Company Description

Casey's General Stores, Inc. together with its subsidiaries, operate convenience stores under the Casey's General Stores name in the Midwest states. It has operations in Iowa, Missouri, Illinois Kansas, Minnesota, Nebraska, South Dakota, Wisconsin, and Indiana. The company was founded in 1959 and is headquartered in Ankeny, Iowa.

Earnings Projections are on the Rise

The company is watching analysts boost estimates ahead of reporting fiscal second quarter results in early December. For the year ending April 2010, the Zacks Consensus Estimate jumped from $2.19 to $2.21 per share in 1 month's time.

For the following year, analysts polled by Zacks are calling for earnings of $2.25 per share, up from last month's $2.21.

The second-quarter Zacks Consensus Estimate of 60 cents per share was increased from 57 cents over the past 90 days.

A Solid First Quarter

The company announced fiscal first-quarter results in early September. Earnings of 87 cents per share, exceeded the Zacks Consensus Estimate by 45% and topped the year-prior total. During the past 4 consecutive quarters, Casey's delivered an average upside earnings surprise of 17.5%.

The company also declared a dividend of $0.085 per share, which translates into a an industry-leading yield of 1%. The dividend was paid out on November 2.

Beating the Benchmarks

Fundamentally, Casey's is leading the industry. The company's return on equity (ROE) of 14% doubles the industry average of 7%. Its net profit margin of 2% tops the industry average of 0.44%.

Casey's has also outperformed technically lately as shares have doubled the market's return over the past 3 months. Zacks Investment Research

Company Description

Casey's General Stores, Inc. together with its subsidiaries, operate convenience stores under the Casey's General Stores name in the Midwest states. It has operations in Iowa, Missouri, Illinois Kansas, Minnesota, Nebraska, South Dakota, Wisconsin, and Indiana. The company was founded in 1959 and is headquartered in Ankeny, Iowa.

A Solid Quarter

The company announced fiscal first-quarter results in early September. Earnings of 87 cents per share, exceeded the Zacks Consensus Estimate by 45% and topped the year-prior total. During the past 4 consecutive quarters, Casey's delivered an average upside earnings surprise of 17.5%.

"Strong gas margins and enhanced profitability inside the stores were the primary reasons for the record quarter," said President and CEO Robert J. Myers. "Lower retail fuel prices also brought about significant relief in our operating expenses."

The company also declared a dividend of $0.085 per share, which translates into a an industry-leading yield of 1%.

The dividend is payable Nov 16 to shareholders of record on Nov 2.

Bullish Forecasts and Strong Momentum

The company is seeing higher Zacks Consensus Estimates and a share price surge after reporting. For the year ending April 2010, forecasts of $2.19 per share are up a penny over the past month and are 21 cents higher than the projections of 2 months ago. The most accurate Zacks Consensus Estimate is more bullish at $2.28 per share.

The Zacks Consensus Estimate for the fiscal second quarter stands at 60 cents per share, versus the 2 months-ago level of 57 cents.

Shares of CASY have more than doubled the market's return after reporting first quarter results. Zacks Investment Research

The Fowler Ridge joint venture is currently under construction on a 17,000-acre site, about 90 miles northwest of Indianapolis and is expected to be operational in the first quarter of fiscal 2010. The 200MW facility will produce enough electricity for nearly 60,000 homes.

The project's entire power output has already been sold under four, long-term 50-MW contracts. Three of these deals were signed with units of American Electric Power (AEP) and one with Vectren Energy Delivery (VVC) of Indiana for 20-year terms each. The project will use 133 wind turbines, each with the ability to generate 1.5 MW.

The Fowler Ridge II development is an expansion of Fowler Ridge I, a 400-MW wind farm that commenced operations in March this year. Together, the projects will form the largest wind farm in the Midwest, generating 600 MW, or enough clean energy to power about 180,000 homes.

Sempra Energy is a southern California-based energy services holding company involved in the sale, distribution, storage and transportation of natural gas. The company’s businesses are broadly divided into Sempra Utilities, Sempra Global and parent. Sempra Utilities consist of two California regulated public utilities Southern California Gas Co. and San Diego Gas & Electric. They service 6.2 million natural gas customers and 1.4 million electricity customers. These two businesses, together known as the California Utilities, serve customers throughout parts of central California, most of southern California, San Diego and southern Orange counties.

Sempra Global and parent consist of unregulated subsidiaries engaged in providing energy products and services Sempra Commodities, Sempra Generation, Sempra Pipelines & Storage and Sempra LNG. Sempra Pipelines & Storage operates global energy projects and serves 2.8 million power and gas customers, Sempra Commodities reflects 49% stake in the JV RBS Sempra Commodities with Royal Bank of Scotland Group (RBS), which trades and markets wholesale energy commodities in Asia, Europe, and North America, Sempra Generation operates power plants and provides energy related services and Sempra LNG develops, owns and operates receipt terminals for importing liquefied natural gas.

We are positive about Sempra Energy’s stable base of utility earnings along with expansion in its LNG terminals and renewable power projects in the Pacific Southwest. However, on account of volatility of the commodity business, tightening credit markets and pending regulatory issues, we reiterate our Neutral recommendation on the stock.

