The index has two major components: the expectations about how the economy will look in the future, and the state of the economy currently. Relative to June, both sides fell fairly sharply, but remain well above the lows seen last winter. Consumers' perceptions about the future dropped to a reading of 63.2 from 69.2 in June, and are almost back to the 63.1 reading in April (but that was a huge improvement over March's reading of 53.5).

The perception of the current state of the economy also slipped, falling to 70.5 from June's 73.2. However, it remains above the readings last spring (even as recent as May's 67.7 reading). While relative to June, the expectations component was the culprit, it was also the reason for the improvement versus the preliminary reading for July, rising by 2.3 points while the current conditions part rose only 0.1 point.

Consumer sentiment is often greatly influenced by two factors: gasoline prices and how well the stock market is doing. So the decline from June is a little bit surprising given that gas prices are down and the market is up (although that could explain the improvement from the preliminary number).

I have never put much stock in these numbers, even though Consumer Confidence (to be released next week by the Conference Board, and usually very similar to the University of Michigan data) is one of the items in the leading economic indicators. The numbers are of very limited utility from a market perspective. Still, the reversal after several months of improvement in the overall index is a little disconcerting, especially in the face of lower gasoline prices and higher stock prices. It means that consumers plan to keep their wallets shut pretty tight (but they do not always act the way they say they will).

This is not good for more discretionary parts of the economy. Mid-range retailers like Macy's (M) and J.C. Penny's (JCP) would seem to me to be particularly vulnerable as the carriage trade caters to those that have money to spare, regardless of the state of the economy. Discounters like Family Dollar (FDO) and Big Lots (BIG) can benefit from former J.C. Penny customers trading down in a tough economy. However, it is not something to put a lot of weight on.

However, the company continues to surprise on estimates and post revenue growth. In April, the company surprised for the 7th consecutive quarter by a hearty 58.14%.

First quarter net income rose 33% to $19.5 million, or 68 cents per share, from $14.7 million, or 51 cents, in the year ago period. Analysts expected just 43 cents.

Sales were up 6% to $180.2 million from $170.3 million in the year ago period. However, the backlog continued to shrink, falling 23% to $307.5 million at the end of the first quarter compared to $398.8 million at the end of the fourth quarter of 2008.

The company is really feeling the slowdown in the energy industry in its orders which fell 30% year over year to $89.3 million from $126.9 million.

In April, Chart remained cautious about forecasting order activity in the second half of the year given the slowdown in the first quarter.

Consensus Estimates Holding for the Second Quarter

Covering analysts are also taking a wait-and-see type approach to estimates. Second quarter consensus estimates have been steady at 35 cents per share over the last 30 days.

Full year consensus estimates have moved higher by 2 cents in the last 60 days to $1.44 per share.

The company is scheduled to report second quarter results on July 30.

Value Fundamentals

Chart Industries is now a Zacks #2 Rank (buy) stock but was a Zacks #1 Rank (strong buy) when I reviewed it in Sep 2008.

It still has attractive value characteristics. The company is trading with a forward P/E of 13.4 and a price-to-book of 1.3. Chart Industries has a solid 1-year return on equity (ROE) of 20.11%.

Read the Sep 12, 2008 analysis.

Update to Previous Value Zacks Rank Buy Stocks

Canadian Natural Resources Limited (CNQ), the oil exploration company, saw production rise in the first quarter even as crude prices fell sharply. The company has surprised on estimates 3 out of the last 4 quarters. It is trading with a forward P/E of 12.4.Read the full article.

Helen of Troy Limited (HELE), the maker of personal care and household products, recently surprised on estimates as sales rose 11% for household good products like OXO and Good Grips. Analysts expect year over year earnings growth of 19.71% despite tough retail conditions. Read the full article.

Middleby Corporation (MIDD), which makes equipment for commercial food processing, has surprised on estimates 3 out of the last 4 quarters by an average of 20.96%. The company has a PEG ratio of just 0.63. Read the full article.

Natural Gas Services Group, Inc. (NGS), a provider of compressors to the natural gas industry, has surprised on estimates 4 quarters in a row by an average of 18.70% despite difficult economic conditions as natural gas prices have plunged. The company is trading with a forward P/E of 12.66. Read the full article.

Zacks Investment Research

Chicago, IL – July 17, 2009 – Four free stock picks are being made available today on Zacks.com. The industry’s leading independent research firm highlights one Zacks #1 Rank Strong Buy or a Zacks #2 Rank Buy stock for each of the four main styles of investing: Aggressive Growth, Growth & Income, Momentum, and Value.

The four highlighted picks are: Jo-Ann Stores, Inc. (JAS), The Estee Lauder Companies Inc. (EL), TC Pipelines LP (TCLP) and Natural Gas Services Group, Inc. (NGS).
    
Today, Zacks is promoting its ''Buy'' stock recommendations. Four daily picks are offered free at http://at.zacks.com/?id=5607

Zacks #1 Rank Stocks have nearly tripled the S&P 500 since 1988, producing an average annual return of +26%. Performance has been notable even during volatile and down times. For example, during the last bear market, 2000-2002, the market tumbled -37.6% – but Zacks #1 Rank stocks gained +43.8%.

