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The mining equipment manufacturer made the Zacks #1 Rank Top Performers List today with a gain of more than 13%. Volume is also flexing with nearly 8 million shares changing hands, compared to the daily average of 1.9 million.

BUCY is one of the world's leading manufacturers of large-scale excavation equipment used in surface mining. Its machines are used throughout the world by customers mining copper, coal, oil sands, iron ore and other minerals.

The company is part of the machinery-construction/mining industry. Other names from this space on today's Zacks #1 Rank List include heavy hitters like Caterpillar, Inc. (CAT), Ingersoll-Rand plc (IR) and Joy Global, Inc. (JOYG).

Third Quarter

Bucyrus reported third-quarter earnings per share of $1.21 late yesterday, which beat the Zacks Consensus Estimate of 86 cents by nearly 41%. This marked its third straight quarter of better-than-expected profit, having amassed an average surprise of more than 25% in the period.

The result also easily improved on the year-ago result of 85 cents.

Meanwhile, sales improved to $675.8 million from $646 million.

In regards to original equipment sales, BUCY reported a decrease in surface mining due to a decline in electric mining shovel sales, but an increase in underground mining as all product lines contributed.

For aftermarket parts and service sales, surface mining advanced due to the Chilean market with an assist from the Canadian and Chinese markets, while underground mining also advanced thanks to increased longwall replacement projects here in the U.S. along with better sales in the Czech Republic market.

In a conference call, the company raised its revenue outlook for 2009 to between $2.6 billion and $2.63 billion, versus the prior estimate of $2.5 billion.

Earnings Estimates

Now that Bucyrus has announced a strong quarterly report, the 14 analysts that cover each this year and next are likely to revise their estimates higher. Luckily, quarterly expectations had been marching upward even before this report.

The Zacks Consensus Estimate for this year is at $3.52 per share, up nearly 3% from $3.42 over the past 2 months and up 1.1% from $3.48 in the past 30 days.

For next year, the Zacks Consensus Estimate is at $2.29 per share. That marks an advance of 9.6% in 2 months and 5% in 30 days.

Zacks Investment Research

The company will test run its 4G LTE network in six countries across Europe and Latin America. The outcome of the trials will help Telefonica to chalk out its next phase of network deployment strategy.

Telefonica will conduct 4G LTE trials during the next six months in multiple European countries such as Czech Republic, Germany, Spain and the UK, while the Latin American trials will be staged in Brazil and Argentina. The company has already conducted its first LTE trial in Madrid in April 2009, which has demonstrated encouraging throughput levels.

Telefonica has also announced network infrastructure and equipment vendors to facilitate the field testing. It has reportedly selected six technology providers: Alcatel-Lucent (ALU), Ericsson (ERIC), Huawei, NEC, Nokia Siemens Networks and ZTE.

Leading carriers across the world have adopted LTE as the base technology standard for 4G network upgrade initiatives due to its fast data transfer capability. LTE offers rapid downlink and uplink speeds that averages 100 megabits per second (Mbps) and 50 Mbps, respectively, which is competitive or faster than other leading 4G standards, including WiMax.

Telefonica has recently expanded its strategic alliance with the second-largest Chinese carrier China Unicom (CHU). This extended collaboration is expected to offer significant technological and operational synergies. Additionally, the companies are likely to collaborate in future technology upgrades, such as the development of 4G LTE technology.

By moving to the 4G LTE network, Telefonica will offer its customers super-fast mobile broadband experience, representing an encouraging opportunity to improve customer retention. The company hopes to offer peak network speed of up to 340 Mbps in ideal conditions. Moreover, the ultra high-bandwidth multimedia data applications fostered by the 4G LTE network will boost revenue per user through increased minutes of use.

The leased facility at ProLogis Park Ostrava is strategically located close to the Ostrava city center – a premier administrative and manufacturing hub in the country. The site provides immediate access to major centers of commerce in the region through a highway network and Ostrava International Airport.