Steel Dynamics became the largest producer of ferrous scrap after acquiring Indiana-based OmniSource Corp. in 2007. The company believes that its scrap business will be profitable in full year, reversing losses of about $9 million in the first half of 2009. Significant improvements in processing volume and better margins due to higher facility utilization, better cost control and favorable pricing should help margins in the business.

The company is building a $235-million iron-making facility in Minnesota (Mesabi Nugget) in partnership with Kobe Steel of Japan. The project will produce a fully metalized iron-nugget product suitable for use as an alternative iron or scrap substitute. Steel Dynamics expects bulk of the iron output from this planned nugget plant to be consumed in its mini-mills.

The company did not provide any guidance for the fourth quarter, citing uncertainty in the market and continued weakness in non-residential construction industry. However, we believe Steel Dynamics will benefit from its relatively higher mix of flat steel.

The company has expanded its flat steel operation at the Butler plant in Indiana to 3 million tons and runs it at full capacity. Despite a weak long bars and beams market and extremely low utilization rate, Steel Dynamics was able to manage profit on the back of strong prices at this division.

Although the market for beams could remain particularly challenging for some time, we believe that the company is well positioned to take advantage when the economy recovers. Additionally, the Mesabi Nugget project should further reduce its already low cost structure. We maintain our Outperform recommendation on the stock.

Duke Energy issued senior notes totaling $500 million due in 2014 with a 3.95% coupon rate semi-annually and another $500 million due in 2019 with 5.05% coupon rate annually.

The company needs funds for its ongoing capital expenditures. Duke Energy is currently expanding its Cliffside Steam Plant on the border of Cleveland and Rutherford counties and a new plant at Edwardsport gasified-coal facility in Indiana.

The company is also investing to control carbon dioxide emissions from its coal-based plants. This is vital in the light of recent progress in the American Clean Energy and Security Act that stipulates stringent caps against such emissions.

Based in Charlotte, North Carolina, Duke Energy is a diversified energy company. It supplies electricity to nearly 4 million US customers. It has approximately 36,000MW of electricity generating capacity in the Midwest and the Carolinas. We have a Neutral recommendation on the shares of Duke Energy.

Company Description

Casey's General Stores, Inc. together with its subsidiaries, operate convenience stores under the Casey's General Stores name in the Midwest states. It has operations in Iowa, Missouri, Illinois Kansas, Minnesota, Nebraska, South Dakota, Wisconsin, and Indiana. The company was founded in 1959 and is headquartered in Ankeny, Iowa

Bullish Forecasts

The company is seeing higher Zacks Consensus Estimates ahead of reporting fiscal first-quarter results. During the past 3 months, forecasts of $1.97 per share climbed from $1.80 for the year ending April 2010.

For the following year, the Zacks Consensus Estimate was increased from $1.95 per share to $1.97 over the past 3 months.

The Zacks Consensus Estimate for the fiscal first quarter stands at 60 cents per share, versus the 3 months-ago level of 55 cents.

First quarter results are scheduled for release on September 9.

Record Results

The company's fiscal fourth-quarter and full-year report included record earnings for the year of $1.69 per share. Last year, Casey's earned $1.68 per share.

Fourth-quarter earnings of 31 cents per share topped the previous year's 28 cents but missed the Zacks Consensus Estimate of 36 cents.

In fiscal 2010, the company said it plans to increase same-store sales of gas, groceries and prepared food. The company also increase its number of stress by 4%.

Casey's hiked its dividend to $0.085 per share, which was paid out on August 17. CASY's dividend yield tops the industry average at 1.3%.

Solid Fundamentals

The company offers a return on equity (ROE) of 12.5%, surpassing the industry average of 10%. The company's net profit margin of 2% is ahead of the industry average of 1%. Zacks Investment Research

Volumes were more than a fifth lower in the industrial segment over the year-ago period, as softer economy has reduced the industrial volumes across the nation. Other utilities like Constellation Energy Group (CEG) and Dominion Resources (D), also reported sharp fall in industrial volumes in the quarter.
 
Tepid economy providing no growth triggers dragged down revenue to $3.2 billion from $3.5 billion in the year-ago period. AEP reiterated its fiscal 2009 outlook and expects EPS of $2.75 – $3.05. This is in-line with our expectation of $2.86 for the current fiscal year.
 
The company’s capital position remains stable with debt-to-capitalization steadily improving to 57.3% after the first half of fiscal 2009 from 63.1% after the end of the previous quarter. Also, with more than $3.5 billion available from revolving credit facilities, AEP has a strong liquidity position close to $3 billion after the first half of the fiscal year.
 
AEP is one of the largest public utility holding companies catering to approximately 5.2 million customers spread over 11 states.  We maintain our cautious Neutral recommendation on AEP.

In addition, Andersons is working on expanding the capacity at its facilities in Delphi, Indiana and White Pigeon, Michigan. The company said that each facility will increase its capacity by 750,000 bushels within the next few months. Andersons seeks to expand its presence in new markets through storage agreements, leases and acquisitions.