Here is a summary of today's selected stocks that are now highly rated by Zacks:          
       
Aggressive Growth – Jo-Ann Stores, Inc. (JAS)
Jo-Ann Stores, Inc. is expected to grow 30% over each of the next two years and recently topped analyst estimates.

Zacks Guide to Aggressive Growth Investing (free!): http://at.zacks.com/?id=4309

Growth & Income – The Estee Lauder Companies Inc. (EL)
The Estee Lauder Companies Inc. is seeing solid forecasts from analysts ahead of reporting next month for the fiscal fourth quarter and full year. For the year, the average earnings estimate of $1.43 per share is 4% above the 3 months-ago level.

Zacks Guide to Growth & Income Investing (free!): http://at.zacks.com/?id=4310
  
Momentum – TC Pipelines LP (TCLP)
TC Pipelines LP's share price has more than doubled over the last 7 months as energy prices have been on the upswing. Valuations, however, are still in check, trading in line with the overall market.

Zacks Guide to Momentum Investing (free!): http://at.zacks.com/?id=4311

Value – Natural Gas Services Group, Inc. (NGS)
Natural Gas Services Group, Inc., a provider of compressors to the natural gas industry, has surprised on estimates 4 quarters in a row by an average of 18.70% despite difficult economic conditions as natural gas prices have plunged. The company is trading with a forward P/E of 12.66.

Zacks Guide to Value Investing (free!): http://at.zacks.com/?id=4312

How to Regularly Access Picks from the Zacks Rank Discovery for Free:  http://at.zacks.com/?id=5607
 
Underlying the four free stock picks is a simple truth that first appeared in a Financial Analysts Journal article published in 1979. Leonard Zacks, a Ph.D. in Mathematics from M.I.T. found that "earnings estimate revisions are the most powerful force impacting stock prices."  Zacks #1 Rank is awarded to a stock when analysts sharply upgrade their estimates of what the company will earn.

Today, Zacks is promoting its stock recommendations by offering four daily picks free to those who register at http://at.zacks.com/?id=5607 

About Zacks

Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978 by Len Zacks. The company continually processes stock reports issued by 3,000 analysts from 150 brokerage firms.  It monitors more than 200,000 earnings estimates, looking for changes.

Then, when changes are discovered, they’re applied to help assign more than 4,400 stocks into five Zacks Rank categories: #1 Strong Buy, #2 Buy, #3 Hold, #4 Sell, and #5 Strong Sell. This proprietary stock-picking system continues to outperform the market by a nearly 3-to-1 margin. 
  
More Free Stock Picks

Each weekday, new Zacks #1 Rank or Zacks #2 Rank stock picks are released on the free email newsletter, Profit from the Pros. Investors are invited to register for their free subscription at http://at.zacks.com/?id=5642

Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.

Disclaimer: Past performance does not guarantee future results. Investors should always research companies and securities before making any investments. Nothing herein should be construed as an offer or solicitation to buy or sell any security.

Zacks.com

Aggressive Growth Stocks:
Contact: Bill Wilton
Phone: 312-265-9277

or

Growth & Income Stocks:
Contact: Alex Kolb
Phone: 312-265-9149

or

Momentum Stocks:
Contact: Michael Vodicka
Phone: 312-265-9226

or

Value Stocks:
Contact: Tracey Ryniec
Phone: 312-265-9232

Email: pr@zacks.com
Visit: www.zacks.com

Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.

Chicago, IL - June 29, 2009 - Zacks Equity Research highlights Strayer Education (STRA) as the Bull of the Day and Red Robin Gourmet Burgers (RRGB) the Bear of the Day. In addition, Zacks Equity Research provides analysis on Forest Laboratories, Inc. (FRX), ViroPharma (VPHM) and Pfizer (PFE).

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

Here is a synopsis of all five stocks:

Bull of the Day:

Financial results for the past thirteen quarters at Strayer Education (STRA) have been above expectations, and management's guidance for 2009 portends continued double-digit EPS growth.

The company benefits from positive pricing through annual 5% tuition increases with the 2009 tuition increase having been announced concurrent with the third quarter earnings report.

Despite the stock's valuation being in the upper-half of the historical range, the stock is rated a Buy.

Bear of the Day:

We believe shares of Red Robin Gourmet Burgers (RRGB) will continue to underperform both the larger market and the restaurant industry.

Red Robin's traffic began declining long before the onset of rising gas prices in October 2007, which began choking business in the casual dining sector -- a victim of poor site selection in new markets. In spite of their poor performance, the company has retained and even added to these sites as it repurchased 45 franchises since 2005.

Moreover, 2009 consensus EPS estimates are 10% higher than ours, and we think our estimate may prove aggressive if the economic slowdown is deeper or more protracted than we currently anticipate.

Latest Posts on the Zacks Analyst Blog:

Good News for Forest Labs

Forest Laboratories, Inc. (FRX) announced positive results recently from two global multi-center phase III studies which were conducted to evaluate the efficacy, safety and tolerability of ceftaroline for the treatment of community-acquired bacterial pneumonia (CABP).

