(SUR) - CNA Surety Corporation - In seven out of the 10 quarters, the company produced a double-digit percentage surprise

CNA Surety Corporation (SUR), which was first featured as a Value stock on Mar 3, continues to exceed analysts’ earnings expectations. In fact, it has done so for 10 straight quarters by an average margin of 13.8%. The company has held on to its Zacks #1 Rank status and continues to trade at a discounted valuation. SUR has a price-to-book ratio of 1.7, compared to 4.8 for the market. Full Analysis CNA Surety Corporation is an insurance holding company that provides surety and surety-related products in the United States and international markets. The company's insurance subsidiaries are Western Surety Company and Universal Surety of America. SUR has a combined network of approximately 34,000 independent agents. Headquartered in Chicago, Illinois, CNA Surety Corporation is the largest publicly traded surety company. It has been over eight months since SUR made its debut as a Value stock. At the time, the company proudly held the status of a Zacks #1 Rank stock. Thanks to continually exceeding analysts’ earnings expectations, coupled with consensus estimates trending higher, SUR still holds this exclusive ranking. Furthermore, the company continues to trade at a discounted valuation. SUR beat the Street’s earnings estimate for 10 consecutive quarters by an average margin of 13.8%. In seven out of the 10 quarters, the company produced a double-digit percentage surprise. Earnings per share grew 20.1% over the past five years. On Oct 30, SUR reported profits for the third quarter of 2006 of $23.6 million, or 54 cents per share. The result easily surpassed the consensus estimate of 43 cents by 25.6%. Compared to the third quarter of 2005, earnings rose by an impressive 17.4%. Gross written premiums climbed 2.1% to $115.9 million, while net written premiums experienced a 2.0% jump to $105.1 million when compared to the prior-year period. For the first nine months of the year, profits soared to $61.1 million, versus $21.9 million for the same period in 2005. Gross written premiums increased 7.6% to $347.9 million and net written premiums jumped 11.9% to $316.2 million. The consensus estimate for 2006 currently sits at $1.86. Compared to the consensus of 30 days prior, it has risen 8.1%. Profit forecasts for 2007 are up 6.0% to $1.95 over the same period of time. SUR is currently trading at a valuation of 11.7x trailing 12-month earnings and at 11.2x current fiscal-year estimated earnings. The market, as represented by the S&P 500, is trading at a valuation of 17.5x trailing 12-month earnings and at 16.5x its current fiscal-year estimated earnings. The company has a price-to-book ratio of 1.7, compared to 4.8 for the market. Its return on equity of 17% tops the industry average of 13%. 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. | Blog Home| VitalStocks Home

Click for full article

(UTR) - Unitrin, Inc - exceeded earnings expectations in 11 out of the past 13 quarters by an average margin of 46.1%

Unitrin, Inc. (UTR) beat analysts’ earnings expectations in 11 out of the past 13 quarters by an average margin of 46.1%. UTR increased revenues and grew profits for three years running. Consensus estimates for this year and next have been on the rise. The Board of Directors recently expanded its stock repurchase program by six million shares. This Zacks #1 Rank stock has a current dividend yield of 3.7% and a five-year average dividend yield of 4.4%. Full Analysis Unitrin, Inc. is a $3 billion financial services company that specializes in property and casualty insurance, life and health insurance and consumer finance for individuals, families and small businesses. UTR exceeded analysts’ earnings expectations in 11 out of the past 13 quarters by an average margin of 46.1%. In eight out of the 11 quarters, the company managed to surprise by a double-digit percentage. On Oct 31, the company turned it up a notch and posted a 127.5% positive surprise for the third quarter. Earnings per share came in at $1.16, compared to the consensus estimate of 51 cents. Profits in the prior-year period amounted to 33 cents per share, marking a 251.5% year-over-year improvement for UTR. Total revenues climbed to $778.9 million, compared to $754.1 million for the third quarter of 2005. For the first nine months of the year, UTR’s profits rose 31.2% to $221.5 million from $168.8 million during the first nine months of 2005. Revenues climbed slightly to $2.31 billion from $2.29 billion. The company increased revenues and grew profits for three years running. The consensus estimate for 2006 currently resides at $3.84—up 29.7% when compared to the consensus of 30 days earlier. Profit forecasts for 2007 jumped 31.3% to $4.07 over the same period of time. Earnings per share are forecasted to grow 10.0% over the next 3-5 years, in line with the expected growth rate of the industry. During the third quarter of 2006, UTR bought back approximately 1.1 million shares of its common stock at a cost of $47.1 million. The company stated this was the highest level of repurchase activity since the year 2000. UTR expanded its repurchase program by six million shares on Nov 1. It had about 750,000 shares remaining under the previous authorization as of the first of November. Management has also enhanced shareholder value through dividend distributions. The Board of Directors recently declared a quarterly cash dividend of 44 cents per share. UTR has a current dividend yield of 3.7% and a five-year average dividend yield of 4.4%. 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. | Blog Home| VitalStocks Home

Click for full article

(SAY) - Satyam Computer Services, Ltd - Six analysts have raised their numbers for this year and next year

Satyam Computer has blown away earnings estimates in each of the past two quarters by an average of 33%. Six analysts have raised their numbers for this year and next year. Over the past month, this year's estimates have jumped 7.6%, while next year's have risen 8.9%. The stock is trading at 22.3x next year's estimates of 98 cents per share, in-line with its long-term growth rate of 22.63%. Full Analysis Satyam Computer Services, Ltd. (SAY) is a worldwide consulting and information technology (IT) company, providing end-to-end IT solutions that help customers re-engineer and re-invent their businesses, improve efficiency of their IT infrastructure, and gain a competitive advantage. Through its global delivery model, the company leverages a combination of its offshore technology centers in India, its offsite-site overseas facilities in Australia, Canada, China, Hungary, Japan, Malaysia, Singapore, United Arab Emirates, United Kingdom, and the United States. The company also offers Business Processing Outsourcing (BPO) services through its majority-owned subsidiary, Nipuna. These services include product support, a technical help desk, back-office transaction processing and customer care centers in the areas of finance and accounting, human resources, claims administration and document management along with research, analytics, and animation services to its portfolio. In terms of revenue, SAY is the fourth largest Indian software services company and continues to win new clients across several different vertical markets. Over the last five years, Satyam has shown significant growth, aided to a large extent by the global trend of outsourcing and off-shoring. Apart from maintaining a strong growth rate, Satyam has also been working toward reducing the risk of its business model. Satyam also stands to benefit from its expansion across the globe, as it builds more nearsite centers that can better enhance its businesses in Europe and Asia, where English typically isn't the first language. In a bid to enhance its global delivery capabilities, the company has decided to launch operations and open GDCs in Hungary (Budapest), and Brazil (Sao Paolo), which should bode well for the company's future growth. SAY has blown away earnings estimates in each of the past two quarters by an average of 33%. Six analysts have raised their numbers for this year and next year. Over the past month, this year's estimates have jumped 7.6%, while next year's have risen 8.9%. The stock is trading at 22.3x next year's estimates of 98 cents per share, in-line with its long-term growth rate of 22.63%. 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. | Blog Home| VitalStocks Home