Geis Logistics will utilize the facility as a central warehouse for its operations in the Czech Republic and Slovakia and as a gateway to other Eastern European markets. Besides its prime location, the facility would also provide access to a talented pool of workforce that in turn could increase the company’s efficiency.

ProLogis owns and manages interests in over 2,500 distribution facilities, service offices and properties spanning 475 million square feet of space (including properties under development). As of June 30, it had 200.5 million square feet of directly owned industrial assets, 81.5% of which was located in North America, 14.2% in Europe and 4.3% in Asia.

In the Czech Republic, the company’s portfolio includes six distribution parks totaling 6.5 million square feet. ProLogis is currently monetizing its land bank to capitalize on its construction expertise for grade A sustainable facilities that uniquely satisfy customer requirements and attracts new businesses despite a softening economy.

The M2 flex machine gun is a belt-fed, recoil-operated, air-cooled, right-hand/left-hand feed compatible, crew-served arm and is suited for both offensive and defensive operations. The guns will be manufactured at the company’s Saco, Maine facility and its technology center in Burlington, Vermont will administer program management.

General Dynamics is likely to continue meeting investor expectations backed by strong revenue growth, margin expansion and cash flow generation. The recent acquisitions of Jet Aviation and Axle Tech, increased Navy spending and resumption of the Pander program for the Czech Republic will provide near-term upside potential despite apprehensions about defense spending under the Obama Administration, steady ramp down of BOWMAN program and the bleak Gulfstream scenario.

Shares of General Dynamics closed at $58.73 on Wednesday, trading at 9.2X trailing 12-month EPS. We maintain our Outperform recommendation on the stock.

Investors see Hungary becoming “significantly” less risky, allowing for further reductions in interest rates, central bank Deputy Governor Ferenc Karvalits said. “Over the past few months, international risk appetite has improved significantly, the risk assessment of the region and Hungary has stabilized, and this allows for further easing of monetary conditions,” Karvalits said in an interview on Kossuth Radio today.

The Magyar Nemzeti Bank lowered its benchmark interest rate by half a percentage point to 8 percent on Aug. 24 as it works to jolt the economy out of its worst recession in 18 years. The bank has shaved 1.5 points off the key rate since July as confidence rises in the first European Union nation to get a bailout. Hungary received 20 billion euros ($28.5 billion) in an emergency loan from the International Monetary Fund, the EU and the World Bank.

The country has a “good chance” to finance its budget deficit from the market and may not need the next installment of the IMF loan, Karvalits said. The forint weakened 0.3 percent against the euro and was trading at 268.82 at 7:48 a.m. in Budapest.

You see, one of the principal reason why Hungary is in such a mess is that as inflation shot up in the months leading up to the crisis Hungary chose to loosen its peg against the Euro. At the time, the rationale seemed wise albeit very bold. In an environment where investors were willing to take risk (i.e. hunting for yield) their objectives could be aligned with that of public authorities in the sense that the former got their yield whereas the latter got the nominal appreciation needed to keep inflation in check.

It did not work quite like that.

As the crisis hastened its grip on global markets and as its locus steadily moved to Eastern Europe the Hungarian Forint plummeted and lay bare the country's vulnerabilities in the context of balance sheet (on the liability) side denominated in Swiss Francs. The result was that Hungary crashed into a recession unable to tweak monetary policy downwards because of a fear that this would scythe the Forint and thus essentially bankrupt scores of households and companies. On the other, the government also had (and has) difficulties raising funds on international capital markets.

Now however things appear to have changed at least for a moment and Hungary's central seem poised to take advantage of the relatively benign market conditions to lower interest rates to support its ailing economy. The underlying idea is simple. If you believe that risk aversion is to stay low, the Forint should not be sensitive towards the lowering of nominal interest rates since after all the carry remains plentiful. In this way, my view is that Hungary's central bank is trying to claw back the control over monetary policy by locking in a lower interest rate for the Forint. The key question which we should be asking ourselves however is of course whether Hungary could actually be forced to raise rates further down the road to defend the Forint. Clearly, bets are being made inside Hungary at the moment that this is not the case.