The top-line data in each of the studies (FOCUS I and II) showed that ceftaroline met the primary endpoint of non-inferiority and achieved high clinical cure rates compared with ceftriaxone (84.3% vs. 77.7%). Additionally, ceftaroline was well tolerated with an adverse event profile similar to ceftriaxone. Earlier, Forest had reported positive phase III results on ceftaroline for the treatment of complicated skin and skin structure infections (cSSSI).

Ceftaroline is a novel, bactericidal, injectable, broad-spectrum cephalosporin which is being developed for the treatment of cSSSI and CABP. The anti-infective market, which is currently dominated by antibiotics, represents a significant commercial opportunity for the company.

Commonly prescribed anti-infective treatments include products like Vancocin from ViroPharma (VPHM) and Zyvox from Pfizer (PFE) among others. Improved clinical cure rates and a good side effect profile should help ceftaroline gain share once approved and launched. We estimate peak sales could be in the range of $250 - $300 million.

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

About the Bull and Bear of the Day

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

About the Analyst Blog

Updated throughout every trading day, the Analyst Blog provides analysis from Zacks Equity Research about the latest news and events impacting stocks and the financial markets.

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Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.

Continuous analyst coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.

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About Zacks

Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978 by Leonard Zacks. As a PhD in mathematics Len knew he could find patterns in stock market data that would lead to superior investment results. Amongst his many accomplishments was the formation of his proprietary stock picking system; the Zacks Rank, which continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros at http://at.zacks.com/?id=5509.

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Disclaimer: Past performance does not guarantee future results. Investors should always research companies and securities before making any investments. Nothing herein should be construed as an offer or solicitation to buy or sell any security.

Contact:
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312-265-9380
Visit: www.zacks.com

Red Robin's traffic began declining long before the onset of rising gas prices in October 2007, which began choking business in the casual dining sector -- a victim of poor site selection in new markets. In spite of their poor performance, the company has retained and even added to these sites as it repurchased 45 franchises since 2005.

Moreover, 2009 consensus EPS estimates are 10% higher than ours, and we think our estimate may prove aggressive if the economic slowdown is deeper or more protracted than we currently anticipate.Zacks Investment Research

U.S. average retail gasoline price, in dollars per gallon, plotted monthly using the data from the middle week of the month, January 2004 to June 2009. Data source: EIA.

Up until the fall of 2008, consumer sentiment had been closely following that roller coaster, with a sharp plunge in consumer sentiment accompanying the spiking gas prices associated with Hurricane Katrina in 2005, a second, broader drop in sentiment accompanying the second, broader bump in gasoline prices in 2006, and then a significant sustained decline in consumer sentiment as gasoline prices began their remarkable rise over 2007-08. The burden on consumers from that last run-up was in my opinion a key factor that precipitated the initial economic downturn over 2007:Q4 to 2008:Q3. The path of consumer sentiment is plotted as the solid line in the figure below. I've also plotted gas prices on an inverse scale (the dashed line in the picture below) in order to highlight visually the negative relation between sentiment and gas prices. The dashed line was calculated as 22/P for P the gasoline price in dollars per gallon, which you could interpret as how many miles you could drive for every dollar you spent on gasoline if you get 22 miles to the gallon.

Consumer sentiment versus miles per dollar. Solid line (left scale): Reuters/Michigan index of consumer sentiment, from FRED and MarketWatch. Dashed line (right scale): miles per dollar spent on gasoline, calculated as 22 divided by the price from the previous figure.

That strong relation between gas prices and consumer sentiment continued as the falling gasoline prices (or rising miles per dollar) between June and September 2008 lifted consumer sentiment back up. However, the subsequent financial scares and credit problems in the fall introduced a very dramatic new dynamic, causing consumer sentiment to drop back down to the June 2008 lows by November despite plummeting gas prices.

So how should we assess the likely consequences of the fact that gas prices have now come back up significantly from their lows of December? The Edelstein-Kilian regressions employed in my paper from a recent conference at the Brookings Institution imply that a 20% increase in energy prices would historically be followed within 2 months by a 15-point drop in consumer sentiment and a 1.4% decline (relative to trend) in real consumption spending. From that perspective, the 46% (logarithmic) increase in (seasonally unadjusted) gasoline prices since December is quite worrisome.

On the other hand, since those December prices were 88% (logarithmically) below the July 2008 peak, consumers should have been giddy in December and still be significantly more sanguine now than they had been last summer, if the only thing on their mind was the price of gasoline.

Only problem is, consumers were anything but giddy in December. Credit and employment challenges have weighed far more heavily than gas prices over the last 9 months, and are presumably far more important than gas prices for determining what happens over the next few months as well.

But whatever may come next on the credit front or for unemployment, the impressive spring spike in energy prices can not be a welcome development for American consumers.

Technorati Tags: macroeconomics, gasoline prices, consumer sentiment, economics

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Here are highlights from Thursday's Analyst Blog:

Gasoline Boosts May Retail Numbers

At best, retail sales remain at current levels until the economy finally improves. However, if gasoline prices continue to rise, consumers will find themselves with fewer dollars to spend on discretionary items, and that will put a lid on a recovery in consumer spending. Rising gas prices also sets the stage for disappointment in the second half of the year, as retailing stocks are already pricing in a second half rebound.