Click for full article

(ATI) - Allegheny Technologies Inc - Consensus estimates for this quarter and next have risen 8.8% and 11.8%, respectively

Allegheny Technologies Incorporated (ATI), already featured twice in the past as a Growth and Income stock, continues to perform quite well. The company is still a Zacks #1 Rank stock due to its strong history of earnings per share surprises coupled with earnings estimates trending higher. ATI recently beat the Street’s third-quarter estimate by 17.0%. The company’s return on equity, a common measure of profitability, doubles that of the industry average—50% compared to 25%. Full Analysis Allegheny Technologies Incorporated is one of the world's largest and most diversified producers of specialty materials. The company operates production facilities, service centers and sales offices throughout the United States and in 17 other countries. ATI operates in three business segments: high performance metals, flat rolled products and engineered products We are featuring ATI once again as a Growth and Income pick. The company, which has been highlighted twice in the past, continues to perform quite well and most importantly is still a Zacks #1 Rank stock. When ATI was presented for a second time on Jul 13, the company had exceeded analysts’ earnings expectations for five consecutive quarters. In the two quarters that have since elapsed, ATI added two more positive earnings surprises to its string of beating the Street. Over the past seven quarters, its average margin of surprise was 22.6%. On Oct 25, ATI reported strong profitable growth in the third quarter. Earnings per share came in at $1.58, beating the consensus estimate by 17.0% and soaring past earnings of 87 cents in the prior-year period by 81.6%. Revenues were also up huge—ballooning 50% to $1.29 billion from $861.7 million in the third quarter of 2005. Chairman, President and Chief Executive Officer L. Patrick Hassey stated, “Most of our major markets remained strong and total operating margins continued to expand.” For the first nine months of the year, profits increased 68.0% to $404.8 million from $241.0 million for the first nine months of 2005. Revenues rose 33.6% to $3.54 billion from $2.65 billion. In addition to producing a steady stream of EPS surprises, ATI is still a Zacks #1 Rank stock because earnings estimate revisions have been trending upward. Consensus estimates for this quarter and next have risen 8.8% and 11.8%, respectively, over the past 60 days. Profit forecasts for this year and next are up 7.1% and 6.8%, respectively, over the same period of time. Earnings per share are forecasted to grow 15% over the next 3-5 years. The Board of Directors declared a quarterly dividend of 10 cents per common share of stock in mid September. The company is currently yielding 0.52%. ATI’s return on equity, a common measure of profitability, doubles that of the industry average—50% compared to 25%. 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. | Blog Home| VitalStocks Home

Click for full article

(GMRK) - GulfMark Offshore, Inc - topped analysts’ earnings expectations in five out of the past eight quarters by an average margin of 67.2%

GulfMark Offshore, Inc. (GMRK), a Zacks #1 Rank stock, recently beat the Street’s third-quarter earnings estimate by an impressive 80.7%. The company also posted record revenues for the quarter. Consensus estimates have shot upward since the company announced its third-quarter results. GMRK has a price-to-book ratio of 1.8, compared to 4.8 for the market. Full Analysis GulfMark Offshore, Inc., together with its subsidiaries, provides offshore marine services primarily to companies involved in offshore exploration and production of oil and natural gas. The majority of the company’s operations are conducted in the North Sea, with the balance in offshore Southeast Asia, Brazil, West Africa and India. GMRK topped analysts’ earnings expectations in five out of the past eight quarters by an average margin of 67.2%. On the five occasions in which the company surprised to the upside, two quarters produced triple-digit percentage surprises while the other three marked double-digit surprises to the upside. On Nov 1, GMRK reported third-quarter profits of $33.3 million, or $1.59 per share. The result crushed the consensus earnings estimate of 88 cents by 80.7%. With earnings of 63 cents per share in the prior-year period, the result amounted to a 152.4% year-over-year improvement. Revenues soared 43.0% to $75.8 million from $53.0 million a year earlier and marked an all-time high for the company. President and COO Bruce Streeter stated, “The outstanding quarterly performance is the direct result of being strategically positioned to take full advantage of a strong market and having been prepared for the anticipated seasonal impact.” For the first nine months of the year, profits ballooned to $59.1 million from $30.2 million for the first nine months of 2005. Revenues experienced a 19.3% jump to $181.9 million from $152.5 million. Consensus estimates have shot upward since the company announced its third-quarter results. Profit forecasts for this quarter and next increased 14.6% and 17.4%, respectively, over the past week. Estimates for this year and next year have risen 32.1% and 18.1%, respectively, over the same period of time. GMRK has placed an emphasis on improving and adding to its fleet of vessels. The company has nine owned vessels currently under construction. The last vessel is scheduled for delivery in 2008 and will bring GMRK’s fleet to 57 owned and 12 managed vessels. GMRK is currently trading at a valuation of 12.6x trailing 12-month earnings and at 10.6x current fiscal-year estimated earnings. The market, as represented by the S&P 500, is trading at a valuation of 17.5x trailing 12-month earnings and at 16.4x its current fiscal-year estimated earnings. The company has a price-to-book ratio of 1.8, compared to 4.8 for the market. Its return on equity of 17% slightly tops the industry average of 16%. 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. | Blog Home| VitalStocks Home

Click for full article

(ANF) - Abercrombie & Fitch - pollution control industry will benefit - How Democratic Wins Affect the Market, With Zacks Investment Research