This is very interesting in a practical as well as a theoretical sense as I have discussed for example in this post about carry trade and global monetary policy. More recently, Edward Hugh mused on the same topic (more or less) invoking the idea of the (eternal) triangle of monetary policy in an open economy context.

In the case of the Central Europe "four", Poland and the Czech Republic opted for maintaining their grip on monetary policy, thus accepting the need for their currency to "freefloat" and move according to the ebbs and flows of market sentiment. As it turns out this decision has served them remarkably well, since the real appreciation in their currencies which accompanied the good times helped take some of the sting out of inflation, while their ability to rapidly reduce interest rates into the downturn has lead to currency depreciation, helping to sustain exports and avoid deflation related issues.

The other two countries (Hungary and Romania), to a greater or lesser degree prioritised currency stability, and as a result had to sacrifice a lot of control over monetary policy, in the process exposing themselves to the risk of much more violent swings in market sentiment when it comes to capital flows. Having been pushed by the logic of their currency decision towards tolerating higher inflation, they have seen the competitiveness of their home industries gradually undermined, and as a consequence found themselves pushed into large current account deficits for just as long the market was prepared to support them, and into sharp domestic contractions once they were no longer disposed so to do.

Edward's account here is important since it alerts us to the fact that it was only at the very end that e.g. Hungary opted for float because it was believed that it would make the inflation problem go away. At that point however, the structural imbalances and essentially damage were already embedded in the system of course. Nevertheless, it is unequivocally the fact that Hungary, at the moment, is attempting to benefit from the relative benign market conditions which means that risk aversion remains relatively subdued.

Elsewhere in Market Land ...

If our little trip to Hungary suggests that risk is on, if only a little bit and potentially in the case of Hungary news elsewhere suggest that the waters are more choppy. Of course, none of this is earth shattering by any means of the word, but since much, if not everything, seems to be revolving around China at the moment it seems worthwhile to dwell at recent news on how China are expected to "tweak" its hitherto lax lending policies to skim the worst of the mounting bubble (quote below from Bloomberg).

China’s banking regulators are “tweaking” lending policies to remove “froth” from the system while growth remains the top priority for policymakers, according to Royal Bank of Scotland Group Plc. The goal is to manage risk exposure among banks and asset quality by checking lending from going into A-shares traded on the mainland and properties, Wendy Liu, Hong Kong-based head of China research at RBS ABN Amro, said in a report dated yesterday.

(...)

The banking regulator sent draft rule changes to banks on Aug. 19 that would require lenders to deduct all existing holdings of subordinated and hybrid debt sold by other lenders from supplementary capital, said the people, who have seen the document and declined to be named as the matter is private. This may cut lending by as much as 700 billion yuan ($102 billion), China International Capital Corp. said Aug. 24.

Of course, the main bias of the Chinese stimulus program and thus the authorities' objective remain one of promoting growth through the expansion of domestic investment and, one would assume, consumption. As RBS ABN Amro's Wendy Liu is quoted of saying; "policymakers have a far greater tolerance for asset-price appreciation over the medium term than before". That sounds about right to me even if I am no sage, at all, on China.

What is interesting in the case of the recent news from China was also the following piece by Bloomberg whose headline (Yen Strengthens as China Policy Concern Spurs Demand for Safety) makes a direct link between policies in China and risk sentiment in the market and thus also the movement of the Yen and the USD (remembering of course the narrative that repatriation of profits may ultimately be the main driver of the Yen at the moment).

The yen rose for a third day against the euro in the longest stretch of gains since July on concern Chinese production curbs would slow economic recovery, fanning demand for the relative safety of Japan’s currency. The currency gained versus major counterparts including the pound on speculation Japan’s exporters are repatriating earnings to take advantage of a new tax law. A government report today may show a faster contraction in the U.S. economy than previously estimated.