That said, there are retailers that should benefit from rising gas prices. Discounters, grocers, and wholesale clubs will see higher store traffic as more consumers seek out lower-cost consumables and staples. And those stores that sell discounted gasoline could see an even bigger increase in traffic.

Stocks to keep an eye on include Costco (COST), Wal-Mart (WFT) and Kroger (KR). All are defensive in nature and have gas stations at many of their stores.

Hotel Metrics Continue Sliding

In order to reach the projections of Smith Travel Research, industry operating metrics will need to improve substantially in the second half of the year. Given our expectation that the ongoing cuts to ADR will prolong and amplify the downturn, we believe that the results will ultimately come in far below the firm's projections.

As many investors in the hotel sector rely upon these industry operating metric projections, we believe that hotel stocks may be set for a correction if the operating data continues to deteriorate more than investors currently expect.

We continue to maintain our negative outlook on the group, and reiterate our Sell ratings on Starwood (HOT) and Marriott (MAR).

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About Zacks Equity Research

Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.

Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.

Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Subscribe to this free newsletter today: http://at.zacks.com/?id=2677

About Zacks

Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978 by Leonard Zacks. As a PhD in mathematics Len knew he could find patterns in stock market data that would lead to superior investment results. Amongst his many accomplishments was the formation of his proprietary stock picking system; the Zacks Rank, which continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros at http://at.zacks.com/?id=4580.

Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.

Disclaimer: Past performance does not guarantee future results. Investors should always research companies and securities before making any investments. Nothing herein should be construed as an offer or solicitation to buy or sell any security.

Contact:
Mark Vickery
Web Content Editor
312-265-9380
Visit: www.zacks.com

• Investor expectations were at extreme lows coming into 2009, and retailers were able to beat those low expectations. This enabled retail stocks to outperform the broader market.
• The upside on the bottom line was due primarily to cost cuts. Gross margins were still unimpressive.
• For most of the industry, sales were down significantly year-over-year. But, the decline in sales was at a slower rate than in the second half of 2008.
• Retailers that actually increased sales were Carter's (CRI), which sells baby apparel; O'Reilly (ORLY), which sells auto parts; and 99 Cents Only (NDN), which is a discount store.
• The retail stocks that outperformed within the group were the lowest priced stocks with the worst-looking balance sheets.
• The laggards were the defensive retailers like supermarkets and wholesale clubs and those with the best balance sheets.
• The stock market action was bullish for companies that reported good news, and it was forgiving of those companies with disappointing results or soft guidance.

• The primary theme on retail conference calls was caution. Management's second quarter guidance -- if offered at all -- was conservative. Several retailers indicated that sales in the first half of May was trending weaker than April.
• As a group, retailers do not expect the consumer to rebound in the second half of the year. Retailers are reducing inventory levels to accommodate a lower level of sales.
• There seems to be a general feeling that consumer spending will not return to levels of a few years ago anytime soon.
• Unemployment is climbing and wages are not. That is not a recipe for higher consumer spending.
• Year-over-year comparisons in the second quarter will be difficult because of the last year's stimulus checks.
• While gasoline prices are down 36.5% from last June, gas prices have increased 44% year-to-date, including 22% in the last month. Retailers will not perform well in an environment of rising gasoline prices.

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Here are highlights from Friday's Analyst Blog:

GameStop CFO: GME a Bargain

According to an SEC filing dated May 27, GameStop (GME) CFO David Carlson purchased 25,000 GameStop shares for $562,000, which comes out to an average price of $22.48. Mr. Carlson now owns a total of 194,828 GameStop shares.

That is a pretty substantial purchase, and it should put GameStop's recent sell-off into perspective. It was just last week that GameStop reported solid first quarter results, but disappointed investors with its second quarter outlook. Investors (mistakenly) viewed management's tepid second quarter outlook as evidence that even GameStop could not escape the reach of the slowdown in consumer spending. The stock sold-off hard on the news.

However, we would like to point out that GameStop's outlook had more to do with the video game release schedule than with overall economy. Video game publishers decided to push back the release dates for their most promising games until second half of the year. This left the cupboard bare for the second quarter.

Most of the time investors should be skeptical of a retailer that says to look past its current results and point to a second half recovery. This is not one of those times. The second half of this year the release schedule looks strong, with titles including Batman Arkham Asylum, Madden NFL 2010 and Modern Warfare 2. What's more, there is a good chance that Sony (SNE) finally cuts the price of its PlayStation 3, which would stimulate more demand for consoles and games.

AutoZone - Buying Opportunity

AutoZone, Inc. (AZO) is a leading retailer of automotive parts and accessories. The company has a significant cash flow and plans to expand its square footage growth. AutoZone has maintained a mid-single-digit square footage growth rate by opening new stores every year.

Falling gas prices are helping the company to improve same-store sales. In the second quarter of fiscal 2009, domestic same-store sales witnessed a 6% improvement compared to a 1.5% fall in the previous quarter and a 0.3% decline in the same quarter of fiscal 2008.

The company is aggressively repurchasing its shares. With significant cash on its balance sheet, the company can repurchase about 8% of its shares every year. Each 1% reduction in shares outstanding increases earnings growth by 3%. We rate the shares a Buy, with a six-month target price of $185.00.