From possible changes in negotiating drug prices for Medicare to possible future governmental regulations, we were interested in finding out how the shift in congressional power toward the Democratic Party will affect the overall stock market. Zacks writer Mark Vickery spoke with Senior Market Analyst Charles Rotblut, CFA and Director of Equity Research Dirk van Dijk, CFA for their impressions. MV: We have nearly all of the mid-term election results in. What are your initial thoughts? CR: Right now [Wednesday] we’re having sort of a “sell on the news” reaction, as people were expecting Democrats to win the House. There is a little uncertainty in the Senate with Virginia still undecided, and that looks to be a definite recount situation. Obviously, the balance of power in the Senate rests on how this comes out. DvD: I agree, and I think Virginia could be going on for a long time. Because if the Senate goes Republican or winds up 50/50, then Dick Cheney will be spending a lot of time on Capitol Hill, where he will break all ties. But if Jim Webb can hang on to win in Virginia, we might see a very different story. MV: Which industries do you expect will be the big winners and losers? DvD: I think the pollution control industry will benefit from a lot more emphasis on issues like global warming than we had previously. Also, if we get a minimum wage increase passed, one really obvious beneficiary will be the teen retailers, like Abercrombie & Fitch (ANF). Because although quite a few heads of households are working at or near minimum wage, an awful lot are also suburban kids. For them, this is purely discretionary income that will go get spent at the mall. As far as losers, I see tougher times ahead for the pharmaceuticals industry. We are likely to see a big effort to make the federal government able to negotiate prices for the new Medicare prescription drug plan, which could save the government tens of billions of dollars over the next several years. This will come right out of the hide of companies like Pfizer (PFE) and Eli Lilly (LLY). CR: Democrats are likely to try and change laws to have more drugs imported from Canada. We’re already seeing a trend going on with major insurance HMOs pushing for the increased use of generics, and we’ve seen all kinds of brand-name prescription drugs come off-patent and cause increased competition from the generic drug companies. But some of these reactions we’re seeing in the market actually reflect underlying trends already going on outside the political spectrum; attributing them purely to politics might just be an easy place to lay the blame for a stock that might be declining. MV: How do you see the energy industry being affected by the changes to congressional power? CR: Certainly you should see some type of change – or at least a push for a change – in energy policy. This should have a net benefit for companies more focused on alternative fuels. But even if we see more of a push toward more environmentally friendly policy, it’s important to remember that the underlying factors supporting oil remain. Nigeria is still having problems, the Mid-East is still uncertain, and even with the Democrats in control of one or both houses of Congress, the simple fact is that the Bush administration still controls Iraq policy to large extent. And a lot of what’s going on in Iraq is out of U.S. control completely. So macro factors affecting oil should keep prices high, which is a net benefit for oil companies. DvD: I don’t expect we’ll see on the energy front anything like a windfall profits tax, but an awful lot of special tax breaks that energy companies have gotten in the past might be taken away. Will the Democrats be able to do that over Bush’s veto or maybe graft it onto some much larger packages, which would require some serious negotiation? At the margin, we might see some of that happen, but I don’t expect anything really radical like a windfall profits tax on the energy industry. Oh, and I think ANWAR is dead, too, by the way. MV: Are you expecting increased federal regulations with the increase in Democratic power? DvD: Again, anything like that would have to get past a presidential veto. But what we do have is an awful lot of regulations already on the books that have been totally unenforced, because those who have been put in charge of enforcement really have no desire to enforce them. Take the mine safety industry, for instance – a top lobbyist for the mining industry heads that up. People like that might get their feet held to the fire, and they might decide that it’s just easier to do their jobs. So I don’t think there will be any new regulations written, but we should see a lot more oversight of the Administration. CR: I think it’s likely we’ll actually see less regulation – really less laws, period – because I expect more gridlock in Congress, simply because there is likely to be more partisan bickering. We should keep in mind that we have a Bush White House that, from an ideological standpoint, is very much opposed to a Democratic Congress. I also think that Democrats coming in and trying to change too much too soon might suffer a backlash. For the Senate, regardless which side ends up in control, it’s going to be very evenly split. Also, new people elected to Congress tend to be more moderates than ideologues, on either side of the aisle. MV: Any other passing thoughts on what the affects of the midterm elections might be? CR: The question for the Democrats is, “Now that they’ve regained some power, what will they do with it?” I think they will need to choose their steps carefully to give themselves the best opportunity to win back the presidency in two years. This will be mixed in with the inklings of some Democrats who want to take advantage of their new power and get their agenda across. But my guess is we’re going to see mostly stagnation coming out of government instead of new policy. It should be interesting to see how things play out in the next couple years. DvD: With the decision on who controls the Senate still out, the Democrats currently have about one-sixth of the power in Washington. They could double that if they take over the Senate, and at that point I think you might see a little more advancement of the Democratic agenda. But without it, I think they’ve got enough power to block the Administration’s policies, but not enough to advance much of their own. Perhaps they’ll be able to better position themselves in 2008, but I don’t think they can just run roughshod and pass a whole laundry list of things they’d love to see get done. Realistically, they can only prevent those things the Administration wants that the Democrats are horrified by. Dirk van Dijk, CFA is the Director of Zacks Equity Research. Charles Rotblut, CFA is the Senior Market Analyst for www.zacks.com. 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 insights on key industries in the news along with their favorite stocks to buy and sell now. Zacks Equity Research Home Page | Blog Home| VitalStocks Home

Click for full article

Mettler-Toldeo (MTD) - 13 straight positive earnings surprise quarters

Background Mettler-Toledo is the world's largest manufacturer and marketer of weighing instruments for use in laboratory, industrial and food retailing applications. The company focuses on the high value-added segments of the weighing instruments market by providing solutions for specific applications. MTD also manufactures and sells certain related laboratory measurement instruments, with one of the top three market positions worldwide in titrators, thermal analysis systems, pH meters and lab reactors. Full Analysis Mettler-Toledo reported earnings for the Sep 2006 quarter on Nov 2. MTD announced EPS at $1.10 for the quarter, compared with 72 cents in the same quarter last year. The result was also a positive 36% surprise above the consensus earnings estimate. In fact, MTD has a habit of delivering positive earnings surprises, having done so the last 13 straight quarters. Technical Analysis For the year, MTD is up a rather modest (compared to most Momentum stocks) 35% while the S&P 500 is up only about 10.5%. This, too, is in character for MTD, as it has outperformed the general market for the last three full years. Anyone who questions the continued effect of a positive earnings surprise should look at MTD. When the company reported Sep earnings, the stock gapped higher into six-year highs the next day, and closed 10% higher at $74.90 on heavy volume. On Nov 8, MTD again closed at a new high of $76.67 on very heavy trading volume. In yesterday’s Momentum column we talked a bit about acceleration gaps and how important they are to the Momentum trader. Looking at the chart of MTD again illustrates this. The current uptrend in MTD is now over four years old. Yet powerful positive earnings surprises and explosive market action give proof that the best is yet to come. 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. | Blog Home| VitalStocks Home

Click for full article

(BWLD) - Buffalo Wild Wings, Inc - Seven analysts have raised their forecasts for this year