Apart from expanding its grain storage capacity, the company is focusing on increasing value-added proprietary products in the Turf & Specialty Group. Management believes that its proprietary product strategy will lead to continued growth for the group in 2009.

Going forward, Andersons expects the Grain business and Turf & Specialty Group to continue performing well. However, the company’s Plant Nutrient unit posted a loss in 2008 as well as the first quarter of 2009 due to sharp decline in fertilizer prices. Slumping global fertilizer prices resulted in a significant fall in the company’s inventory value leading to negative adjustments.

The other concern is impact of the general economic weakness on the company’s Rail and Retail groups. Due to reduced rail traffic, average utilization rate fell to 86.8% in the first quarter, compared to 91.1% in the final quarter of 2008.

Management noted that a significant portion of the total US rail fleet is idle, which suggests a further decline in the Rail Group's utilization rate. In the Retail group, Andersons is witnessing lower average sale per customer.

Finally, the economics of ethanol remains challenging. Andersons said the pricing relationship between corn and ethanol hurt the results of its equity investments in three ethanol limited liability companies.

On the brighter side, Andersons noted that some ethanol companies are shutting down or idling plants. While the industry has started responding to market conditions, we believe that it will take time to bring the market into balance.

We maintain a Hold recommendation on Andersons.

Company Description

The Anderson's is a diversified agribusiness company with interests in grain and plant nutrients, railcar leasing and repair, industrial products formulation, turf products, retailing and ethanol operations. The company has operations in 12 states and Puerto Rico as well as rail equipment leasing interests in Canada and Mexico.

Zacks Consensus Estimates Rise Ahead of Earnings

The Andersons is scheduled to report second quarter results next week on Aug 6. Ahead of the earnings report, Zacks Consensus Estimates have been rising.

In the last week, the second-quarter Zacks Consensus Estimate rose 5 cents to 90 cents with 1 out of 4 covering analysts raising.

The full-year Zacks Consensus Estimate jumped 7 cents to $2.14 per share.

The company used to provide earnings guidance but in its first quarter report it decided to not release a forecast for the year.

Increasing Grain Storage Capacity

The Andersons has recently been expanding its grain storage capacity with a strategy of serving more customers within the Eastern Corn Belt.

On July 29, the company announced it had added another 4 million bushels of capacity at two south-central Michigan facilities. It is also currently working on expanding capacity at facilities in Delphi, Indiana and White Pigeon, Michigan which, when completed in the next few months, will increase capacity at each facility by 750,000 bushels.

The additions will bring the Grain Division's total capacity to more than 101 million bushels.

ANDE Surprised in the First Quarter

Despite the tough economic conditions, The Andersons still beat the Zacks Consensus Estimate by 28 cents reporting earnings per share of 27 cents when the Zacks Consensus Estimate called for a loss of 1 cent.

Revenue, however, did drop to $697 million from $713 million.

The grain business was a positive in the quarter, as its operating income rose to $5.7 million from $2.2 million. Also seeing growth was the Turf & Specialty Group which saw revenue rise to $45 million from $40 million in the year ago period as turf products tonnage increased 13% year over year.

The Andersons Continues Dividend Tradition

On May 8, the company announced it would pay its 51st consecutive quarterly dividend of 8.75 cents which was payable on Jul 22 to shareholders of record as of Jul 1. It currently has a yield of 1.10%.

It has been paying dividends since it listed on the Nasdaq in 1996.

Value Fundamentals

The Anderson's is a Zacks #1 Rank (strong buy) stock. It is trading on the upper end of the value category, with a forward P/E of 15.6. But its price-to-book ratio is just 1.55. The company also has a stellar 5-year average return on equity (ROE) of 17.42%.

Zacks Investment Research

In fact, this Indiana-based auto components manufacturer increased profit from $7 million, or 4 cents per diluted share, in the first quarter, driven by cost reduction initiatives and alignment of manufacturing capacity to the reduced demand.

However, the profit was significantly lower than $293 million, or $1.49 per diluted share, reported a year ago. This was attributed to lower volumes, especially due to a steep decline in demand in the Engine and the Components segments.

Despite the deteriorating market conditions, Cummins has managed to generate significant positive cash flow ($181 million) during the quarter, and did not utilize any of its $1.1 billion credit facility.

Sales for the quarter were 37% lower at $2.43 billion. Sales plummeted 45% to $1.31 billion in the Engine segment, primarily due to sales declines in light-duty/RV (54%) and industrial (45%) vehicles. Sales slumped 41% in the Components segment to $502 million due to significant volume declines from OEM customers in North America and Europe.

Sales in the Power Generation segment fell 35% to $610 million due to poor performances in the commercial and consumer products markets. Distribution sales slashed 20% to $463 million as a result of unfavorable foreign currency exchange rate movements.

Cummins formed joint ventures (JVs) and partnerships with large automakers in emerging markets, including Tata in India, Dongfeng and Foton in China, and Kamaz in Russia. Income from JVs dipped 17% to $57 million due to significant declines in demand.