Esterline Outlook Over a Cliff

Esterline Technologies (ESL) reported not-so-bad results for its second quarter of fiscal 2009. What was shocking to some, however, was its outlook for the balance of the fiscal year.

Before we get into the details of the quarter, let me explain what was disturbing about the Company's latest pronouncement. Last quarter, ESL's management opined that fiscal 2009 earnings would probably be in a range of $3.70 to $3.90 per share. This quarter, ESL's management lowered its EPS range estimate for the year to $3.00 to $3.20. The decline between the mid-point of those projections is over 18%.

One reason for the reduction: incoming orders in first quarter amounted to $370.2 million, while incoming orders in the second quarter totaled $306.1 million, a sequential decline of over 17%. Put another way, organic incoming orders in Q2-09 were off by $152.8 million, which is a year-over-year decline of over 19% from the $788.1 million booked in Q2-08. Any way you look at it, business is softening.

Westell New Management Assessed

Westell (WSTL), a provider of broadband access products and conferencing services, recently declared financial results. Earnings were essentially in-line with our earlier quarterly earnings forecast. The company also announced a new CEO and CFO, along with the appointment of two independent board members.

For full fiscal 2009, total revenue was $170.4 million, down 18.3% year-over-year. Gross margin was 30%, remaining flat with margins attained in fiscal 2008. Adjusted diluted EPS (excluding extraordinary items) equated to a loss of $0.16 per diluted share in fiscal 2009 compared to a loss of $0.04 per diluted share in fiscal 2008. At the end of fiscal 2009, Westell had approximately $46.1 million of cash and short-term investment and no outstanding debt on its balance sheet.

Want more from Zacks Equity Research? Subscribe to the free Profit from the Pros newsletter: http://at.zacks.com/?id=2649.

About Zacks Equity Research

Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.

Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.

Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Subscribe to this free newsletter today: http://at.zacks.com/?id=2677

About Zacks

Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978 by Leonard Zacks. As a PhD in mathematics Len knew he could find patterns in stock market data that would lead to superior investment results. Amongst his many accomplishments was the formation of his proprietary stock picking system; the Zacks Rank, which continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros at http://at.zacks.com/?id=4580.

Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.

Disclaimer: Past performance does not guarantee future results. Investors should always research companies and securities before making any investments. Nothing herein should be construed as an offer or solicitation to buy or sell any security.

Contact:
Mark Vickery
Web Content Editor
312-265-9380
Visit: www.zacks.com

Will Berkshire Hathaway (BRK.A) devotees hear words of hope and promise from Warren Buffet at the annual meeting in Omaha, Nebraska this weekend? It seems unlikely. Yet, America's most respected investor is expected to draw an estimated 35,000 investors to the Midwest city for the event.

Shares of Berkshire Hathaway have slumped 40% to their lowest level since Buffet assumed office, and the net worth of the company shrank by 9.6% in 2008. As the world sank deeper into the worst downturn since the Great Depression, Buffet had warned investors that the economy would be in "shambles throughout 2009."

"Most of the Berkshire businesses whose results are significantly affected by the economy earned below their potential last year, and that will be true in 2009 as well," Buffett wrote in his annual letter to shareholders on Feb. 28.

Buffet has admitted to making some investment blunders of late. Of the more notable ones would be the move to buy into ConocoPhillips (COP) at a time when gas prices were near their peak, just before energy prices slumped. Such moves not only cost his business empire several billion dollars, but also stripped Berkshire of its triple-A credit rating.

However, Berkshire still has strong credit and plenty of cash. Moreover, with two-thirds of its businesses in utilities and insurance, Berkshire is expected to be more resilient in volatile times. The 78 year-old top boss of the group also played a key role in steadying the economy by injecting $8 billion into Goldman Sachs (GS) and General Electric (GE), calling them "the symbol of American business to the world."

While everyone has been wondering about who will eventually succeed Buffet, as long as the Oracle of Omaha is still around, investors would value his insight more than ever during these troubled times.

Will Berkshire Hathaway (BRK.A) devotees hear words of hope and promise from Warren Buffett at the annual meeting in Omaha, Nebraska this weekend? It seems unlikely. Yet, America's most respected investor is expected to draw an estimated 35,000 investors to the Midwest city for the event.

Shares in Berkshire Hathaway have slumped 40% to their lowest level since Buffett assumed office and the net worth of the company shrank by 9.6% in 2008. As the world sank deeper into the worst downturn since the Great Depression, Buffett had warned investors that the economy would be in "shambles throughout 2009."

"Most of the Berkshire businesses, whose results are significantly affected by the economy, earned below their potential last year and that will be true in 2009 as well," Buffett wrote in his annual letter to shareholders on Feb. 28.

Buffett has admitted to making some investment blunders as of late. Of the more notable ones would be the move to buy into ConocoPhillips (COP) at a time when gas prices were near their peak, just before energy prices slumped. Such moves not only cost his business empire several billion dollars, but also stripped Berkshire of its triple-A credit rating.