Buffalo Wild Wings has exceeded earnings estimates in 10 out of the past 11 quarters, with the other quarter meeting expectations. Seven analysts have raised their forecasts for this year, while six have done so for next year. Over the past month, this year's estimates have jumped 11% to $1.61 per share, while next year's numbers have increased 12% to $1.96 per share. Full Analysis Buffalo Wild Wings, Inc. (BWLD) engages in the ownership, operation, and franchising of restaurants in the United States. The company’s restaurants serve various food items, as well as domestic and imported beers, wines, and liquor. As of December 25, 2005, it operated 122 company-owned restaurants and 248 franchised restaurants. The stock got a huge boost from the company's outstanding third-quarter earnings report. BWLD said it earned 40 cents per share in the quarter, a full 29% ahead of the consensus estimate. It was also well ahead of the 28 cents the company earned a year ago. Total revenue increased 32.1% to $68.3 million, and company-owned restaurant sales grew 32.5% to $60.8 million. An important metric also showed nice growth. Average weekly sales for company-owned restaurants were $35,380 for the third quarter of 2006 compared to $31,361 for the same quarter last year, a 12.8% increase. Franchised restaurants averaged $42,964 for the period versus $40,149 in the third quarter a year ago, a 7.0% increase. Sally Smith, President and Chief Executive Officer, remarked, "Our top-line performance drove earnings per diluted share of $0.40, an impressive increase over prior year. We are extremely pleased with our strong sales, proving that our new advertising tag line YOU HAVE TO BE HERE(TM) is on the mark." Company-owned restaurants had 11.8% same-store sales and 12.8% average weekly sales volume increases, signs of our growing brand strength. Franchised locations also continued strong same-store sales at 6.4% for the quarter, with average unit volumes on pace to exceed $2.3 million for the year." BWLD has exceeded earnings estimates in 10 out of the past 11 quarters, with the other quarter meeting expectations. Seven analysts have raised their forecasts for this year, while six have done so for next year. Over the past month, this year's estimates have jumped 11% to $1.61 per share, while next year's numbers have increased 12% to $1.96 per share. The stock is trading at 27.2x next year's estimate of $1.96 per share, slightly above the long-term growth rate of 24.71%, giving the stock a PEG ratio of 1.10. 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. | Blog Home| VitalStocks Home

Click for full article

(SNX) - SYNNEX Corporation - Profit forecasts for this quarter and next are up 4.7% and 10.8%

SYNNEX Corporation (SNX), a Zacks #1 Rank stock, exceeded analysts’ earnings expectations in nine out of the past 11 quarters, most recently by 16.2%. The company managed to match estimates in the other two quarters. Consensus estimates have been on the rise. SNX has a price-to-book ratio of only 1.3, compared to 4.8 for the market. Full Analysis SYNNEX Corporation is a global information technology supply chain services company which provides a comprehensive range of offerings to original equipment manufacturers and value-added resellers. SNX makes a habit out of either matching or beating analysts’ earnings expectations. In fact, the company has done so every quarter since it went public in 2003. Over the past 11 quarters, SNX surprised to the upside on nine occasions by an average margin of 6.3%. On Sep 21, SNX reported third-quarter profits of $13.8 million, or 43 cents per share. In the prior-year period, the company’s earnings per share came in at 34 cents, marking a 26.5% year-over-year improvement. The result also represented a 16.2% positive surprise with analysts calling for 37 cents. Revenues jumped 14.4% to $1.59 billion from $1.39 billion in the third quarter of 2005. President and CEO Robert T. Huang stated, “I am pleased by our performance in the third quarter, especially considering the fact that each of our operating regions contributed to our sales and profit growth.” Consensus estimates have been climbing upward. Profit forecasts for this quarter and next are up 4.7% and 10.8%, respectively, over the past 60 days and reflect upward revisions by four analysts. Estimates for the full years of 2006 and 2007 have risen 5.3% and 6.0%, respectively, over the same period of time. Four analysts upped their estimates for both years. Earnings per share are projected to grow 12.0% over the next 3-5 years. Management expects fourth-quarter revenues between $1.67 billion and $1.72 billion and net income between $14.2 million and $14.9 million, or 44 cents to 46 cents per share. In the fourth quarter of 2005, revenues amounted to $1.59 billion while earnings per share came in at 40 cents. The company announced on Sep 11 that its wholly owned subsidiary, BSA Sales, LLC signed a definitive agreement to acquire Concentrix Corporation, which provides call center, database analysis and print-on-demand services to customers in various industries. Concentrix recorded revenues of about $15 million in 2005. Huang stated, “We look for acquisitions, like Concentrix, that will further strengthen our capabilities and service offerings.” SNX is currently trading at a valuation of 14.1x trailing 12-month earnings and at 13.5x current fiscal-year estimated earnings. The market, as represented by the S&P 500, is trading at a valuation of 17.4x trailing 12-month earnings and at 16.4x its current fiscal-year estimated earnings. The company has a price-to-book ratio of only 1.3, compared to 4.8 for the market. 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. | Blog Home| VitalStocks Home

Click for full article

(YUM) - YUM! Brands, Inc - 14 analysts submitted upward revisions over the past 30 days

YUM! Brands, Inc. (YUM) exceeded analysts’ earnings expectations for the past 15 quarters, most recently by 9.2%. Earnings per share are projected to grow 12% over the next 3-5 years. After reporting solid results for the third quarter, the company raised its full-year 2006 profit guidance. The Board of Directors announced a quarterly dividend of 15 cents per share and expanded its share repurchase program by $500 million in mid September. Full Analysis YUM! Brands, Inc. engages in the development, operation, franchising and licensing of quick service restaurants. Its restaurant brands comprise KFC, Pizza Hut, Taco Bell, Long John Silver and A&W All-American Food Restaurants. YUM is the world's largest restaurant company in terms of system restaurants with over 34,000 restaurants in over 100 countries. YUM’s history of beating the Street’s earnings estimate is truly remarkable. The company exceeded analysts’ earnings expectations for 15 consecutive quarters. Earnings per share grew 12.4% over the past five years. On Oct 11, YUM announced third-quarter profits of $230 million, or 83 cents per share. With analysts expecting 76 cents per share, the company produced a solid 9.2% positive earnings surprise. Total revenues grew slightly to $2.28 billion from $2.24 billion in the prior-year period. Profits increased 26% in China and the country now sports nearly 1,700 KFC restaurants—an increase of 18% over the same period last year. YUM stated that KFC is opening a new restaurant in China every day. YUM increased revenues and expanded gross margins over the past four years. The company grew profits for five years running. Strong growth from its China Division, coupled with double-digit growth from its Yum! Restaurants International Division, prompted the company to raise its full-year 2006 earnings per share guidance. YUM now expects profits of $2.89 per share, compared to its previous outlook that called for $2.83. Analysts responded to the company’s bullish guidance by revising their profit forecasts for 2006, with 14 submitting upward revisions over the past 30 days. The consensus jumped six cents to $2.90. For the full year of 2007, 15 analysts upped their earnings estimates. The consensus rose seven cents to $3.21. Earnings per share are projected to grow 11.7% over the next 3-5 years. The Board of Directors made two announcements on Sep 14 in an effort to enhance shareholder value. The Board approved a quarterly dividend of 15 cents per common share of stock. The company is currently yielding 1.0%. Also, an additional $500 million was added to YUM’s share repurchase program. Year-to-date the company bought back $853 million of its stock. YUM 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 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. 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. | Blog Home| VitalStocks Home

