. The company is also expanding into the IPTV, or TV over the Internet, and the Digital-Video Recorder (DVR) spaces, which should help boost revenues this year. Starting late in 2005, DirecTV started offering new set-top boxes that include NDS's DVR solution, which will add another license stream. Finally, the company has a solid position in growth markets, such as India and China, where the pay-TV model is only starting to catch on. We believe that the company should be trading at 30x our recently raised fiscal 2007 EPS estimate of $1.81 a share, or close to $54.50 over the next six months. One stock that has continually disappointed investors is Infineon (IFX), the German semiconductor company. The company specializes in Memory products, such as DRAM, and semiconductors for the Automotive and Industrial, and Communications markets. It has consistently lost money, and has undergone a long restructuring effort that doesn't look to be completed now until mid-2007. The company's Communications business has been under severe pressure, and reported its seventh consecutive loss in the most-recent quarter. DRAM prices have continually been under pressure, and the company cost structure isn't well-positioned to compete on price against its Asian competitors. Additionally, the company is in the middle of creating a separate independent unit for its Memory business, in order to pursue strategic alternatives, such as an IPO. An IPO appears to be the most reasonable alternative, as there has been very little interest from anyone in buying this unit from Infineon. We rate these shares a sell, and expect the company to trade at 25x our fiscal 2007 estimate or $9.00 a share over the next six months, compared to its recent share price of $9.97. Finally, what are the main issues tech companies in your coverage are expected to face this year? Recently, Philips (PHG) announced that it was planning to create a separate entity for its Semiconductor business and explore alternatives for the group. Infineon has also started the process of creating a separate entity for its memory business, and is also exploring alternatives for that business. When these transformations finish towards the second-half of 2006, we may start to see a consolidation trend in the Semiconductor market. There has been much speculation as to who would be interested in these stand-alone companies, but it is too early to start guessing. We do feel that the semiconductor industry will enter into a consolidation phase eventually, and it is something to keep an eye on in 2006. Robert Perri, CFA is a senior analyst covering the technology industry in Europe for Zacks Equity Research. About Zacks Analyst Interviews Zacks Equity Research employs 50 stock analysts who are experts in the industries they cover. In these articles you will discover our analyst's current insights on key industries in the news along with their favorite stocks to buy and sell now. Learn More about Zacks Equity Research

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(AMX) - PEG ratio of 0.57 - Latin America's largest wireless holding company

America Movil (AMX) has had a tremendous run over the past 12 months, increasing about 100% over that time period. Despite this torrid performance, the stock is trading at quite attractive valuations. AMX is currently trading at 20.4x 2006 earnings estimates of $1.74 per share, well below the long-term growth rate of 35.68%, giving the stock a PEG ratio of 0.57. Full Analysis America Movil (AMX) is Latin America's largest wireless holding company, with approximately 93 million subscribers, and it is one of the top ten mobile operators in the world. AMX was established in September 2000 as a spin-off from Teléfonos de México (Telmex), the dominant provider of local and long-distance telephone services in Mexico. Since the spin-off, AMX has expanded rapidly, using acquisitions to become a leading Latin American regional wireless player. Through several other subsidiaries, AMX is also the leading wireless provider in Colombia, Ecuador and Guatemala. Over the past year, the company has acquired wireless operators in El Salvador, Argentina and Nicaragua. America Movil's combined network covers about two-thirds of the Latin American population, or roughly 330 million people. Because of its well-known brand, extensive distribution network, nationwide coverage and benign regulatory environment, AMX's Telcel holding dominates the Mexican wireless market. Telcel reduced its tariff by 20% in 2004 to avoid a telecommunications industry tax. However, given the price elasticity of wireless communication services, the tariff reduction was more than offset by increased usage, resulting in a slight rise in average revenue per user (ARPU). Sales are also benefiting from the migration of voice traffic from fixed-lines to wireless and from the “network effect” (that is, as the network grows, more people sign up in order to communicate with subscribers already on the network). Now that the technological upgrade is complete, the company's capital expenditures are expected to subside, positively impacting free cash flow and profitability. Benefits of GSM over TDMA include more efficient use of spectrum (which increases capacity) and cheaper handsets (requiring less of a subsidy). More importantly, the upgrades have enabled AMX to offer enhanced data services and roaming agreements on a global basis. Now that AMX has completed most of its strategic roll-up activities in the region, future growth will focus on organic activities, within the existing company's holdings. The stock has had a tremendous run over the past 12 months, increasing about 100% over that time period. Despite this torrid performance, the stock is trading at quite attractive valuations. AMX is currently trading at 20.4x 2006 earnings estimates of $1.74 per share, well below the long-term growth rate of 35.68%, giving the stock a PEG ratio of 0.57. Estimates for 2006 have increased 10.1% over the past 60 days, with four different analysts raising their numbers. Note: The Zacks Rank is a very sensitive indicator that can change frequently for an individual stock. The ranks are updated every Monday morning on Zacks.com. As such, it is prudent to check the site for the latest Zacks Rank on the stocks highlighted in this section. Simply click the link for the stock or enter the symbol in the ticker entry box in the upper left hand corner of the web site. Content Courtesy: Zacks Investment Research #1 Ranked Stocks Highlight Archive To truly take advantage of the Zacks Rank, you need to first understand how it works. That is why we created the free special report: Zacks Rank Guide: Harnessing the Power of Earnings Estimate Revisions.

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(BMHC) - PEG ratio of 0.59 - topped analysts' estimates in seven of the past eight quarters