However, Berkshire still has strong credit and plenty of cash. Moreover, with two-thirds of its businesses in utilities and insurance, Berkshire is expected to be more resilient in the recession. The 78 year-old top boss of the group also played a key role in steadying the economy by injecting $8 billion into Goldman Sachs (GS) and General Electric (GE), calling them "the symbol of American business to the world."

While everyone has been wondering about who will eventually succeed Buffett, as long as the Oracle of Omaha is still around investors will value his insight more than ever during these troubled times.

Zacks Investment Research
]]> http://www.straightstocks.com/stock-watch/buffett-calling-troubled-investors-zacks-tale-of-the-tape/feed/ 0 http://www.straightstocks.com/investing-in-energy-markets/natural-gas-energy-strategist-04222009/ http://www.straightstocks.com/investing-in-energy-markets/natural-gas-energy-strategist-04222009/#comments Fri, 24 Apr 2009 16:36:02 +0000 The Energy Report http://www.straightstocks.com/?p=43299 http://www.straightstocks.com/investing-in-energy-markets/natural-gas-energy-strategist-04222009/feed/ 0 http://www.straightstocks.com/market-commentary/innovative-technology-and-distribution-efforts-garner-greenchek-technology-inc-gchkob-speculative-buy-rating-from-beacon-equity-research/ http://www.straightstocks.com/market-commentary/innovative-technology-and-distribution-efforts-garner-greenchek-technology-inc-gchkob-speculative-buy-rating-from-beacon-equity-research/#comments Tue, 21 Apr 2009 19:22:37 +0000 QualityStocks http://Blog.QualityStocks.net/?p=15136 http://www.straightstocks.com/market-commentary/innovative-technology-and-distribution-efforts-garner-greenchek-technology-inc-gchkob-speculative-buy-rating-from-beacon-equity-research/feed/ 0 http://www.straightstocks.com/stock-watch/zacks-bull-bear-of-the-day-highlights-china-life-insurance-red-robin-gourmet-burgers-valueclick-general-motors-and-webcom-press-releases/ http://www.straightstocks.com/stock-watch/zacks-bull-bear-of-the-day-highlights-china-life-insurance-red-robin-gourmet-burgers-valueclick-general-motors-and-webcom-press-releases/#comments Wed, 01 Apr 2009 12:47:54 +0000 Zacks Market Commentaries http://www.zacks.com/stock/news/18714/Zacks+Bull+%26+Bear+of+the+Day+Highlights%3A+China+Life+Insurance%2C+Red+Robin+Gourmet+Burgers%2C+ValueClick%2C+General+Motors+and+Web.com+-+Press+Releases For Immediate Release

Chicago, IL - April 1, 2009 - Zacks Equity Research picks China Life (LFC) as Bull of the Day and Red Robin Gourmet Burgers (RRGB) as Bear of the Day. In addition, the analysts at Zacks Equity Research discuss the latest on ValueClick, Inc. (VCLK), General Motors Corp. (GM) and Web.com (WWWW).

Full analysis of all these stocks is available at: http://at.zacks.com/?id=2678

Bull of the Day

Headquartered in Beijing, China, China Life Insurance Company Ltd. (China Life, LFC) is China's leading life insurance company. As of December 31, 2008, China Life had about 716,000 exclusive agents, over 12,600 direct sales representatives, and nearly 94,000 non-dedicated agencies throughout China.

LFC's FY08 results were disappointing, stemming from a combination of external negative factors -- snow, earthquake, and the global financial crisis. However, despite growing competition as well as volatile capital market, the company seems to be in a better position than its peers due to its prudent investment strategy and beneficial geographical positioning.

Further, it has not yet successfully completed its conversion to higher-margin products, nor does its current valuation fully reflect its growth prospects, which we think have further improved in view of China's stimulus package, as also the regulator's decision to allow the insurers to invest directly in the infrastructure projects. Therefore, we maintain our Buy recommendation on the shares.

Bear of the Day

We believe shares of Red Robin Gourmet Burgers (RRGB) will continue to underperform both the larger market and the restaurant industry. Red Robin's traffic began declining long before the onset of rising gas prices in October 2007, which began choking business in the casual dining sector -- a victim of poor site selection in new markets.

In spite of their poor performance, the company has retained and even added to these sites as it repurchased 45 franchises since 2005. Moreover, 2009 consensus EPS estimates are 10% higher than ours, and we think our estimate may prove aggressive if the economic slowdown is deeper or more protracted than we currently anticipate.

Barring a prolonged recession, which is a distinct possibility -- we think RRGB's traffic should stabilize in late 2009 as it laps weak comps and unit growth is rationalized industry-wide. Indeed, industry capacity is currently contracting as unit growth is slowed, underperforming units are closed and more independents close.

Recent Analysis from the Analyst Blog

ValueClick Feels the Impact 

ValueClick, Inc. (VCLK) is feeling the impact of declining advertising spending as consumer confidence wanes. This has been reflected in the company's subdued outlook for Q109.

Despite a weak macro economic environment, ValueClick delivered strong Q408 results with improved margins, beating Wall Street as well as our expectation. In the long-term, we believe there is still significant growth opportunity ahead for the Internet advertising industry, but we don't expect meaningful improvement over our six month time frame.