Click for full article

(GIVN) - Given Imaging, Ltd - The company reported third-quarter results that beat expectations by 150%

Given Imaging has met or exceeded estimates in seven out of the past eight quarters, with two of them surpassing a 100% surprise. After its rec ent quarter, next year's estimates have increased almost 10% to 34 cents per share over the past week. The stock is valued at 64.7x next year's estimates, above the long-term growth rate of 36%, giving the stock a PEG ratio of 1.80. Full Analysis Given Imaging, Ltd. (GIVN) engages in the development, manufacture, and marketing of diagnostic products for the visualization and detection of disorders of the gastrointestinal tract. Its principal product is the Given System, a wireless imaging system that uses disposable video capsules. The Given System comprises three principal components: the PillCam video capsule, a disposable, miniature video camera contained in a capsule, which is ingested by the patient; a portable data recorder and array of sensors that are worn by the patient; and a computer workstation with proprietary RAPID software for downloading, processing, and analyzing recorded data. The company reported third-quarter results that beat expectations by 150%. GIVN earned two cents per share, well above the loss of four cents that analysts expected. Management proceeded to raise 2006 guidance to between seven and 14 cents per share. Worldwide sales increased 21.2% to $24.0 million in the third quarter of 2006, compared to $19.8 million in the third quarter of 2005. Gross margin in the third quarter of 2006 was 74.8%, compared to 76.7% in the third quarter of 2005. "I am pleased with our third quarter results and, in particular, with record PillCam SB reorders which increased 30% over last year and were up 11% in the U.S. compared to the second quarter of this year. We believe this reflects substantive progress in focusing both our U.S. and international sales teams on PillCam capsule sales." "We are also encouraged by the growing reimbursement coverage for PillCam SB diagnostic procedures in several key European countries as well as the recent PillCam ESO reimbursement decision by Florida and Connecticut Medicare in the U.S.," said Homi Shamir, president and CEO of Given Imaging. After its recent quarter, next year's estimates have increased almost 10% to 34 cents per share over the past week. The company has met or exceeded estimates in seven out of the past eight quarters, with two of them surpassing a 100% surprise. The stock is valued at 64.7x next year's estimates, above the long-term growth rate of 36%, giving the stock a PEG ratio of 1.80. 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. | Blog Home| VitalStocks Home

Click for full article

(CT) - Capital Trust, Inc - The Board of Directors increased the company’s quarterly dividend twice over the past five months

Capital Trust, Inc. (CT), a Zacks #1 Rank stock, topped the Street’s earnings estimate in eight out of the past nine quarters, most recently by 11.7%. Consensus estimates for 2006 and 2007 have been trending higher. The Board of Directors raised the company’s quarterly dividend twice over the past five months. The company has a price-to-book ratio of 1.9, compared to 4.8 for the market. Full Analysis Capital Trust, Inc. is a finance and investment management company focused on the commercial real estate industry. The company originates, underwrites, structures, closes and manages real estate-related high-yield debt and other investments. CT is organized as a real estate investment trust (REIT). CT exceeded analysts’ earnings expectations in eight out of the past nine quarters by an average margin of 9.9%. On Oct 30, the company surprised to the upside by 11.7% when it reported third-quarter earnings per share of 86 cents. The Street was calling for 77 cents per share. Compared to profits of 64 cents per share in the prior-year period, earnings soared 34.4%. CEO John Klopp stated, “New originations topped $550 million, an all-time record, with 50% representing first mortgage and construction loans. Most important, our pipeline of investment opportunities has never been stronger and we are excited about our new initiative in Brazil.” Analysts’ optimism about the company’s future earnings potential continues to grow. Consensus estimates for this quarter and next are up 2.6% and 6.4%, respectively, over the past 60 days. Profit forecasts for the full years of 2006 and 2007 have risen 5.8% and 5.5%, respectively, over the same period of time. Earnings per share are forecasted to grow 10% over the next 3-5 years. Investors seeking additional income in the form of a dividend have been extremely satisfied with their investment in CT. The Board of Directors increased the company’s quarterly dividend twice over the past five months. On Jun 14, the Board declared a quarterly dividend of 70 cents per share, which represented a 16.7% increase when compared to its previous quarterly dividend. On Sep 15, the 70-cent dividend was upped 7.1% to 75 cents per share. CT has a current dividend yield of 6.9% and a five-year average dividend yield of 5.0%. CT is currently trading at a valuation of 13.4x trailing 12-month earnings and at 13.3x current fiscal-year estimated earnings. The market, as represented by the S&P 500, is trading at a valuation of 17.2x trailing 12-month earnings and at 16.2x its current fiscal-year estimated earnings. The company has a price-to-book ratio of 1.9, compared to 4.8 for the market. Its return on equity of 14% is in line with the industry average. 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. | Blog Home| VitalStocks Home

Click for full article

(WTS) - Watts Water Technologies, Inc - exceeded analysts’ earnings expectations for four consecutive quarters by an average margin of 16.2%