Building Materials Holding Corporation (BMHC), a Zacks #1 Rank stock, reported record 2005 sales and profits in early February. The company topped analysts' estimates in seven of the past eight quarters. Earnings per share grew 41.9% over the past five years. Analysts' earnings estimates have shot upwards for BMHC. The company has a price-to-book (P/B) multiple of 2.2 and a PEG ratio of 0.59. Full Analysis Building Materials Holding Corporation provides construction services and building products to professional homebuilders and contractors throughout the United States. The company serves the homebuilding industry through two subsidiaries: BMC Construction and BMC West. BMHC topped analysts' earnings estimates in seven of the past eight quarters. Earnings per share grew an impressive 41.9% over the past five years and are forecasted to grow 13.5% over the next 3-5 years. On Feb 7, 2006, Building Materials Holding Corporation reported fourth-quarter 2005 earnings per share of $1.13. With the Street calling for $1.16, BMHC missed by three cents. However, the company's sales for the quarter were up 51.7% to $817.9 million. Profits amounted to $33.5 million, compared with $19.0 million in the fourth quarter of 2004. For the entire year, BMHC achieved record sales and profits. Profits were $129.5 million, versus $53.9 million in the prior year. Revenues increased 38.1% to $2.9 billion. BMC Construction's revenues were fueled by recent acquisitions as well as strong homebuilding activity, particularly in the Las Vegas and Phoenix markets. Due to strong construction activity in the company's Texas, Northwest and Intermountain regions, revenues at BMC West experienced solid improvements. BMHC's expansion during the year included the completion of seven acquisitions. The company finalized the acquisitions in an effort to focus on strengthening its service offerings, increasing its framing capabilities and adding trades such as concrete and plumbing. Building Materials Holding Corporation continues to adhere to the two key objectives within its acquisition strategy: expanding the company's breadth of services for homebuilders and providing value through an integrated service offering. Analysts have been upping their earnings estimates for BMHC. The consensus earnings estimate for this quarter and next increased by 20.6% and 18.6%, respectively, over the past 60 days. Forecasts for 2006 and 2007 profits jumped 8.4% and 20.9%, respectively, over the same time period. BMHC has been more profitable than its peers. The company has a ROE of 31%, compared to 21% for the industry. Positive operating cash flows have enabled BMHC to currently yield 0.83%. Building Materials Holding Corporation has a price-to-book (P/B) multiple of 2.2 and a PEG ratio of 0.59. Furthermore, the stock trades at a valuation of 8.2x trailing 12-month earnings and at 8.0x its current fiscal year estimated earnings. Note: The Zacks Rank is a very sensitive indicator that can change frequently for an individual stock. The ranks are updated every Monday morning on Zacks.com. As such, it is prudent to check the site for the latest Zacks Rank on the stocks highlighted in this section. Simply click the link for the stock or enter the symbol in the ticker entry box in the upper left hand corner of the web site. Content Courtesy: Zacks Investment Research #1 Ranked Stocks Highlight Archive To truly take advantage of the Zacks Rank, you need to first understand how it works. That is why we created the free special report: Zacks Rank Guide: Harnessing the Power of Earnings Estimate Revisions.

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(GRMN) - EPS increased 27% from the year ago quarter

Garmin International is a navigation stock that hasn't lost its way. Background Garmin International designs, manufactures, and markets navigation and communications equipment for a variety of markets, including aviation, marine, automotive, cellular, OEM, and general recreation. Specifically, the company aims to enrich the lives of customers, suppliers, distributors, and employees by providing the very best products that offer superior quality, safety, and operational features at affordable prices. Full Analysis Imagine a company with no earnings disappointments for the last 16 quarters. Earnings, sales and income all show strong growth. And analysts are nearly united in raising next year's estimates. That company might well look like Garmin. GRMN reported earnings on Feb 22 for the December 2005 quarter. It's EPS of 80 cents increased 27% from the year ago quarter. Sales were up 65.7% to $319.3 million and income was up 83.8% to $87.1 million. Furthermore, imagine that same company had outperformed the general market for the last four years. Would it surprise you to learn that 40% of the company was owned by insiders? Indeed, such is the case at GRMN. Technical Review When you have a company as well managed as GRMN, you'd expect that the stock price would be performing well, and indeed it is. GRMN is up +16.2% YTD. This follows a 2005 year when GRMN gained 9.1% versus the 3% gain for the S&P 500. GRMN made a new 52-week high Tuesday, continuing an uptrend that started with a very strong day on Feb 27, 2006 when GRMN managed to close 5.0% higher. Since that breakout, GRMN has continued to make new 52-week highs. Clearly this is a stock with improving fundamentals being recognized for its improvement by the market. A classic Momentum stock. Content Courtesy: Zacks Investment Research #1 Ranked Stocks Highlight Archive To truly take advantage of the Zacks Rank, you need to first understand how it works. That is why we created the free special report: Zacks Rank Guide: Harnessing the Power of Earnings Estimate Revisions.

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(LFC) - PEG ratio of 0.62 - Estimates have increased 9.3% the past 30 days

China Life Insurance Company Ltd. (LFC) is the market leader in China's life insurance industry. Even though the stock has had an excellent run over the past year, it is still attractively valued. LFC is trading at 17.3x 2006 earnings estimates of $2.69 per share, which is well below the company's long-term growth rate of 27.95%. This gives the stock a PEG ratio of 0.62. Estimates for 2006 have increased 9.3% over the past 30 days. Full Analysis China Life Insurance Company Ltd. (LFC), with headquarters in Beijing, is China's largest life insurance company. The company is also a leading provider of annuity products and life insurance for both individuals and groups and a leading provider of accident and health insurance. The company sells insurance products and services through the most extensive distribution network of exclusive agents, direct sales representatives, and dedicated and non-dedicated agencies throughout China. Opportunities in China's life insurance industry are significant. LFC continues to grow a solid client base, employ a unique multi-channel distribution and service network, improve its operational and management procedures, and benefit from the favorable operating environment. China's life insurance industry has experienced rapid growth in the past ten years, and will see great growth in the next decade as well. Total life premiums increased from RMB25.7 billion ($3.1 billion) in 1995 to RMB364.6 billion ($45.2 billion) in 2005, representing an annualized growth rate of 30.4%. The key drivers of this rapid growth are a low penetration rate, limited investment channels, and lack of efficient social security system, and an aging population. In 2005, LFC held 44% of the market share. Its foreign competitors and Sino-foreign insurance joint ventures in China only make up around 9% of the market. LFC has the most extensive distribution network throughout China. LFC surpassed Pingan Insurance in the Shanghai market in 2005. Moreover, LFC had been the only state-owned life insurance company in China for a long time, so the company has built up its brand recognition in China. It will be almost impossible for its competitors to change LFC's leading position in China in the foreseeable future. Even though the stock has had an excellent run over the past year, it is still attractively valued. LFC is trading at 17.3x 2006 earnings estimates of $2.69 per share, well below the company's long-term growth rate of 27.95%, giving the stock a PEG ratio of 0.62. Estimates have increased 9.3% over the past 30 days. Note: The Zacks Rank is a very sensitive indicator that can change frequently for an individual stock. The ranks are updated every Monday morning on Zacks.com. As such, it is prudent to check the site for the latest Zacks Rank on the stocks highlighted in this section. Simply click the link for the stock or enter the symbol in the ticker entry box in the upper left hand corner of the web site. Content Courtesy: Zacks Investment Research #1 Ranked Stocks Highlight Archive To truly take advantage of the Zacks Rank, you need to first understand how it works. That is why we created the free special report: Zacks Rank Guide: Harnessing the Power of Earnings Estimate Revisions.