GM Price Target Remains $0

We believe that the best chance for General Motors Corp. (GM) survival in the long run is to file for bankruptcy to rid itself of Unions, pension and health care issues, and separate dealerships from the rest of the company.

Unconvinced with the restructuring plan that GM presented on February 17, 2009, the administration forced CEO Rick Wagoner to resign and gave the company 60 days to formulate a viable restructuring program. President Obama warned General Motors unions and bondholders to push GM into bankruptcy in order to force them to accept serious cuts. A bankruptcy would impel bondholders to suffer big losses on $29 billion of unsecured debt.

Web.com with Huge Upside

Web.com (WWWW) is a leading provider of Web services for small and medium businesses (SMBs). The company uses a factory approach that it can leverage over thousands of customers.

The company is currently feeling a pressure from a slowing consumer market, which many of its customers cater to, but the long-term outlook still looks bright, and the company's new alliance with Chase Paymentech is expected to help its SMB merchants.

We maintain our Buy recommendation on WWWW with our six-month target price of $6.50. Our target price represents a multiple of 9.3x our new 2009 EPS estimate of $0.70 and 1.6x our new 2009 revenue estimate of $4.08.

Get the most recent insight from Zacks Equity Research with the free Profit from the Pros newsletter: http://at.zacks.com/?id=2649.

About the Bull and Bear of the Day

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

About the Analyst Blog

Updated throughout every trading day, the Analyst Blog provides analysis from Zacks Equity Research about the latest news and events impacting stocks and the financial markets.

About Zacks Equity Research

Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.

Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.

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In spite of their poor performance, the company has retained and even added to these sites as it repurchased 45 franchises since 2005. Moreover, 2009 consensus EPS estimates are 10% higher than ours, and we think our estimate may prove aggressive if the economic slowdown is deeper or more protracted than we currently anticipate.

Barring a prolonged recession, which is a distinct possibility -- we think RRGB's traffic should stabilize in late 2009 as it laps weak comps and unit growth is rationalized industry-wide. Indeed, industry capacity is currently contracting as unit growth is slowed, underperforming units are closed and more independents close. Zacks Investment Research

AutoZone has maintained a mid-single-digit square footage growth rate by opening new stores every year. Falling gas prices are helping the company to improve same-store sales.

We rate the shares a Buy, with a six-month target price of $185.00. This target price amounts to 15.9x our 2009 EPS estimate. Zacks Investment Research

Meanwhile, restaurants are beginning to enjoy decelerating food costs, lower overhead through cost cuts and kitchen improvements, industry-wide capacity rationalization as restaurants close under-performing units and slow expansion, and improved credit markets, which make franchise financing more available.

There is also abundant evidence, however, that the consumer may not be as resilient as recent stock price increases suggest. Rising unemployment (it's currently at 6.7% nationally and 8.4% in California), falling home values, negative personal savings, and diminished retirement portfolios all suggest that an upturn in consumer spending may be father away and the recession longer than past recessions. As a result, we think same-store sales at casual dining and upscale restaurants will continue to decline well into 2009 at average rates in the mid-to-high single digits, with flat to low-single digit average declines in the quick service sector as it benefits from a consumer trade-down.

Given the past month's multiple expansion, we expect that any earnings disappointments would be met with sharp stock price corrections and valuation multiple contractions. Earnings estimates have been revised significantly downward, however, lessening the potential for severe disappointments, as much of the near-term bad news appears baked into estimates. The severity and longevity of the recession will determine whether future downward estimate revisions are necessary, and currently there is no visibility to the economy in 2009.

With these uncertainties in mind, we recommend investing in companies that have solid balance sheets, are fully funded for the next 12 months, pay attractive dividends in no danger of being cut, and have catalysts for top-line growth.

OPPORTUNITIES

In the restaurant sector, we recommend companies that are actually benefiting from the recession as consumers "trade down" to cheaper eats. McDonald's (MCD) and Yum! Brands (YUM) are at the top of our Buy-rated recommendations that we expect to outperform the overall market and the restaurant sector over the next 6-12 months. MCD and YUM pay healthy dividends, currently yielding 3.3% and 2.5%, respectively, and we expect continued revenue and free cash growth, both domestically and overseas as the trade down phenomenon picks up Europe and rapid unit growth continues in Asia.

WEAKNESSES

Conversely, we expect restaurant companies with poor balance sheets and waning customer traffic to under-perform the overall market. Jamba (JMBA) is our strongest Sell recommendation. In the midst declining sales, rising food costs and heavy capital expenditures, Jamba faces a severe cash flow shortage that poses a risk of bankruptcy, in our opinion. To secure badly needed cash, in September the company borrowed $25 million in a two-year note that pays interest in cash and shares equivalent to 18.5%!
"JMBA" Free Stock Analysis: Buy? Sell? Hold?
"YUM" Free Stock Analysis: Buy? Sell? Hold?
"MCD" Free Stock Analysis: Buy? Sell? Hold?
Zacks Investment Research

Restaurants are typically early-cycle stocks, bottoming six-to-nine months before a turn in the economy. With that in mind, it appears that investors expect restaurant traffic to bottom in the June-to-September time frame. Bolstering that investment case are falling gas prices and the likelihood of aggressive stimulus packages from President-elect Obama, both of which should provide some relief for consumer spending pressures.

