Highlighted stocks include Watson Pharmaceutical Inc. (WPI), NewMarket Corporation (NEU), Hormel Foods Corporation (HRL), Check Point Software Technologies Limited (CHKP), and Dresser-Rand Group Inc. (DRC).

Watson Pharmaceutical Inc. (WPI), a generic and branded drug manufacturer, didn’t disappoint when it reported third quarter results last week. The company easily surprised on Wall Street estimates by 18.37% and raised 2009 guidance.

Adjusted earnings per share were 58 cents per share compared to analysts’ estimates of 49 cents.

Revenue rose 6% to a record $667.4 million. The quarter was led by sales of generic products which rose 15% to $395.2 million over the year ago period. Generics had several new products, including potassium-chloride extended-release capsules.

The company is bullish about the rest of 2009.

“Based on our first quarter results and our view for the remainder of the year, we are raising our outlook for 2009, a clear signal that we remain confident in the growth prospects of each of our divisions, and are optimistic that execution on our business plans will continue to generate increasing value for shareholders,” said Paul Bisaro, President and CEO.

The company’s new 2009 guidance calls for adjusted earnings per share between $2.40 and $2.52 which is up sharply from its prior February guidance of $2.18 to $2.28 per share.

Value Fundamentals

Watson Pharmaceutical is now a Zacks #2 Rank (buy) stock. It is trading at 12.9x forward earnings.

Read the Apr 24 analysis.

Update to Previous Value Zacks Rank Buy Stocks

NewMarket Corporation (NEU), the specialty chemical additives manufacturer, saw a record first quarter as quickly declining raw material prices boosted operating profit. NEU has a PEG ratio of just 0.80. Read the Apr 28 analysis.

Hormel Foods Corporation (HRL), the food and meat products manufacturer, has surprised on estimates 5 out of the last 6 quarters. HRL is trading at 12.12x forward earnings. Read the Apr 29 analysis.

Check Point Software Technologies Limited (CHKP), the Internet security provider, recently surprised on first-quarter estimates by 7.69% as revenue rose 2%. It was the third surprise out of the last four quarters. Read the Apr 30 analysis.

Dresser-Rand Group Inc. (DRC), the maker of rotating equipment for the oil and gas industry, saw strong aftermarket sales in the first quarter as customers delayed new orders. DRC has a forward P/E of 13. Read the May 1 analysis.

Zacks Investment Research

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