“We have talks from China cutting back expanding, trying to sort out the balance sheet and prevent too much reckless lending,” said Peter Frank, a London-based currency strategist at Societe Generale SA. “But domestic factors, like capital repatriation, are driving yen’s strength right now.”

Whether there is a history to be made here is debatable, but one thing is certain. China seems to have decidedly taken center stage in the global market discourse. Finally and essentially as a small footnote, yours truly took notice of the fact that despite the decidedly positive sentiment in the core of Europe at the moment on the back of the Q2 GDP print and upbeat confidence readings in Germany, aggregate retail sales continued their steady decline.

Whether all this signifies that risk is "on" or "off" I will allow the reader to decide for themselves. Personally, I am still bearish, but it is difficult to deny that the relative calm and positive environment that has prevailed since spring seems rather strong. I would expect sentiment to change once we return to "normal" in Q4 once the elections in Germany and Japan have been resolved and, more importantly, once OECD stimulus packages start to wane. Most importantly however, there is the situation in Southern and Eastern Europe still loom as the most likely harbringers of, if you will, black swans in which case risk almost surely would be off.

However on a GAAP basis, the company sank to a net loss of 87 cents per ADS due to large one-time charges. It lost 64 cents per ADS for a prepayment provision and another 31 cents for changes in fair value of conversion feature of convertible bonds.

Solarfun witnessed a 24.9% sequential rise to record net revenue in excess of $125 million. Photovoltaic (PV) module shipments rose to 64.3MW from 35.7MW in the first quarter. The spike in volumes came from higher PV module shipments and PV module processing services. Of this, Germany continued to account for the lion’s share, consuming 83% of the company's total PV module shipments during the quarter. Czech Republic, Australia, Korea and Spain accounted for 6%, 5%, 3% and 2%, respectively, of the module shipments during the same period.

The company had cash and cash equivalents of $72.4 million, working capital of $188.7 million and unutilized credit lines worth $84.9 million at the end of the second quarter. Solarfun continues with its capacity expansion programs. It plans to expand its current module capacity of 460MW to 510MW by the end of the third quarter of fiscal 2009. Over the long term, it plans to reach annualized module capacity of 700MW in fiscal 2010.

However, Solarfun saw lower average selling price during the quarter, which was down to $2.66 from $2.78 per watt in the first quarter on account of poorer market prices of PV products. The company sees the trend continuing for the rest of the year and warned that average selling prices could slide as low as $2 per watt. We maintain our market Neutral recommendation on the shares.

Yesterday, the company announced plans to open a new technology center of Excellence & Innovation in Cambridge, Massachusetts, and make certain organizational changes. Monster plans to add more staff to this center in the foreseeable future. As part of organizational changes, the company will eliminate approximately 160 positions within the product and technology group on a global basis.

Monster is now actively recruiting for approximately 80 new technical positions to be located in the Cambridge center, with potential capacity for adding a total of 170 new positions at this center. The company already has technological centers in Massachusetts, California, Czech Republic, Malaysia and New Delhi. Monster believes that Cambridge is a strategic location for its business.

The company‘s business has been adversely affected by the economic downturn. The weak global economy has significantly impacted hiring demand in the past eighteen months. Companies have reduced headcount, frozen hiring and delayed recruitment-related decisions. Many key industry verticals that Monster serves, such as financial services, retail, manufacturing and construction, have been severely hit and might not be able to renew their contracts with the company.

Moreover, we believe competition has intensified in the industry over the last few years and taken away market share from Monster. While Monster once had a dominant position, there are now several national competitors (i.e., CareerBuilder and HotJobs) as well as niche sites (i.e., Dice, JobsintheMoney, TheLadders, SnagAJob, etc.). A number of premium recruiters have reduced their use of job boards in favor of alternative social media sites such as LinkedIn.

In response to this downtrend, the company has justifiably been repositioning itself and making efforts to improve its technology in order to improve the experience for both job seekers and corporate clients. We maintain our Hold on the stock.