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(FMD) - return on equity more than twice the industry average

The First Marblehead Corporation (FMD), fueled by strong revenue growth, posted solid financial results in late-January. FMD has topped the Street's estimate in seven consecutive quarters. Earnings per share are forecasted to grow 10.6% over the next 3-5 years. This Zacks #1 Rank stock's return on equity is more than twice that of the industry average—46% compared to 22%. Full Analysis The First Marblehead Corporation is an industry leader in providing services for private, non-governmental, education lending in the United States. The company focuses primarily on loan programs for undergraduate, graduate and professional education, and to a lesser degree, on the primary and secondary school market. FMD has topped the consensus earnings estimate in seven straight quarters by an average margin of 9.0%. Furthermore, the company met or beat the Street in nine consecutive quarters—meeting only once. Earnings per share are forecasted to grow 10.6% over the next 3-5 years. On Jan 26, 2006, The First Marblehead Corporation reported strong results for the second quarter of fiscal 2006, as well as for the first six months of the year. The company posted earnings per share of $1.74 for the quarter, while the Street called for $1.58. Profits in the second quarter of fiscal 2005 amounted to $1.12. Total service revenues for the quarter jumped sharply to $230.5 million, up 48.0% from $155.8 million in the prior year. A strong increase in securitization volume led to total service revenues of $265.6 million for the six months of fiscal 2006. This represented an increase of 49.1% from the $178.2 million reported in the same prior-year period. Profits increased 53.0% to $105.9 million. The company expects fiscal 2006 profits to grow by 25% to 30% over fiscal 2005 levels, fueled by strong revenue growth. Analysts have been upping their earnings estimates for The First Marblehead Corporation. The consensus earnings estimate for this quarter and next increased by 10.6% and 7.7%, respectively, over the past 90 days. Forecasts for fiscal 2006 and fiscal 2007 profits jumped 10.5% and 10.1%, respectively, over the same time period. On Mar 14, 2006, the Board of Directors at FMB announced a quarterly cash dividend of 12 cents per share, leading to a current dividend yield of 1.0%. The company's ROE of 46% illustrates that management has been very successful in building shareholder value. This is notably higher when compared to the industry's ROE of 22%. During the second quarter of fiscal 2006, FMB repurchased 2,346,800 shares of its common stock in open-market transactions. Based on the share repurchase program announced on Sep 29, 2005, the company is currently authorized to repurchase up to an additional 2,653,200 shares. Note: The Zacks Rank is a very sensitive indicator that can change frequently for an individual stock. The ranks are updated every Monday morning on Zacks.com. As such, it is prudent to check the site for the latest Zacks Rank on the stocks highlighted in this section. Simply click the link for the stock or enter the symbol in the ticker entry box in the upper left hand corner of the web site. Content Courtesy: Zacks Investment Research #1 Ranked Stocks Highlight Archive To truly take advantage of the Zacks Rank, you need to first understand how it works. That is why we created the free special report: Zacks Rank Guide: Harnessing the Power of Earnings Estimate Revisions.

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(BSC) - topped the consensus estimates 16 quarters by an average margin of 18.6%

The Bear Stearns Companies, Inc. (BSC), a Zacks #1 Rank stock, recently reported record net revenues, net income and earnings per share for the first quarter of fiscal 2006. The company has topped the consensus earnings estimate for an impressive 16 straight quarters by an average margin of 18.6%. Earnings per share grew 25.3% over the past five years. Analysts' earnings estimates have been trending higher for BSC. Full Analysis The Bear Stearns Companies, Inc. is the parent company of Bear, Stearns & Co. Inc., a leading global investment banking, securities trading and brokerage firm. The company operates in three segments: capital markets, global clearing services and wealth management. BSC has a strong history of exceeding analysts' earnings estimates. The company beat the Street in 16 consecutive quarters by an average margin of 18.6%. Earnings per share grew 25.3% over the past five years and are forecasted to grow 10.6% over the next 3-5 years. BSC has increased profits for the past four years. On Mar 16, 2006, The Bear Stearns Companies, Inc. reported record quarterly results. The company posted first-quarter fiscal 2006 earnings per share of $3.54. This amounted to a 19.2% surprise when compared to the consensus earnings estimate and a 34.1% increase over first-quarter fiscal 2005 profits. Net revenues were a record $2.2 billion for the quarter, up from the $1.8 billion in the prior year. This was BSC's second consecutive quarter of record net revenues, net income and earnings per share. Institutional equities, fixed income and wealth management led the way. Analysts have been upping their earnings estimates for BSC. The consensus earnings estimate for this quarter and next increased by 8.7% and 6.3%, respectively, over the past 90 days. Forecasts for fiscal 2006 and fiscal 2007 profits jumped 8.3% and 8.6%, respectively, over the same time period. Nine analysts increased their estimates for fiscal 2006, while five raised their projections for fiscal 2007. The Board of Directors at The Bear Stearns Companies, Inc. recently declared a quarterly cash dividend of 28 cents per common share of stock. The company has a current dividend yield of 0.84% and a five-year average dividend yield of 0.99%. Despite the company's strong fundamentals, BSC continues to trade at a discounted valuation. The company has a price-to-book (P/B) multiple of 1.6. Furthermore, the stock trades at a valuation of 11.4x trailing 12-month earnings and at 11.5x its current fiscal year estimated earnings. Management at The Bear Stearns Companies, Inc., as measured by return on equity, has been very efficient. The company has a ROE of 18%, compared to the industry average of 13%. Note: The Zacks Rank is a very sensitive indicator that can change frequently for an individual stock. The ranks are updated every Monday morning on Zacks.com. As such, it is prudent to check the site for the latest Zacks Rank on the stocks highlighted in this section. Simply click the link for the stock or enter the symbol in the ticker entry box in the upper left hand corner of the web site. Content Courtesy: Zacks Investment Research #1 Ranked Stocks Highlight Archive To truly take advantage of the Zacks Rank, you need to first understand how it works. That is why we created the free special report: Zacks Rank Guide: Harnessing the Power of Earnings Estimate Revisions.