For 2009, Cummins continues to expect sales 30% lower than the previous year. These lead us to recommend CMI as Hold with a six-month target price of $37.00.

Company Description

Casey's General Stores, Inc. together with its subsidiaries, operate convenience stores under the Casey's General Stores name in the Midwest states. It has operations in Iowa, Missouri, Illinois Kansas, Minnesota, Nebraska, South Dakota, Wisconsin, and Indiana. The company was founded in 1959 and is headquartered in Ankeny, Iowa.

Record Results

The company recently released its fiscal fourth-quarter report, which included record earnings for the year of $1.69 per share. Last year, Casey's earned $1.68 per share.

Fourth-quarter earnings of 31 cents per share topped the previous year's 28 cents but missed the consensus estimate of 36 cents.

In fiscal 2010, the company said it plans to increase same-store sales of gas, groceries and prepared food. The company also increase its number of stress by 4%.

Casey's hiked its dividend to $0.085 per share, noting that it is payable August 17 to shareholders of record on August 3. CASY's dividend yield tops the industry average at 1.1%.

CASY has been trading ahead of market since reporting in mid-June, and stock is beating the market by more than 30% over the past year.

Bullish Forecasts

Analysts' earnings estimates for the year ended April 2010 are at $1.97 per share, above the 2 months-ago level of $1.80.

For the following year, analysts are calling for earnings of $1.97 per share, an increase from the 2 months-ago level of $1.95. Zacks Investment Research

Chicago, IL – July 9, 2009 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Colgate Palmolive (CL), China Mobile (CHL), ICICI Bank (IBN), Tele Norte (TNE) and Toyota Motor Corp. (TM).

Get the most recent insight from Zacks Equity Research with the free Profit from the Pros newsletter: http://at.zacks.com/?id=5513

Here are highlights from Wednesday’s Analyst Blog:

IMF Grows More Optimistic

While the U.S. is gaining share of the world economy relative to the other advanced economies, it is losing share to the developing parts of the world, most notably China and India. While the two emerging giants have not been immune to the world economic slowdown, they have held up much better than most.

This year the IMF expects China to grow 7.5% and for India to post growth of 5.4%. Next year, both are expected to see their growth accelerate to 8.5% and 6.5%, respectively. Without a doubt, that is much slower than they were growing a few years ago -- in 2007, China grew 13.0% and India grew by 9.4% -- but is still extremely healthy relative to everywhere else.

In other words, the pace at which they are picking up share of the world economy has actually accelerated during the downturn. In 2007, China grew 7.9% percent faster than the world as a whole (and more than that ex China), while this year it will (assuming the IMF projections are accurate) grow 8.9% faster. For India, the relative acceleration is even more significant, growing from a 4.3% lead in 2007 to a 6.8% lead this year.

This suggests to me that gaining some exposure to China and India in your portfolio is still a good thing to do. This can be done indirectly through buying U.S. multinationals such as Colgate Palmolive (CL).

China Mobile (CHL) might be a firm to investigate for exposure to China, and ICICI Bank (IBN) is a good way to get exposure to India.

The other two BRIC countries have not fared as well in the downturn, with Russia being particularly hard hit due to the decline in Oil prices from a year ago. It is expected to see a decline of 6.5% this year before rebounding with 1.5% growth next year. The IMF cut this year’s forecast for Russia by 0.5% relative to April, but raised its outlook pretty sharply by 1.0% for next year.

Brazil has held up relatively well in the downturn but it is not immune, with an economic contraction of 1.3% this year, then a rebound of 2.5% positive growth next year. Brazil can also be played through individual ADRs such as Tele Norte (TNE).

Toyota Gears Up on Highlander Plant

Toyota Motor Corp. (TM) is reportedly spending $500 million on retooling its southwestern Indiana plant (Princeton) for production of the Highlander sport utility vehicle. The total investment on this facility now rises to about $3.7 billion. The company, which is the largest automaker in the world in terms of sales and production, plans to begin production at the facility in October 2009 with 300,000 vehicles per annum.

According to the Associated Press, Toyota plans to spend $500 million entirely on acquiring new equipment at the Princeton facility. The company has no intention of spending on expansion or job creation at the facility. About 300 employees at the plant opted for voluntary retirement on payment of $20,000 and other incentives. The plant currently employs about 4,200 employees.

Last year, Toyota had announced major changes in its production mix on the back of changing consumer demand from large-size trucks to smaller vehicles. The production of Tundra full-size pick-up truck is planned to be shifted from the Princeton facility to the San Antonio plant in the second half of 2009.

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In the first quarter, Tenneco had reported adjusted net losses of $29 million or $0.61 per diluted share, compared with adjusted net income of $10 million or $0.20 per diluted share a year ago. Revenues were down 38% year-over-year to $967 million, on lower OE production volumes.

Earlier, Tenneco had stated that cash generation and strict cost management remain its top near-term priorities in the face of the global economic crisis. The company plans to lower its global salary costs by a minimum of 10% each quarter, equivalent to the reduction of salary cost by about $7 million each quarter during 2009.