Watts Water Technologies, Inc. (WTS) beat analysts’ earnings expectations for four straight quarters, most recently by 19.6%. Consensus estimates for both 2006 and 2007 have risen over the past 60 days. Earnings per share are forecasted to grow 10.0% over the next 3-5 years. This Zacks #1 Rank stock is currently yielding 0.88% and its return on equity of 14% tops the industry average of 13%. Full Analysis Watts Water Technologies, Inc. designs, manufactures and sells various water safety and flow control products primarily for the water quality, water safety, water flow control and water conservation markets in North America, Europe and China. The company sells its products through wholesale distributors, do-it-yourself chains and original equipment manufacturers. WTS exceeded analysts’ earnings expectations for four consecutive quarters by an average margin of 16.2%. On Oct 31, the company posted third-quarter profits of 67 cents per share. The result represented a solid 19.6% positive surprise and an impressive 63.4% year-over-year improvement. Revenues ballooned 39.7% to $325.1 million from $232.7 million last year. Increased prices to cover higher costs for raw materials such as copper, coupled with higher sales of plumbing and heating products, fueled the company’s sales. Furthermore, WTS’s recent acquisitions also contributed to its growth. The company acquired Black Teknigas, Limited on Aug 14 and Calflex Manufacturing, Inc. on Jun 2. Black Teknigas has annual revenues of 8 million Euros, while Calflex Manufacturing, Inc. has $7 million in annual revenues. For the first nine months of the year, profits experienced a 40.4% leap to $55.6 million, while revenues rose 32.4% to $900.3 million versus the first nine months of 2005. WTS increased revenues for the past six years, expanded gross margins for the past four and grew profits for five years running. Consensus estimates for this quarter and next quarter have risen 7.0% and 9.1%, respectively, over the past 60 days. Profit forecasts for the full years of 2006 and 2007 are up 7.5% and 6.9%, respectively, over the past two months. Earnings per share are forecasted to grow 10.0% over the next 3-5 years. On Oct 31, the Board of Directors declared a quarterly cash dividend of nine cents per common share of stock. The dividend is payable on Dec 8 to stockholders of record as of Nov 27. WTS has a current dividend yield of 0.88% and a five-year average dividend yield of 1.2%. Management has been effective in building shareholder value, made clear by the company’s return on equity of 14%. This is slightly higher than the industry’s return on equity of 13%. 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. | Blog Home| VitalStocks Home

Click for full article

(NATI) - National Instruments Corporation - Five analysts have raised their forecasts for this year, while two have done so for next year

National Instruments has made a habit out of exceeding earnings estimates. The company has done so in eight out of the last nine quarters, with seven of them posting double-digit surprises. Five analysts have raised their forecasts for this year, while two have done so for next year. Over the past month, this year's estimates have jumped 3.5% to 88 cents per share. Full Analysis National Instruments Corporation (NATI) engages in the design, development, manufacture, and marketing of instrumentation software, and specialty computer plug-in cards and accessories. Its application software products include LabVIEW, LabVIEW Real-Time, LabVIEW FPGA, Measurement Studio, LabWindows/CVI, DIAdem, TestStand, MATRIXx, and SignalExpress that are used to create virtual instrumentation systems for general, commercial, industrial, and scientific applications. The company offers various software products for developing measurement and automation applications to meet the various programming and computer preferences. In addition, it provides TestStand, a test management environment for organizing, controlling, and running automated production test systems on the factory floor. National Instruments Corp. earned $18.7 million, or 24 cents per share, in its third quarter -- up 30% from $14.4 million, or 18 cents per share, last year at this time. The company brought in $164.1 million in revenue, a 16% increase over last year at this time when its revenue was $141.6 million. For good measure, the company also announced a dividend of six cents per share. "I am pleased with our strong performance in the third quarter, driven by strong revenue growth in software and record revenue for many of our hardware products," says NI CEO James Truchard. NATI has made a habit out of exceeding earnings estimates. The company has done so in eight out of the last nine quarters, with seven of them posting double-digit surprises. Five analysts have raised their forecasts for this year, while two have done so for next year. Over the past month, this year's estimates have jumped 3.5% to 88 cents per share. The stock is currently trading at 26.8x next year's estimates of $1.13 per share, slightly above the long-term growth rate of 20.33%, giving the stock a PEG ratio of 1.32. 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. | Blog Home| VitalStocks Home