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(VVI) - poised for a major move higher

Viad Corp (VVI), a Zacks #1 rank stock, is poised for a major move higher. Background Viad Corp. is comprised of operating companies and a division which constitute a diversified services business. Most of Viad's services are provided to businesses for use by their customers. Accordingly, the corporation markets its services through retail and financial locations, primarily in the U.S., to numerous trade show organizers and exhibitors, and others. Full Analysis VVI is one of those underfollowed stocks that seem to fly under everyone's radar. On Feb 3, VVI reported earnings at 16 cents per share for the quarter ended Dec 2005 versus a year-earlier loss of 27 cents. It is important to note that VVI has failed to exceed analysts' expectations only twice in the last 16 quarters. Technical Review News of the Dec 2005 results propelled VVI to gap higher on the Feb 3 trading session. Despite trading significantly higher during the session, the stock closed up by only 4.5%, on the lows of the day. Since then, however, the stock has continued a quiet, steady move to the upside, setting 52-week highs with regularity. VVI set its most recent 52-week high on more than twice normal trading volume on Friday closing at $33.60. It was VVI's highest price since Jul 30, 1999 when the stock briefly touched $33.875. In fact, Friday's close was historic for VVI. The usual technical trend indicators are favorable to this stock, with Moving Average Convergence Divergence (MACD) turning up in the last week and signaling a ‘buy'. The stock is above both its 50- and 200-day moving averages and the slope of those averages is positive. As VVI moves above its old highs of $33.875, this stock looks to be setting for another major leg up. Content Courtesy: Zacks Investment Research #1 Ranked Stocks Highlight Archive To truly take advantage of the Zacks Rank, you need to first understand how it works. That is why we created the free special report: Zacks Rank Guide: Harnessing the Power of Earnings Estimate Revisions.

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(AMX) - PEG ratio of 0.57 - growth rate of 35.68

America Movil (AMX) has had a tremendous run over the past 12 months, increasing about 100% over that time period. Despite this torrid performance, the stock is trading at quite attractive valuations. AMX is currently trading at 20.4x 2006 earnings estimates of $1.74 per share, well below the long-term growth rate of 35.68%, giving the stock a PEG ratio of 0.57. Full Analysis America Movil (AMX) is Latin America's largest wireless holding company, with approximately 93 million subscribers, and it is one of the top ten mobile operators in the world. AMX was established in September 2000 as a spin-off from Teléfonos de México (Telmex), the dominant provider of local and long-distance telephone services in Mexico. Since the spin-off, AMX has expanded rapidly, using acquisitions to become a leading Latin American regional wireless player. Through several other subsidiaries, AMX is also the leading wireless provider in Colombia, Ecuador and Guatemala. Over the past year, the company has acquired wireless operators in El Salvador, Argentina and Nicaragua. America Movil's combined network covers about two-thirds of the Latin American population, or roughly 330 million people. Because of its well-known brand, extensive distribution network, nationwide coverage and benign regulatory environment, AMX's Telcel holding dominates the Mexican wireless market. Telcel reduced its tariff by 20% in 2004 to avoid a telecommunications industry tax. However, given the price elasticity of wireless communication services, the tariff reduction was more than offset by increased usage, resulting in a slight rise in average revenue per user (ARPU). Sales are also benefiting from the migration of voice traffic from fixed-lines to wireless and from the “network effect” (that is, as the network grows, more people sign up in order to communicate with subscribers already on the network). Now that the technological upgrade is complete, the company's capital expenditures are expected to subside, positively impacting free cash flow and profitability. Benefits of GSM over TDMA include more efficient use of spectrum (which increases capacity) and cheaper handsets (requiring less of a subsidy). More importantly, the upgrades have enabled AMX to offer enhanced data services and roaming agreements on a global basis. Now that AMX has completed most of its strategic roll-up activities in the region, future growth will focus on organic activities, within the existing company's holdings. The stock has had a tremendous run over the past 12 months, increasing about 100% over that time period. Despite this torrid performance, the stock is trading at quite attractive valuations. AMX is currently trading at 20.4x 2006 earnings estimates of $1.74 per share, well below the long-term growth rate of 35.68%, giving the stock a PEG ratio of 0.57. Estimates for 2006 have increased 10.1% over the past 60 days, with four different analysts raising their numbers. Note: The Zacks Rank is a very sensitive indicator that can change frequently for an individual stock. The ranks are updated every Monday morning on Zacks.com. As such, it is prudent to check the site for the latest Zacks Rank on the stocks highlighted in this section. Simply click the link for the stock or enter the symbol in the ticker entry box in the upper left hand corner of the web site. Content Courtesy: Zacks Investment Research #1 Ranked Stocks Highlight Archive To truly take advantage of the Zacks Rank, you need to first understand how it works. That is why we created the free special report: Zacks Rank Guide: Harnessing the Power of Earnings Estimate Revisions.

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(MYGN) - (BOOM) - (FLEX) - (MRO) - (CMI) - "This is what any correction feels like just before it reverses to the upside!"