Senior level executives would take a larger salary reduction. The company plans to downsize 1,100 positions, 500 salaried and 600 hourly, out of its 21,000 employees worldwide.

Tenneco’s total costs are coming down by about $30 million every year. Cost cutting has offset some of the negative impacts of higher raw material prices, particularly in Europe, where 12 facilities have been moved from Western Europe to Eastern Europe and an 11% reduction in headcount has been implemented. About 30% of the production now takes place in Eastern Europe.

Under the current global restructuring program, the company aims at closing three manufacturing facilities in North America – an elastomer plant in Milan, Ohio, and two OE emission control facilities in Evansville, Indiana and Emigsville, Pennsylvania. Internationally, the company is shutting down the Dunsborough engineering facility in Australia.

Tenneco is flexing operations at both its Cozad, Nebraska and Hartwell, Georgia OE ride control plants instead of completely shutting down these facilities. With these measures, Tenneco anticipates generating $58 million in annualized cost savings by the end of 2009.

Yet, what remains a matter of concern is that Tenneco’s fixed costs are about 40% of its sales. Pricing pressure from OEMs, weakening demand for aftermarket parts, and sizeable production cuts at General Motors (GMGMQ) and Ford (F) are the negative factors associated with the stock.

We expect the company to report net losses in the range of $1.50 to $1.55 per diluted share in the second quarter of 2009. Revenues are expected to slip about 20% to 25% year over year. We rate the stock a Hold and set a six-month target price of $11.50.

STATES WITH PROJECTED FY2010 BUDGET GAPS
State	FY2010 pre-budget	FY2010 mid-year gap	FY2010 Total	FY2010 Total % of Budget
Alabama	$1.2 billion	0	$1.2 billion	16.70%
Alaska	$1.3 billion	0	$1.3 billion	30.00%
Arizona	$4.0 billion	0	$4.0 billion	41.10%
Arkansas	$146 million	0	$146 million	3.20%
California*	$34.2 billion	$19.5 billion	$53.7 billion	58.20%
Colorado	$1.0 billion	$384 million	$1.4 billion	18.60%
Connecticut	$4.1 billion	0	$4.1 billion	23.20%
Delaware	$557 million	0	$557 million	17.60%
District of Columbia	$650 million	$150 million	$800 million	12.70%
Florida	$5.9 billion	0	$5.9 billion	22.80%
Georgia	$3.1 billion	$750 million	$3.9 billion	22.30%
Hawaii	$682 million	$297 million	$978 million	19.10%
Idaho	$411 million	0	$411 million	16.40%
Illinois	$9.2 billion	0	$9.2 billion	33.00%
Indiana	$1.1 billion	0	$1.1 billion	7.50%
Iowa	$779 million	0	$779 million	13.20%
Kansas	$1.4 billion	Yes, DK size	$1.4 billion	22.60%
Kentucky	0	$1.1 billion	$1.1 billion	11.30%
Louisiana	$1.8 billion	0	$1.8 billion	21.60%
Maine	$640 million	0	$640 million	21.40%
Maryland	$1.9 billion	Yes, DK size	$1.9 billion	13.60%
Massachusetts	$5.0 billion	0	$5.0 billion	17.90%
Michigan	$2.4 billion	0	$2.4 billion	12.00%
Minnesota	$3.2 billion	0	$3.2 billion	21.00%
Mississippi	$480 million	0	$480 million	9.60%
Missouri	$923 million	0	$923 million	10.30%
Nebraska	$150 million	0	$150 million	4.30%
Nevada	$1.2 billion	0	$1.2 billion	37.80%
New Hampshire	$250 million	0	$250 million	16.20%
New Jersey	$8.8 billion	0	$8.8 billion	29.90%
New Mexico	$345 million	0	$345 million	6.30%
New York	$17.9 billion	0	$17.9 billion	32.30%
North Carolina	$4.6 billion	0	$4.6 billion	21.90%
Ohio	$3.3 billion	0	$3.3 billion	12.30%
Oklahoma	$600 million	0	$600 million	10.50%
Oregon*	0	0	0	0.00%
Pennsylvania	$4.8 billion	0	$4.8 billion	18.00%
Rhode Island	$590 million	0	$590 million	19.20%
South Carolina	$725 million	0	$725 million	12.50%
South Dakota	$32 million	0	$32 million	2.90%
Tennessee	$1.0 billion	0	$1.0 billion	9.70%
Texas	$3.5 billion	0	$3.5 billion	9.50%
Utah	$721 million	$279 million	$1.0 billion	19.80%
Vermont	$278 million	0	$278 million	24.80%
Virginia	$1.8 billion	Yes, DK size	$1.8 billion	10.90%
Washington	$3.4 billion	$195 million	$3.6 billion	23.30%
West Virginia	$200 million	0	$200 million	5.30%
Wisconsin	$3.2 billion	0	$3.2 billion	23.20%
Wyoming	0	$32 million	$32 million	1.70%
Total	$143.2 billion	$22.7 billion	$165.9 billion	24.40%

This will lead to very drastic cuts in state budgets. Access to medical care by the poor will likely be one of the first things to be cut.