Click for full article

(APOL) - Apollo Group - Paul Tracy, StreetAuthority Market Advisor newsletter

Paul Tracy, editor of the StreetAuthority Market Advisor newsletter, outlines the differences between real turnaround candidates versus the value traps that have little chance of recovery. Take a look at this featured expert’s commentary. Then read Tracy’s analysis of one of his corporate turnaround plays. FEATURE ARTICLE from October 31 Winners and Losers Not all corporate turnaround stories pan out. When once-great companies are unable to adapt to changing market conditions, they can eventually fail. A perfect example of this is Polaroid. The company's instant camera was tremendously popular in the 1970s, and Polaroid stock gained steadily throughout the decade. But the firm failed to adapt to new innovations -- digital cameras and other instant photography technologies eroded Polaroid's market. The company ultimately went bankrupt in 2001. Fortunately for investors, there are ways to separate the real turnaround candidates from the value traps that have little chance of recovery. While turnaround candidates certainly don't have to exhibit all of these traits to be successful, these are some of the key factors Paul Tracy and his team look for: Low Debt or Debt Reduction -- Companies with enormous debt loads generally have a much harder time turning around their operations. Significant debt burdens lead to high interest bills and less cash available to fund restructuring initiatives. In addition, companies with too much debt are more likely to go bankrupt, particularly when the economy slows down and overall business conditions deteriorate. When searching for turnaround candidates, Tracy and his team look for firms that already have relatively low debt loads. A good rule of thumb is to focus on stocks with debt-to-equity ratios (total debt divided by shareholder's equity) of less than 50%. Alternatively, if a firm does carry a higher debt load, then Tracy and his team prefer to focus on companies that have a viable plan for repaying their debt as part of their restructuring initiative. Carlos Ghosn, for example, made debt repayment the centerpiece of his turnaround plan; he started paying down debt almost immediately after joining Nissan. New Management Team -- Some companies, such as Apple Computer, have managed successful turnarounds without a management shake-up. But in many cases, a new management team is key to the recovery of fallen angels. Oftentimes older firms fall into a rut -- even quality, longstanding managers can fail to see new opportunities or adapt to changing conditions. For example, Nissan's management team clung to the traditional practice of lifetime employment even after it became clear that labor costs were too high for the company to survive. While the system promoted extreme employee loyalty and high quality in the 1980s, it wasn't compatible with the weak Japanese economy of the mid-1990s. A new management team with a fresh focus can often reinvigorate companies that have lost their way. In Nissan's case it took a total outsider -- a foreigner with limited business experience in Japan -- to see what changes needed to be made. Long Operating History -- The best turnaround candidates are often older firms with a long operating history. Such firms have proven that they have a successful, workable business model; most have simply lost their way in the short run due to mismanagement or a failure to adapt to new business conditions. By contrast, relatively new companies that are financially distressed or underperforming may simply not be solid, viable businesses. Such firms have not yet established their business models and brand names. Thus, it's much harder to know if less-established firms will successfully turn things around. Divestments -- Like Tyco, some of the best turnaround candidates are firms that divest or sell off underperforming business units. Sometimes ambitious management teams will enter ventures outside a company's core business. Expansion and business diversification aren't necessarily bad moves. But excessive expansion into unrelated business lines can divert management's focus away from its core business. And if a company's main business lines and products are ignored too long, then performance can clearly suffer. In addition, even the largest companies have only a limited supply of funding to invest in various business lines -- over-expansion can starve key product and business lines of precious capital. One of the easiest ways to turn around an underperforming firm is to sell off or simply eliminate these non-core businesses and unprofitable products. This allows a firm to re-focus attention and available capital on its most profitable markets. Cost-Cutting -- The best turnaround plans usually involve some degree of cost-cutting. In fact, cutting out unnecessary or unproductive costs is one of the fastest ways for companies to boost profitability. A key component in cost cutting usually involves a firm's labor force. Older firms often develop bloated labor costs and unnecessary overhead. By reducing employee counts or benefits, management can quickly trim these excessive costs. Meanwhile, some companies can cut costs and boost efficiency by redesigning manufacturing processes or simply refinancing debts. New Products, New Markets -- As companies mature and expand, they often come to saturate their core markets. Earnings and revenue growth tend to slow when this happens. But just because a company's traditional markets are maturing doesn't mean it can't grow. For example, under Ghosn, Nissan was able to expand aggressively overseas by designing car models to appeal specifically to American and European consumers. And in Motorola's case, the company reinvented itself as a designer of popular mobile telephone handsets rather than building its semiconductor chip business. Rapid expansion into this new market helped Motorola reignite its growth. With these points in mind, Tracy and his team recently spent countless hours combing the investment landscape in search of compelling corporate turnaround plays. In the text that follows, they profile one stock that fits the bill. Apollo Group (APOL) Business Overview Apollo Group runs the largest private university in the U.S. The company is best known for its University of Phoenix (UOP) unit, which offers both online and campus-based education to more than 320,000 students. In addition to the main UOP brand, Apollo targets younger students with its Axia division; students in this division can acquire an associate degree in a wide variety of course disciplines. Turnaround Plan Apollo was truly an impressive performer from 2000 through early 2004, returning roughly +1,000% over this period. But over the past two-and-a-half years, Apollo has stumbled. Specifically, the company has suffered from declining growth in new student enrollments, as well as a falling retention rate. Thanks to a string of negative surprises, shares of APOL have tumbled more than -65% from their early 2004 highs. But there's reason to believe APOL can turn around its business. The company has absolutely no debt, and while growth has slowed, APOL still generates more than $500 million per year in free cash flow. In addition, the company sports a near 30% operating margin. While growth may have stumbled, Apollo is still a highly profitable business. Moreover, APOL is taking some important steps to address its falling enrollment growth and faltering retention rate. First, the company has greatly stepped up its marketing and promotional efforts. At the beginning of January, APOL employed 3,500 "enrollment counselors" -- employees who help promote APOL's courses to students who have expressed interest. By the end of September, APOL had boosted its base of enrollment counselors to more than 4,300. In addition, APOL has stepped up its marketing on both Ad.com and Monster.com. These two sites are frequented by working adults -- the very demographic that Apollo and University of Phoenix target. On the retention front, Tracy and his team like APOL's long-term strategy with its Axia subsidiary. While the UOP division targets older adults, Axia is aimed at young adults that are 18-23 years old. Axia offers associate degrees at a much lower cost than a degree at University of Phoenix. APOL has found that nearly half of Axia students go on to enroll in UOP after completing their studies. This conversion rate is rising rapidly, thereby increasing the pool of probable students for University of Phoenix. Even better, more than 90% of Axia students who enroll in UOP go on to finish their degrees at UOP. This retention rate is far higher than the company average. Meanwhile, a recent management shake-up may also help breathe some vigor into Apollo's turnaround plan. APOL's President, Brian Mueller, was appointed to his role at the beginning of January. Mueller is heading up the company's turnaround plan, and Tracy’s team sees the management shuffle as another positive for APOL. This article highlights the commentary of Paul Tracy for the Zacks.com audience. Paul Tracy provides insightful analysis, market commentary, and favorite recommendations on a timely basis in "StreetAuthority Market Advisor" newsletter. Try it free for 30 days and see if you can improve your investment performance. Learn more about "StreetAuthority Market Advisor" 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. | Blog Home| VitalStocks Home

Click for full article

(PFM) - PowerShares Dividend Achievers - Don Dion, Fidelity Independent Adviser newsletter