Gregory Spear, editor of The Spear Report newsletter, says the Goldilocks Economy is humming along quite nicely in the background. Read this expert's analysis and discover his thoughts on the economy as well as the market. Then learn about some of the stocks profiled by Spear. Afterward, take a sneak peek into his Consensus Buy List portfolio. Goldilocks in the Background Last week Gregory Spear and his team discussed a growing mood of pessimism, despite the fact that the major averages were still in technical uptrends. It had to do with corrections in many of the leadership sectors. Spear and his team also spoke about how negativity is usually a catalyst for a rally, and said "This is what any correction feels like just before it reverses to the upside!" Well, sometimes Spear and his team's timing is just about perfect. In the last week we have seen the NYSE and the S&P Smallcap 600 hit an all time high, and the Dow and the S&P 500 post multi-year closing highs. The market is being led by some of the more conservative names, such as brokers and railroads, while many former momentum leadership tech names like Apple (AAPL) and Advanced Microdevices (AMD) can't get much respect. With crude oil rallying more than 6% this week, pushing $64 on an intraday basis on Thursday (3/16), we also saw a turnaround in the energy patch, which tends to boost the major averages, as well. What was the catalyst? Like a guest that is perennially early to the party, the market is once again celebrating the end of the Federal Reserve rate hike scenario. We have had anticipatory rallies about this before…last spring if you remember…but six rate hikes later the rally is perhaps a bit more realistic. For now, bad news on the data front is good news for Wall Street, as signs of economic sluggishness are being celebrated. Wall Street is quite confident that America's largest corporations can do well enough in an economy growing 2-3% a year and they have good reason to be optimistic. Goldman Sachs (GS) reported blow out numbers this past week for a quarter in which GDP growth was less than 2%. Contrary to the headline news about the burgeoning trade deficit, the latest monthly data from the second busiest port in the U.S. indicates that U.S. exports are rather robust, with the number of outbound containers increasing 21% year-over-year, while the number of inbound containers advanced just 0.9%. Corroborating conditions were reported last Wednesday in New York, where hours worked set a record, employment set multi-year highs, order backlogs are swelling and delivery times are stretched, while inventories post record low levels relative to sales. Get the picture? The Goldilocks Economy is humming along quite nicely in the background. Consequently, after a period of apparent politically motivated disinterest, data from the Treasury Department shows that OPEC nations were buying U.S. Treasuries (bonds) hand over fist in January. As Saudi Arabia's stock market has dropped about 25% since its top in late February, it is also likely that OPEC nations are buying U.S. equities, as well. As the 10-year yield fell to 4.64%, homebuilders found a second wind this week. With brokers, transports, energy and homebuilders in an upswing, the market can certainly do well, despite weakness in technology. A sampling of profiled stocks: Myriad Genetics (MYGN) is a biotech company that is developing Flurizan, a therapeutic drug for the treatment of Alzheimer's disease. Flurizan is the first in a new class of drug candidates known as Selective Amyloid beta-42 Lowering Agents (SALAs). Abbreviated "Abeta42," this compound is the primary constituent of senile plaque that accumulates in the brain of patients with Alzheimer's disease. Most genetic mutations that cause early-onset Alzheimer's disease appear to do so by increasing production of Abeta42, which then causes neuronal damage. Myriad is completing a Phase II human clinical trial of Flurizan in patients with mild to moderate Alzheimer's disease. The stock rallied nicely this week after data showed that after 21 months participants on 800 mg/ day of Flurizan continued to demonstrate increasing benefits in the area of cognition and memory loss. Moreover, they maintained more of their global function and activities of daily living than those on a lesser dosage, and the benefit of Flurizan on the measures of Alzheimer's disease increases the longer patients remain on Flurizan. Based on the positive Phase 2 results, Myriad is now enrolling patients with mild Alzheimer's disease for a 12-month Phase 3 trial, at 130 centers across the United States. Myriad also develops and markets predictive and personalized genetic products. The company discovered the BRCA1 and BRCA2 genes that cause hereditary breast and ovarian cancer, and now offers genetic tests for these two conditions as well as hereditary melanoma and two tests for hereditary colorectal cancer and polyps. Genetic testing has passed an inflection point and is now utilized much more frequently by doctors in guiding cancer treatment, not just prevention. Myriad also offers forensic DNA services. MYGN grew revenues 65% in 2005 to $80 million, posting a net loss of about $40 million. Cash on hand totals over $200 million, which is plenty to survive. Technically, a monthly chart of the stock shows a solid basing pattern and a new uptrend in progress. Dynamic Materials (BOOM) began over 30 years ago as an explosive metal forming business for the aerospace industry. Subsequently, the company licensed metal cladding technology from Dupont and eventually acquired Dupont's metal cladding business, as well as several other competitors in the U.S. and eventually in Europe. Explosion- welded clad metal is primarily used in the construction of large industrial equipment involving high pressures and temperatures, along with a requirement for corrosion-resistance. The company has operations in Pennsylvania, France and Sweden, and is 55% owned by SNPE, a French government-owned defense contractor. BOOM is the dominant player in this niche market for explosion- clad corrosion resistant metals. These high-tech sandwiches are typically made from titanium, aluminum or stainless that is welded onto a cheaper metal substrate. Titanium is a highly corrosion resistant metal but it is not weldable by ordinary means. It takes a special explosive environment to force the inert titanium molecules to bond with anything. Explosion-welded products retain the properties of the original metals before they were bonded, such as corrosion resistance and mechanical properties, unlike materials produced by hot rolling or conventional welding. When fabricated properly, the two metals will not come apart, even under the most extreme circumstances. These exotic hybrid materials are used in the petrochemical industry, oil extraction and refining, mining, nuclear power generation, aluminum production and shipbuilding. An upgrade and expansion cycle in the refining industry should prove to be an important catalyst for BOOM's continued growth. BOOM owns the North American explosive metal-clad market but the company has a worldwide sales force and is likely to be a bidder on any serious metal-clad project that is planned anywhere in the world. Although the patents for the explosion-cladding process have expired, BOOM has proprietary knowledge that distinguishes it from its competitors. The company also provides advanced welding services, primarily to the power turbine and aircraft engine manufacturing industries, which accounts for about 5% of revenue. BOOM showed up on the radar of stock traders and investors in early 2005. Sales for that year grew 46% to $79 million and the company's EPS spiked 120% to $0.86 per share with improved margins, as well. The price of titanium and other metals has been skyrocketing, but BOOM has pricing power and has been able to pass along costs. Stocks from the Consensus Buy List include: Flextronic International (FLEX) is a leading provider of advanced electronics manufacturing services to OEMs primarily in the telecommunications and networking, consumer electronics and computer industries. The company's strategy is to provide customers with the ability to outsource, on a global basis, a complete product where the company's take responsibility for engineering, supply chain management, assembly, integration, test and logistics management. The company provides complete product design services, including electrical and mechanical, circuit and layout. Marathon Oil Corporation (MRO) is an energy company engaged in the worldwide exploration, production and transportation of crude oil and natural gas. The company refines, markets and transports petroleum products in the United States through Marathon Ashland Petroleum LLC, a joint venture company between Marathon and Ashland, Inc. Cummins Inc. (CMI) is one of the leading worldwide designers and manufacturers of diesel engines. The company also produces natural gas engines and engine components and subsystems. Cummins provides power and components for a wide variety of equipment in its key businesses: engine, power generation, and filtration. This article highlights the commentary of Gregory R. Spear for the Zacks.com audience. Gregory R. Spear provides insightful analysis, market commentary, and favorite recommendations on a timely basis in "The Spear Report" newsletter. Try it free for 30 days and see if you can improve your investment performance. Learn more about "The Spear Report" and 30-Day Free Trial. And get immediate access to current issues and special reports. Click here now. Here's How You Can Profit from the Pros Find out what other leading experts are saying about the market. And what stocks they are recommending. For free. Just sign up for our free email newsletter, Profit from the Pros, where we'll give you the commentary, advice, and insight from those rare few experts who consistently beat the market year in, year out. Click here now.