Education budgets will also probably be pared. This could be decreased spending on new textbooks, which would not be good news for publishers like McGraw-Hill (MHP) and Scholastic (SCHL).

Another area that is likely to be hit is new equipment at the municipal level. For example, I would not expect Oshkosh (OSK) to have a very good year selling new fire engines and snow removal equipment to municipalities.

Layoffs of state and municipal workers will simply add to the already high and rising unemployment rate. In short, a big part of the federal stimulus spending is being offset by (legally mandated) anti-stimulus actions at the state level.

As the graph shows, state fiscal problems tend to persist well after the recession is officially over. Indeed the problem is usually worse in the second or third year since by then the "rainy day funds" have already been used up.

Following the last recession, states collectively had their worst year in 2004 with a shortfall of $80 billion (or less than half what they face for fiscal 2010), which was well after the recession officially ended. Thus 2011, and possibly even 2012, will be a very lean year at the state level as well.

What is a Smart-Grid?

"Smart-grids" deliver electricity from suppliers to consumers using digital technology to save energy, reduce costs and increase reliability. Many global governments are promoting such a modernized electricity network as a means of increasing energy independence and reducing global warming issues.

An electricity grid is not a single entity but an aggregate of multiple networks and multiple power generation companies with multiple operators employing varying levels of communication and coordination, most of which are manually controlled.

Smart grids increase the connectivity, automation and coordination between suppliers, consumers and networks, which perform either long distance transmission or local distribution tasks. Transmission networks move electricity in bulk over medium-to-long distances, are actively managed, and generally operate from 400kV to 800kV over AC and DC lines.

Local networks traditionally moved power in one direction, "distributing" the bulk power to consumers and businesses via lines operating at 132kV and lower. This paradigm is changing as businesses and homes begin generating more wind and solar electricity, enabling them to sell surplus energy back to their utilities.

Efficiency Through Technology

Modernization is necessary for energy consumption efficiency; real-time management of power flows; and to provide the bi-directional metering needed to compensate local producers of power. Although transmission networks are already controlled in real-time, many in the US and European countries are antiquated by world standards, and unable to handle modern challenges such as those posed by the intermittent nature of alternative electricity generation, or continental scale bulk energy transmission.

According to Deloitte, in 2009, smart grid providers may represent one of the largest and fastest growing sectors within the "clean," green energy industry. Deloitte forecasts that electricity, as a percentage of total energy consumption, will increase from 9% in 1973 to 16% through 2009.

Additionally, they estimate that modern smart-grids offer approximately twice the efficiency, at 60%, as the average efficiency of the world's legacy electricity grids at  approximately 33%.

Finally, Deloitte estimates that the annual cost  of power outages and power quality disturbances in the U.S. approximates $180 billion.

Likewise, a recent study by the U.S. Department of Energy study estimates that smart-grid modernization of U.S. electricity grids with would save between $46 to $117 billion over the next 20 years.

Among other conclusions, Deloitte deduces through its smart-grid analysis that "[M]ajor manufacturers and utilities should explore partnerships with, and consider acquisitions of, smart energy companies."  Such is the case we now see with Duke Energy and Cisco.

Both Companies Known as Trail-Blazers

At the risk of over-stating the significance of this relationship, particularly for the traditionally staid, 100+ year old electricity industry, both Duke Energy and Cisco rank as consensus innovative leaders in their respective industries. Under terms of the agreement, Cisco seeks to develop and deliver to Duke Energy a state-of-the-art, industry-leading, end-to-end, power plant-to-customer, smart-grid network communications infrastructure.

Empirically speaking, U.S. support for smart-grid technology became federal policy with passage of the Energy Independence and Security Act of 2007. Subsequently, smart-grids received additional support with the passage of the American Recovery and Reinvestment Act of 2009, which appropriated $11 billion for the creation of a smart-grid.

Support from the Federal Government

As recently as January 2009, in his National Address, President Obama requested Congress to pass legislation including the development of new electricity "smart-grids."  On March 19, 2009, The Federal Energy Regulatory Commission (FERC) issued a proposed policy statement and action plan for standards governing the development of a smart-grid. Successful progress toward national implementation of smart-grids continues.

Upon completion, the new, "internet protocol-based open standards" architecture will replace Duke's existing, antiquated analog electric grid with a long-overdue, secure digital backbone infrastructure.

The resultant smart-grid, widely thought to be replicated by other leading energy utilities, will modernize some the most outdated infrastructure in the U.S. - electricity delivery systems - with secure, reliable and efficient data, networks and communications.

The collaboration project will ultimately update the delivery to, and use of electricity by, Duke's 11 million customers served in five states: Ohio, Indiana, North Carolina, South Carolina and Kentucky. Throughout the term of the project, and in subsequent years, Duke will install large-scale new smart-grid technology, including millions of electric and natural gas "smart meters," in addition to hardware and software for distribution.

"Smart meters" replace analog mechanical meters with digital meters which record energy usage in real-time. Smart meters provide a communications pathway extending from generation plants to electrical outlets and other smart grid-enabled devices.