Don Dion, editor of the Fidelity Independent Adviser newsletter, explains that investors have been satisfied enough with the news lately. Read this featured expert’s commentary to find out what he is talking about. Then discover Dion’s thoughts on oil prices, the housing market and the Fed. Afterward, take a look at his Portfolio Spotlight profile. Don’s Outlook from October 26 Click here to find out more! Investors have to be warming up to the Ben Bernanke era at the Federal Reserve Bank. For the third time in a row, the Fed under Bernanke chose not to raise interest rates. Sure it’s true that the hard-core optimists were hoping that the Fed might actually reduce rates to jumpstart the economy and support the housing sector. But this was a lot to expect. And the fact that the three major indices all posted modest gains after the announcement that rates were not changing shows that investors were satisfied enough with that news. The Dow Jones Industrial Average continued to lead the way, with an intra-day record high before closing above 12,134. More notably, 22 of the Dow’s 30 components were up yesterday. The Dow has been pushing its ceiling higher for the past two weeks, and the 12,000 barrier seems to have been broken with confidence. But the Nasdaq and the S&P 500 were also up yesterday and have been trending upward recently as well. Support for stocks appears to be solid and earnings so far in the third quarter have been satisfying, even though expectations were high. One area of concern may soon be oil prices. They were holding to levels under $60 per barrel, despite promises from OPEC that it was going to cut production. But yesterday, crude futures rose by more than $2 per barrel to $61.40 a barrel on the New York Mercantile Exchange after a weekly Energy Department report showed an unexpected drop in crude inventories. The spike in oil prices sent stocks such as ExxonMobil higher. Meanwhile the increase, combined with negative quarterly news, sent stocks such as General Motors and Boeing lower. Economic data will continue to play a role in investor confidence, but certain things are already factored into market prices. For example, there was little negative market reaction this week to news from the National Association of Realtors that existing home sales declined 1.9 percent, marking the slowest sales rate since January 2004. Apparently investors have already resigned themselves to the slowdown in the housing market and they have factored that into their decisions. The Fed is at a bit of a crossroads now. The slowing housing market has caused 30-year home loan rates to decline in recent weeks. But the banking and financial sectors can’t keep lowering rates to stimulate business without cutting into profits. If the economy starts to slow down, the Fed may have to act to reduce rates. That could help stocks, but a slowing economy won’t. Remember that it has been several months now that the yield on short- and long-term bonds has been basically flat, a condition that has led to recession in the past. The fourth quarter should be interesting, especially for retailers and other consumer segments, who depend on the fourth quarter to make or break their entire year. Portfolio Spotlight PowerShares Dividend Achievers (PFM) Any investor who has followed the stock market during the past half-decade knows that small- and mid-cap stocks have absolutely crushed large caps. Indeed, the Russell 2000 Index of small shares and the Russell Mid Cap Index posted annualized gains of 9.44% and 10.89%, respectively, during the five years through August 23. Meanwhile the largest stocks flat lined, with the Russell Top 200 Index of giant caps returning an annual average of just 2.41% per year. Furthermore, lower-quality stocks generally performed best during that period, as low interest rates and strong economic growth improved prospects for weak firms, helping their stocks—which had dramatically trailed blue chips during the late ’90s—earn higher valuations. Those market trends appear to have begun to change. Slower economic growth and rising interest rates make large, high-quality stocks more attractive than smaller, weaker firms, in part because blue-chip firms rely far less on short-term borrowing than their littler cousins. Big, strong companies also boast income streams that are diversified both geographically and by industry, helping them maintain growth when an economic expansion slows. Investors as a result tend to reward such stalwarts during the latter stages of an economic cycle. Stocks that throw off strong dividend payments become especially appealing during such an environment because the payouts provide a measure of protection against losses. Market analysts and pundits have predicted a return to blue chips for some time now, but May’s flight from risk and the volatility that followed appear finally to have kick-started that trend. The Russell Top 200 lost just 0.82% between May 9, when the market peaked, and August 23—while the largest 50 stocks gained 1.77%. Meanwhile the Russell Mid Cap Index fell 6.19%, and the Russell 2000 plunged more than 10%. PowerShares Dividend Achievers increases investors’ exposure to the market’s dividend-paying Goliaths. PFM invests in shares of firms that have increased their dividend payouts for at least the past ten consecutive years. That requirement restricts this exchange-traded fund to the stock market’s most financially powerful firms. Indeed, a look at its recent top five holdings—Exxon Mobil, General Electric, Citigroup, Bank of America and Procter & Gamble—confirms that shareholders here will gain exposure to the bluest of blue chips. PFM recently held a total of 319 stocks, with an average market capitalization of almost $65 billion. (Compare that to the $48 billion average market cap of stocks in the S&P 500.) Its dividend requirements typically focus the fund’s portfolio in the value box, since growth-oriented companies generally reinvest profits into their businesses rather than distribute funds to shareholders. As a result, the fund recently held three-quarters of its assets in value stocks, according to PowerShares.com. The dividend mandate also tends to lead to high concentrations in the financials, consumer staples and industrials sectors—recently 29.8%, 20.3%, and 12.1% of assets, respectively—with correspondingly low allocations to technology (3.3%) and consumer discretionary (6.1%) stocks. Those characteristics make PowerShares Dividend Achievers a terrific vehicle when large, defensive stocks lead the market. For example, the fund was flat between May 9 and August 24, even as the S&P 500 lost 2%. That said, the fund’s concentrations in various market-cap sizes and sectors make it a less-than-ideal core holding, so it is important to take that into account when selecting other solid funds to complete your asset allocation. This article highlights the commentary of Don Dion for the Zacks.com audience. Don Dion provides insightful analysis, market commentary, and favorite recommendations on a timely basis in "Fidelity Independent Adviser" newsletter. Try it free for 30 days and see if you can improve your investment performance. Learn more about "Fidelity Independent Adviser" 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. | Blog Home| VitalStocks Home

Click for full article

(MSFT) - (HPQ) - Charles Carlson, DRIP Investor newsletter

Charles Carlson, editor of the DRIP Investor newsletter, says there’s no denying that a number of tech stocks offer decent values. Find out what this featured expert has to say about renewed interest in large-cap stocks and the move to technology stocks. Then take a look at two profiles of companies that Carlson refers to as stand-out opportunities. The Last Word from October 27 Underlying this move to 12,000 in the Dow are some significant shifts in the market. One of those shifts is renewed interest in large-cap stocks. Charles Carlson expected this to happen this year given that large-cap stocks were especially cheap relative to small-cap stocks. Another shift is a move to technology stocks. Now Carlson knows he has never been a big bull on tech stocks. Quite frankly, it’s hard for him to get a handle on the business models of tech companies. Still, there’s no denying that a number of tech stocks offer decent values. Furthermore, Carlson thinks capital spending on technology will surprise people in 2007. And the move back into large-cap stocks should help some of the biggest tech companies. Of course, saying the time is ripe for a rebound in technology is one thing; choosing those stocks likely to benefit is quite another. To that end, four tech stocks stand out as opportunities for DRIP investors. Two of those stocks are profiled below. Two Tech Opportunities: Microsoft (MSFT) recently moved to a 52-week high, an encouraging sign for a stock that has been fairly dormant for the last few years. New products in 2007 should help revenue growth. Strong finances and continued earnings growth should fuel additional dividend growth. Microsoft’s direct-purchase program permits initial purchases directly with a minimum $1,000. However, the firm will waive the minimum if an investor agrees to automatic monthly investment via electronic debit of a bank account of at least $50. Hewlett-Packard (HPQ) recently captured the top spot in the world for PC shipments in the third quarter. The company has a lot of operating momentum, which should translate into healthy earnings gains. While the stock has given a good account of itself over the last 12 months, these shares still trade at a reasonable valuation of less than 16 times consensus fiscal 2007 earnings estimate of $2.47 per share. The stock is a buy at current prices. Hewlett-Packard’s dividend reinvestment plan requires ownership of at least 10 shares in order to enroll in the plan. If you buy the initial shares from a broker, make sure you get the stock registered in your own name, not the “street” name. Expect to pay the broker an additional fee to have the stock registered in your own name. Minimum optional cash investment in the plan is $50. This article highlights the commentary of Charles B. Carlson for the Zacks.com audience. Charles B. Carlson provides insightful analysis, market commentary, and favorite recommendations on a timely basis in "DRIP Investor" newsletter. Try it free for 30 days and see if you can improve your investment performance. Learn more about "DRIP 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. | Blog Home| VitalStocks Home

Click for full article