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Stealth Stocks Weekly Update on Monday, March 20, 2006

This is Dennis Slothower with your Stealth Stocks Weekly Update on Monday, March 20, 2006. Summary of Recommendations - Stay mostly invested. Market Commentary After last week's rally, primarily in the blue chip stocks, the market is now short-term overbought again, suggesting we are probably going to see a pullback for a few days this week heading into the next FOMC meeting, which occurs on March 27 and 28th. The market expects to see another one or two interest rate hikes. However, given the geopolitical uncertainties in the Middle East and the high prices for commodities (energy and gold), I think the Fed will continue to put pressure on interest rates. I don't think the Fed knows any more than the rest of us as to when interest rates will ultimately peak. I think the Fed will keep raising interest rates until crude oil prices drop to an acceptable target. I don't know exactly where that target is, but I firmly believe the Fed wants crude oil prices down before they feel justified in capping interest rates. The situation is simply uncertain. We really don't know if the U.S. can keep Iraq from falling into a full-blown civil war, given Iran's self serving interests in controlling the Iraqi Shiites to support its regional ambitions. It follows then that the Fed must keep pressure on the fundamentals of crude oil if nothing more than to keep Iran from enriching itself should UN diplomacy fail and the US/Britain/Israel alliance choose a military option. While crude oil fundamentals are very bearish for oil prices, geopolitical worries keep oil prices hovering above $60 a barrel. Crude oil stocks are bucking broncos, whipsawing back and forth on every bit of news. This continues to be a very difficult sector to hold on to for very long. All of these uncertainties have taken a toll on the OTC indexes as investors shy away from taking risk in the technology sectors. We're not getting market leadership out of the OTC. When institutions shun growth in favor of blue chips it is a sign the big boys are hunkering down for potential problems in the future. While the Dow 30, NYSE, and the S&P 500 have made new yearly highs, in a gradual upward slope, the OTC has a sideways trading channel since the first of the year. The OTC is not making new highs. Lack of relative strength and momentum in this key sector tells me that market risk is growing. Hold off any new purchases this week. We should get a few trades once the FOMC meeting is out of the way, assuming key intermediate support levels hold for the OTC. But, for now, hold off getting aggressive as long as the OTC continues to lag. Courtesy: www.stealthstocksonline.com

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(CRK) - good choice for high-risk income investors - (LLL) - strong growth and ratings upgrade candidate

Richard Lehmann, editor of the Income Securities Investor newsletter, says individual investors seeking more than a 5% to 6% return on their capital need to look beyond bonds and trust preferreds or assume more risk. Benefit from this expert's insight on diversification. Afterward, check out a couple corporate bond recommendations. The Universe is Shrinking from March 7 While the universe we live in may be expanding, the universe of fixed income products is shrinking, at least as it pertains to individual investors. The last few years have seen corporate America vastly improve their balance sheets, retiring debt and building up cash, hence, fewer bonds. Since institutional demand for bonds only grows, this has led, in turn, to lower yields on the bonds still in play. This has had the unfortunate effect of also causing a sizeable decrease in the number of brokerage house created trust preferreds. Such preferreds began coming out in great quantity about five years ago as brokerage firms saw an opportunity to buy up blocks of bonds at below their face value, repackage them as preferreds and sell them to a retail clientele. Aside from the commissions they could earn from marketing these new securities, they had a long term compensation incentive in that any appreciation in the price of the bonds held in trust would accrue not to the preferred holders, but rather to the brokerage house that created them. Most of these trust preferreds had a provision allowing them to be called in five years. In five years most of the bonds in these trusts have increased in value to par or above. Hence, they are being called in as quickly as the call dates come up. Worse still, there are few bonds in the market selling at significant discounts from their face value (Ford and GM being the exceptions). Since there is no residual profit for the brokerage houses when creating a trust preferred out of par or above par bonds, there is little new product coming on the market. The bottom line here is that individual investors seeking more than a 5% to 6% return on their capital need to look beyond bonds and trust preferreds or assume more risk. This is one reason why Richard Lehmann has been emphasizing diversification beyond interest only instruments. Diversifications into convertible securities which pay even less than 55 or 6%, but offer a capital gains play should the stock market take off or if they're just plain lucky. Diversification into Canadian oil, natural gas and coal trusts which still pay 10% to 12% and are tied to energy prices rather than interest rates. Diversification into leveraged closed end funds paying 8% and offering some upside when they sell at a discount or hold a portfolio of convertible securities. Diversification into special situations such as GM and Ford currently offer. They represent investments where emotion and other non-financial factors create double-digit return opportunities. These diversifications offer a blending of risks and a strategy which recognizes that fixed income investors today need to not only protect against credit and interest rate risk. They also need to look for compensating opportunities should these first two risks go south. Yes, following such a diversification strategy is complicated, but necessary if you want to receive more than the return on CDs or U.S Treasuries. It's Lehmann's job to bring these various security types to your attention and constantly stress the need to diversify. Those willing to put in the time to learn the details and even begin thinking in terms of the tax consequences of what they buy and when they trade will find this a profitable use of their time. Those who don't have the time or interest should look at mixing and matching from Lehmann's model portfolios. A portfolio drawn from these models can also provide the important diversification of securities and risk. Those who are adamant about holding only bonds, Treasuries and CDs don't need Lehmann's newsletter. Your friendly broker has a ready inventory of bonds, CDs and mutual funds. He may even buy you lunch. Corporate bond recommendations include: Comstock Resources (CRK) is an independent energy exploration and production company engaged in oil and gas acquisition, exploration, development and production in Louisiana, Texas and the Gulf of Mexico. Their operations are conducted through their ownership of Bois d'Arc Energy, Inc. For the fourth quarter and full year 2005, Comstock reported revenues of $93.4 and $303.3 million. Revenues for the same periods in 2004 were $71.2 and $166 million. Net income posted for these periods in 2005 was $41.3 and $60.5 million. In 2004, Comstock reported net income of $15.9 and $34.9 million. This bond is a good choice for high-risk income investors. The call date and maturity are the cause for the low yields in relation to the rating. This bond is for a medium to high-risk investor married to buying bonds. L-3 communications (LLL) is a major provider of intelligence, surveillance and reconnaissance products; secure communications systems, space and wireless products, training and government services and ocean products. Their products include a broad range of high-tech equipment including guidance and navigation, avionics, scanners, propulsion systems, simulators and microwave components. L-3's customers include the Departments of Defense and Homeland Security, aerospace prime contractors and commercial telecom companies. The company's reported net sales for the fourth quarter increased by 51.7% to $2.9 billion compared to the same period in 2004. For the year, sales were up 36.9% to $9.45 billion. Net income for the quarter was $151.4 million, and for the year $509 million. This compares to $119 million and $115.5 million in 2004. Lehmann likes this issue for growth and income portfolios. With an order backlog of more than $7 billion, L-3 looks like a strong growth and ratings upgrade candidate. This article highlights the commentary of Richard Lehmann for the Zacks.com audience. Richard Lehmann provides insightful analysis, market commentary, and favorite recommendations on a timely basis in "Income Securities Investor" newsletter. Try it free for 30 days and see if you can improve your investment performance. Learn more about "Income Securities Investor" and 30-Day Free Trial. And get immediate access to current issues and special reports. Click here now. Here's How You Can Profit from the Pros Find out what other leading experts are saying about the market. And what stocks they are recommending. For free. Just sign up for our free email newsletter, Profit from the Pros, where we'll give you the commentary, advice, and insight from those rare few experts who consistently beat the market year in, year out. Click here now.