Meanwhile, restaurants are beginning to enjoy decelerating food costs, lower overhead through cost cuts and kitchen improvements, industry-wide capacity rationalization as restaurants close under-performing units and slow expansion, and improved credit markets, which make franchise financing more available.

There is also abundant evidence, however, that the consumer may not be as resilient as recent stock price increases suggest. Rising unemployment (it's currently at 6.7% nationally and 8.4% in California), falling home values, negative personal savings, and diminished retirement portfolios all suggest that an upturn in consumer spending may be father away and the recession longer than past recessions. As a result, we think same-store sales at casual dining and upscale restaurants will continue to decline well into 2009 at average rates in the mid-to-high single digits, with flat to low-single digit average declines in the quick service sector as it benefits from a consumer trade-down.

Given the past month's multiple expansion, we expect that any earnings disappointments would be met with sharp stock price corrections and valuation multiple contractions. Earnings estimates have been revised significantly downward, however, lessening the potential for severe disappointments, as much of the near-term bad news appears baked into estimates. The severity and longevity of the recession will determine whether future downward estimate revisions are necessary, and currently there is no visibility to the economy in 2009.

With these uncertainties in mind, we recommend investing in companies that have solid balance sheets, are fully funded for the next 12 months, pay attractive dividends in no danger of being cut, and have catalysts for top-line growth.

OPPORTUNITIES

In the restaurant sector, we recommend companies that are actually benefiting from the recession as consumers "trade down" to cheaper eats. McDonald's (MCD) and Yum! Brands (YUM) are at the top of our Buy-rated recommendations that we expect to outperform the overall market and the restaurant sector over the next 6-12 months. MCD and YUM pay healthy dividends, currently yielding 3.3% and 2.5%, respectively, and we expect continued revenue and free cash growth, both domestically and overseas as the trade down phenomenon picks up Europe and rapid unit growth continues in Asia.

WEAKNESSES

Conversely, we expect restaurant companies with poor balance sheets and waning customer traffic to under-perform the overall market. Jamba (JMBA) is our strongest Sell recommendation. In the midst declining sales, rising food costs and heavy capital expenditures, Jamba faces a severe cash flow shortage that poses a risk of bankruptcy, in our opinion.  To secure badly needed cash, in September the company borrowed $25 million in a two-year note that pays interest in cash and shares equivalent to 18.5%!

Americans consumed 142 billion gallons of gasoline last year. That means that when gasoline prices rose $1/gallon last spring, if consumers and fuel-using businesses had not reduced the quantity of gas they purchased, they would have had to reduce other expenditures by $142 billion. That's a bigger negative shock to spending power than the $90 billion that the federal government was trying to put back into consumers' hands through last spring's fiscal stimulus.

The run-up in gasoline prices hurt the economy not just by reducing consumers' spending power. The abrupt drops in spending on key sectors of the economy exerted significant effects of their own. As higher gas prices caused consumers to shun Detroit's gas guzzlers, U.S. production of motor vehicles and parts fell by 15% between 2007:Q4 and 2008:Q3 (BEA Table 1.5.6), subtracting an average of 0.6% from the annual GDP growth rate over the first three quarters of this year (BEA Table 1.5.2). The BLS reports that 135,000 fewer Americans were employed in motor vehicles and parts manufacturing in October 2008 compared with a year ago. And rocketing gasoline prices surely also contributed to plunging consumer confidence over the spring and summer.

Good news, though. The "cavalry has already arrived", according to the WSJ. U.S. national retail gasoline prices are now down $2 a gallon from their height this summer, erasing the -$140 billion drain of last spring and adding net +$140 billion in disposable income for consumers and firms relative to where we stood one year ago.

U.S. average retail gasoline price. Source: NewJerseyGasPrices.com.

But it's hard for me to believe that this is going to replace the negative developments of last spring and summer with a positive stimulus of the opposite sign. Those unemployed auto workers can't expect to report back to work any time soon. And although falling gasoline prices brought a temporary revival to consumer sentiment in September, Americans are now weighed down by other concerns as the economic deterioration sets in. The Michigan/Reuters index of consumer sentiment was back down to 57.6 in October and barely improved to 57.9 in November.

Reuters/Michigan index of consumer sentiment. Data source: FRED and MarketWatch.

Now that we're in our current mess, the whole affair looks to many as if it had an air of inevitability from the beginning. That, however, is not my view. How severe the financial bankruptcies and mortgage defaults ultimately prove to be will depend directly on how far real estate prices decline. The magnitude of the price decline will be bigger the more severe a recession we experience. The economy was continuing to putter along with positive growth despite a dismal housing sector for two years. That by itself wasn't enough to cause a recession. But when you put the depression in housing together with the negative effects of the oil price shock, it proved to be a potent combination.

My view is that we were teetering on the edge of a cliff last summer, and the oil price shock may have been just enough to tip us over the edge. As we did so, the financial disaster that had always been a potential became a reality.

The trouble is, now that the economy is in free fall, it's going to take more than $2 gasoline to pull us back up.

Technorati Tags: macroeconomics, autos, auto+sales, economics, recession, gas prices, oil shock

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