Manifold benefits await Duke Energy and its customers.

The proposed modernized electric grid will:

• Build an 'Energy Internet', which will enable decentralized power generation, so that customers may be both energy clients and suppliers; allow supplier selection of power consumption to offer flexibility to energy consumers;
• Integrate solar and other renewable energy sources into the electric grid;
• Encourage consumers to actively participate in operations of the grid; improve electricity delivery, improve systems efficiency and reliability, increase energy independence, decrease environmental impact, and help customers reduce their energy consumption, strengthen grid security and resist attack;
• Provide higher quality power that will save money wasted from outages;
• Incorporate two-way digital communication to detect power outages and be readily inter-operable, upgradeable and scalable to new emerging technologies.

Going forward, Cisco plans to continue to deliver products and services to support this initiative serving a growing smart grid communications infrastructure market projected by Cisco to reach $20 billion annually over the next five years.

Duke Energy maintains a Street analyst consensus recommendation with a Buy-rated bias; an average long-term EPS growth rate of 4.2%, within a range of 2.0% to 6.0%, and a target price of $15.48 per share, within a range of $14.00 to $20.00 per share.

Cisco Systems boasts a Street analyst consensus Buy rating with an average estimated long-term EPS growth rate of 10.9, within a range of 2.0% to 20.0% and an average target price of $22.38 per share, within a range of $15.00 to $30.00 per share.

Yesterday, Wall Street responded with a yawn to Obama Administration's announcement that 10 of the largest banks could repay $68 billion of government bailout cash.  Although Treasury Secretary Geithner, appearing before the Senate Appropriations Committee, noted the repayment of the bailout money was a sign of "financial repair," stocks swung back and forth in a narrow range, signaling the much-expected announcement from the Treasury packed few surprises.  Technology stocks, buoyed by Texas Instruments' (NYSE:TXN) better-than-expected earnings and sales outlook, pushed Nasdaq higher while the Dow Jones Industrial Average and broad based S&P 500 index ended the day mixed.  The Tech-heavy Nasdaq rose 17.73 points, or 0.96%, to close at 1860.13.  The DJIA slipped about 0.1% to close at 8,763.06.  The S&P added 0.4% to close at 942.43. 

Some big financial institutions have been eager to escape increased federal involvement and the restrictions that come with being part of the Troubled Asset Relief Program.  Although the Treasury did not name the banks cleared to pay back the TARP funds, the ten institutions quickly confirmed they have been allowed to exit the government's financial assistance program.  Morgan Stanley (NYSE:MS), American Express (NYSE:AXP), JPMorgan Chase (NYSE:JPM), Goldman Sachs (NYSE:GS), Bank of New York Mellon (NYSE:BK), BB&T (NYSE:BBT), Capital One (NYSE:COF), Northern Trust (NASDAQ:NTRS), State Street (NYSE:STT) and US Bancorp (NYSE:USB) were cleared to pay back the rescue funds.  Commenting on the move, JP Morgan Chase & Co (NYSE:JPM) CEO Jamie Dimon noted, "Paying back TARP at this time is the right thing for JPMorgan Chase, and it's the right thing for our country."  Financial sector shares edged up 0.4%, with American Express (NYSE:AXP) topping the list of gainers on the DJIA with a 5% jump, as traders were relieved that the industry's rising rates of card delinquencies and the potential for increased attendant loan losses had not prevented government approval of its repayments.

Following Texas Instruments' (NYSE:TXN) improved guidance, semiconductor shares rallied with Advanced Micro Devices (NYSE:AMD) closing up 3.1%, Intel (NASDAQ:INTC) rising 3.4%, and National Semiconductor (NYSE:NSM) closing up 4.4%. According to a Bank of America (NYSE:BAC) analyst note, Microchip Tech (NASDAQ:MCHP) has been witnessing improved China orders.  BofA raised its price target on the company to $23.

Crude prices went beyond $70 per barrel on hopes a stronger economy will lift demand.  Dollar prices continued to remain under pressure.  Although concerns linger over the state of the world economy, commodities have recorded sharp gains recently as investors have increasingly turned towards crude to hedge against a weak dollar.  Yesterday's $35 billion auction of 3-year Treasuries met with strong demand, however, as a yield of 1.96% topped expectations, and the bid-to-cover ratio equaled 2.8%. Today's calendar is for $19 billion in 10-year notes, with $11 billion 30-years slated for tomorrow.  However, investors remain concerned that rising short-term interest rates will squeeze banking industry's net interest margins, in a sector that has already seen a 73% price run-up over the past three months.

Meanwhile, late Tuesday, the Supreme Court rejected an appeal from three Indiana state funds, consumer groups and others, clearing the way for the sale of most of Chrysler's assets to Italy's Fiat Group SpA. 

Afternoon sentiment will reflect release of the Fed's latest take on regional economic conditions, revealed in its Beige Book at 2:00 AM ET. The report is likely to recount the well-aired areas of economic weakness, namely, depressed housing markets, soft consumer demand, deteriorating employment opportunities, and downward price pressures. Indications of an economic recovery's "green shoots" of growth may help boost sentiment.