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America's "addiction to oil" - energy stocks on sale now

Jim Oberweis and his team, from The Oberweis Report newsletter, highlight the potential economic risks associated with America's "addiction to oil." Read these experts' analysis and discover why they say that a smart investor focused on the big picture can take advantage of the energy stocks on sale now. Then learn about a few of the holdings from Oberweis' Current Portfolio. Commentary from February 27 Just last month, during the State of the Union address, President Bush offered the startling revelation that the United States is "addicted to oil." Like any good politician who has the deep insight to identify such an imperceptible problem, he offered solutions, including "cutting-edge methods" of producing ethanol from corn, wood chips and switch grass. Apparently, the energy-efficient America of tomorrow will be populated by beaver breeders and landscapers. Who knows, maybe it will soon be more profitable to grow corn for ethanol on the famous roof tops across from Wrigley Field. Yes, addicted we are. Like a heroin user who just won five grand at a craps table in Vegas. But that's not the crude reality. The crude reality is that it's getting harder and harder to produce oil and natural gas. Since 1996, the number of natural gas wells drilled in the U.S. has increased nearly 175% and the rig count is up 150%, while average daily production in 2004 was actually lower than it was in 1996. The other crude reality is that there are more "users" looking for a commodity growing scarcer by the day. Like any good drug addict looking for a fix, misery loves company. China and India have booming economies that are said to be growing two to three times as fast as the United States'. All that stuff you buy at Wal-Mart and Best Buy is stamped with the all too-familiar moniker "made in China." It takes lots of energy to run the factories that make all that stuff. Just wait until they ditch their bicycles for Buicks and Fords. Unlike the illegal drug market, where supply can literally be grown to meet increasing demand, crude oil and natural gas are supply-constrained commodities. So when a couple of new addicts like China and India start buying, the price goes up. Even prior to the emergence of these Far East economies, crude oil demand on a global basis has grown virtually every year since 1976. Since 1995, daily demand for oil is up 20%. The crude reality is that the market for oil and gas has never been tighter, and any short-term "shocks" to the system could potentially drive prices significantly higher. Witness the aftermath of last summer's devastating hurricanes, when most of the Gulf's natural gas production was shut down and prices soared. Worse still is our dependence on upstanding global citizens like Iran, Venezuela, Libya, and Nigeria for a significant amount of our supply. Bad for consumers, good for investors. In the short-run, the supply-demand dynamic for oil and gas has been thrown off kilter by a balmy winter. Inventories of natural gas are significantly higher than the 5-year average typically observed at this time of year. The result is pressure on oil and gas prices, and therefore, energy stocks; the Philadelphia Oil Service Index is down 11% from its January 30th peak. Yet despite the dramatic run these stocks have had since early 2004, they remain inexpensive relative to expected growth rates. Nothing crude about that. This minor reprieve granted by Mother Nature will soon yield again to the crude reality, which means a smart investor focused on the big picture can take advantage of the energy stocks on sale now at a stock market near you. The crude reality is that companies like Bronco Drilling (BRNC), Flotek Industries Inc. (FTK), GMX Resources (GMXR) and Veritas DGC (VTS) are riding a rising tide that is lifting all boats. Don't get caught in the undertow. Current Portfolio profiles: LaserCard Corporation (LCRD) manufactures LaserCard optical memory cards and card related products, chip-ready OpticalSmart cards, and other advanced-technology cards. The company sells a majority of its products to value-added resellers including Anteon International Corporation and the Laser Memory Card SPA of Italy. Anteon is the government contractor for LaserCard product sales to the U.S. Department of Homeland Security (DHS), U.S. Department of State (DOS), U.S. Department of Defense (DOD), and the government of Canada. Under government contracts with Anteon, the DHS purchases Green Cards and DOS Laser Visa BCCs; the DOD purchases Automated Manifest System cards; and the Canadian government purchases Permanent Resident Cards. Revenues in the most recent quarter were up 60% to $10 million versus $6.3 million in the same quarter a year ago. Earnings in the most recent third quarter were up 140% to $.10 versus a loss in the same quarter a year ago. Saba Software (SABA) is a provider of software designed to increase organizational performance through the implementation of a management system for aligning goals, developing and motivating people, and measuring results. Saba's suite of products address five key enterprise learning areas: sales and channel readiness, channel certification, customer education, and regulatory compliance. Saba recently acquired Centra, a leading provider of online learning and training solutions. In the company's latest reported second quarter, revenues increased 57% to $16.2 million from $10.3 million in the same period last year. Saba reported earnings per share of $.02 per share versus a loss in the same quarter of last year. Other stocks in the Current Portfolio include: Dawson Geophysical (DWSN) acquires and processes 3-D seismic data used in analyzing subsurface geologic conditions for the potential of oil and natural gas accumulation. The Company operates land-based acquisition crews primarily in the western United States. Data processing is performed by geophysicists at Dawson's computer center in Midland, Texas. ICU Medical, Inc. (ICUI), together with its wholly-owned subsidiary Budget Medical Products, Inc. is a leader in the development, manufacture and sale of proprietary, disposable medical connection systems for use in intravenous therapy applications. The company's intravenous connectors are designed to prevent accidental disconnection's of intravenous lines and to protect healthcare workers and their patients from the spread of infectious diseases such as Hepatitis B and Human Immunodeficiency Virus by significantly reducing the risk of accidental needlesticks. Kenexa Corp. (KNXA) provides software, services and proprietary content that enable organizations to more effectively recruit and retain employees. Kenexa solutions include applicant tracking, employment process outsourcing, phone screening, skills and behavioral assessments, structured interviews, performance management, multi-rater feedback surveys, employee engagement surveys and HR Analytics. Kenexa is headquartered in Wayne, Pa. This article highlights the commentary of James Oberweis Jr. for the Zacks.com audience. James Oberweis Jr. provides insightful analysis, market commentary, and favorite recommendations on a timely basis in "Oberweis Report" newsletter. Try it free for 30 days and see if you can improve your investment performance. Learn more about "Oberweis Report" and 30-Day Free Trial. And get immediate access to current issues and special reports. Click here now. Here's How You Can Profit from the Pros Find out what other leading experts are saying about the market. And what stocks they are recommending. For free. 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Chinese Telecom Has Room to Grow

Chinese Telecom Has Room to Grow by Peter Chua Mar 17, 2006 With the Asia/Pacific region expecting another year of high-growth expectations, we felt it would be a good time to check in with senior analyst Peter Chua, who covers a section of the telecommunications market in the region. Because your coverage deals with the telecommunications industry in the Asia/Pacific region, I wanted to ask you: how are things progressing in the Philippines (and elsewhere) with relatively new technologies like VoIP and 3G? The technology is ready, but what investors should pay attention to are the government regulations, which we feel are pro-consumer. For example, in the Philippines, the National Telecommunications Commission (NTC) just awarded 3G licenses and frequency spectrum in early January to four applicants, with possibly one more being contested by some of the non-winners. Currently, there are only three wireless services operators. The NTC is also in the process of crafting a competition policy to regulate competition among industry players. This policy would be written in favor of smaller players by imposing significant market power (SMP) obligations on dominant industry players. One proposed item is the unbundling of network elements that can be provided on a stand-alone basis, such as access lines, switching functions, etc. to promote efficiency by avoiding unnecessary duplication of investments. Another item is the requirement to publish access prices and interconnection agreements to prevent anti-competitive behavior. Do you see growing competition in telecom creating any headwinds in the Asia/Pacific region for the major players in the industry? Asia/Pacific -- aside from Japan -- can be divided into two camps. The first is the mature markets with high penetration rates, like Singapore, Taiwan, Hong Kong and Macau. These areas have 90% to over 100% penetration rate, which means some of their populations have more than one subscription plan. Therefore, they are expected to show slightly negative growth rates. On the other hand, there is still room for growth in China, India, Pakistan, Thailand, Indonesia, Vietnam and the Philippines. Definitely the most impressive in the group is China; it was reported to have added 58 million subscribers in 2005, and is still growing at some five million a month. By the end of 2006, the Information Industry Ministry is forecasting that 33% of China’s total population will possess a mobile phone, and this is still a long way from saturation. In your opinion, what is the best way for investors to play telecom growth in the region? An investor could choose to participate by investing in established handset makers or equipment manufacturers with significant exposure to the growth areas in the region. These would minimize concerns over accounting issues, corporate governance and management track records that direct investing would bring out. I noticed you recently released a research report on Philippine Long Distance Telephone Company (PHI). What insights does this company give to the Asia/Pacific market in general? The market here, just like its counterparts in the developed countries, will have to adapt to new technologies. The rate of progress will largely depend on government regulation or openness. The Philippines is part of the growing segment in the Asia/Pacific region, and there is a trend towards tapping the still-unconnected, mostly rural dwellers. These potential subscribers would respond positively to low handset prices and low-priced packages of prepaid load. Looking forward, how do you predict 2006 will be in terms of performance for Asia/Pacific telecom, specifically companies like PHI? There are signs of slowing subscriber growth and consequently pricing pressure as the industry combs the lower level of the socio-economic scale. For Philippine Long Distance Telephone Company (PHI), we expect 2006 to be a continuation of 2005 with profit growth coming from lower interest expenses and marketing cost rather than top-line increases. It will be a transition year as the company lays the foundation for future growth by paying down debt and investing in next generation technology. Peter Chua is a senior Zacks analyst covering a section of the telecommunications industry in the Asia/Pacific region. http://www.zacks.com/newsroom/commentary/?id=2773

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Sea Changes in the Housing Market

Sea Changes in the Housing Market by Mario Ricchio Mar 20, 2006 With evidence continuing to gather that the housing bubble is indeed over with, we wanted to find out what many investors do: "What now?" For more on the homebuilding market, we chatted with senior analyst Mario Ricchio for his outlook going forward. You've mentioned in the past that homebuilding companies ought to proceed with caution going forward. But that's not happening yet, is it? Despite a bevy of economic forecasts calling for a decline in 2006 new home sales, the builders ignore the warning and continue on a pace to put up a record supply of new homes this year. In January, housing starts rose to a record 2.27 million units, up 15% on a sequential basis, and the highest level since March of 1973. Some analysts disregard the January starts as a one-time boon attributable to abnormally warm weather conditions. We disagree with this assertion since January building permits, an indicator of future construction, rose almost 4% on a y-o-y basis to an annualized rate of 2.22 million units. Essentially, future construction activity is in-line with the starts seen in January. The ramifications of this oversupply amid declining demand conditions filters down to inventory levels. In January, the backlog of homes unsold rose to a record level of 528,000 – a 22% increase from the December level of 432,000 units. What do you see as the main risk factors for homebuilders in the next couple quarters? With affordability at the lowest level in 14 years, the homebuilders may not be able to push all this supply through the market. We are already seeing an inventory glut forming in the growing number of new homes unsold on the market. The inventory situation is set to worsen as record supply hits the market and demand falters. The demand slowdown thesis is a legitimate concern. Recently, KB Home (KBH) said that during the first two months of the year home order cancellations were up and net orders for new homes were below the year-ago levels. With home inventories at record highs, the big risk is that the builders resort to incentives to drive sales growth. As incentive use increases and price cuts appear, we expect a negative impact on industrywide gross margins. We believe the residential real estate market is on the cusp of a major transition from a seller's market to a buyer's market. In this new reality, the risk is that of a price decline. Buyers hold the bargaining power and can balk at higher prices with homes sitting on market for longer periods of time. In our view, the markets most susceptible to price decline are San Diego, Las Vegas and Miami. Will it be worse for condos or for single-family houses? Investors, or speculators, tend to gravitate towards the condo market more than the single-family home market. This makes the price decline potentially worse for condos as speculators begin to sell properties en masse. In the year 2005, investors accounted for more than 25% of purchases in Las Vegas, Phoenix, Orlando, Miami, and San Diego. In these same markets, we see the greatest risk of price decline as speculators dump properties. The first sign of investors exiting the market comes from the inventory numbers. In San Diego County, inventories have risen a whopping 82% compared to the same time last year. More worrisome: investors are not buying new units, as the number of canceled purchase agreements for condos and town homes rose 75%. In Sarasota, the number of condos on the market tripled to 273 units relative to the same time last year. Miami has also seen a record number of condos for sale, too. What should one make of all these speculators leaving the market? With housing prices having doubled in the last five years, investors appear satisfied in booking profits with future price appreciation potential limited. That speculators are leaving the housing market is evident in the rising number of canceled purchase agreements for condos in major metro markets, San Diego and Miami, and in the number of previous buyers unloading properties. The amount of speculator selling signals the housing appreciation will slow dramatically, if not decline, in the months ahead. With investors having made up such a large share of prior purchases, new buyers must step in to fill the void. The problem is that many first-time buyers are priced out of the market at current levels. This means a lower price level will be necessary to induce future demand. Many analysts are looking for a soft landing in housing prices. How do you see this unfolding? Homeowners have seen four consecutive years of double-digit price increases. To unwind this excess price appreciation will take years. Our 2006 forecast calls for flat, nationwide single-family home prices, and a 1%-5% price decline for condos in major metropolitan markets. For the next couple years, we believe buyers assume the bargaining power in the residential real e