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Here are highlights from Thursday's Analyst Blog:

A Green Shoot Starting to Wilt

There are a huge number of obvious sources to cause initial claims to start to rise again. The most notable of these are the effects of the Chrysler bankruptcy and the very high potential for General Motors (GM) to follow. This not only causes layoffs directly at GM, but throughout the country. Just this week, AK Steel (AKS) announced that it was closing a mill in Kentucky which will cause 750 layoffs, and ArcelorMittal (MT) will close a steel plant in Indiana causing 1,000 jobs to be lost.

Even under the out-of-court restructuring plan, GM is going to shut down over 2000 dealers. If you assume 50 people work at each dealership (salesmen, mechanics, etc.) that adds up to 100,000 jobs right there. State and local budgets are also under severe stress, and that may cause very significant layoffs of teachers, firefighters, prison guards and social workers (not to mention even longer waits at the Department of Motor Vehicles).

Yes the stimulus package helped a bit there, but it has only partially filled the hole. The four-week average is a key indicator. Watch it closely, since it could go either way at this point.

Regulation of OTC Derivatives?

The roots of the current problem go back to December 2000 when the Commodity Futures Modernization Act was adopted, which made the derivative instruments largely unregulated. The law came about after heavy lobbying from the bankers on the Wall Street.

The derivatives market which was relatively small then has since exploded and the face value of all derivatives contracts outstanding at the end 2008 totaled more than $680 trillion. In view of the enormous size of the market and the threat these instruments pose to the financial system, their regulation is long overdue.

We anticipate exchanges like CME Group (CME) and Intercontinental Exchange (ICE) to benefit from the new regulations.

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Company Description

Casey's General Stores, Inc. together with its subsidiaries, operate convenience stores under the Casey's General Stores name in the Midwest states. It has operations in Iowa, Missouri, Illinois Kansas, Minnesota, Nebraska, South Dakota, Wisconsin, and Indiana. The company was founded in 1959 and is headquartered in Ankeny, Iowa.

Stellar Earnings

The company saw a solid third quarter. Earnings per share of 28 cents came in 47% ahead of the consensus estimate.

"We are pleased with the execution of our strategy," said President and CEO Robert J. Myers. "We were able to exceed third quarter earnings from a year ago despite a gas margin decline of over 3.5 cents per gallon."

The company has outperformed the market over the past year, receiving an extra boost after delivering the strong third-quarter results.

Wall Street is Bullish on CASY

Current fiscal year earnings projections of $1.74 per share are above the 2 months-ago level of $1.66. For the following year, earnings expectations of $1.80 were increased from last month's $1.74 and $1.70 of 2 months ago.

CASY's fiscal year ends in April, and the fourth-quarter report is scheduled for release on June 10.

Favorable Comparisons

CASY's return on equity (ROE) of 13% is in line with the industry average. The company's dividend yield of 1.2% stands out as most of CASY's industry peers pay no income. Its net profit margin of 2% is also in line with the industry average.

Zacks Investment Research

Company Description

Casey's General Stores, Inc. together with its subsidiaries, operate convenience stores under the Casey's General Stores name in the Midwest states. It has operations in Iowa, Missouri, Illinois Kansas, Minnesota, Nebraska, South Dakota, Wisconsin, and Indiana. The company was founded in 1959 and is headquartered in Ankeny, Iowa.

Wall Street is Bullish on CASY

Current fiscal year earnings projections of $1.73 per share are above last month's $1.66. For the following year, earnings expectations of $1.76 were increased from last week's $1.74 and last month's $1.72. CASY's fiscal year ends in April.

Favorable Comparisons

CASY's return on equity (ROE) of 13% is in line with the industry average. The company's dividend yield of 1.1% stands out as most of CASY's industry peers pay no income. Its net profit margin of 2% is also in line with the industry average.

Solid Quarter

The company recently reported favorable results for the fiscal third quarter. Earnings per share of 28 cents came in 47% ahead of the consensus estimate.

"We are pleased with the execution of our strategy," said President and CEO Robert J. Myers. "We were able to exceed third quarter earnings from a year ago despite a gas margin decline of over 3.5 cents per gallon."

The company has outperformed the market over the past year, receiving an extra boost after delivering the stellar results. Zacks Investment Research

The company also stated that it would stop operations indefinitely at the Indiana Harbor Long Carbon facility in East Chicago. It also notified the workers of reductions effective in about 2 months.

Shares of the company fell a little more than 4% Tuesday on unusually low volume. More than 6 million shares changed hands today, compared to the daily average volume of 8 million.

Three analysts have pulled back on expectations over the past month, bringing the 2009 consensus estimate down to 77 cents per share from $1.39.

ArcelorMittal missed the consensus estimate in 3 of the last 4 quarters. It is currently a Zacks #3 Rank ("Hold") company.

The stock is trading marginally down 0.5% while volumes are at lower-than-average levels. The world's largest manufacturer of mining and construction equipment said the layoff will impact 2,365 support and management workers for 6 months, while 89 will be let go permanently.

CAT had announced the elimination of 22,000 positions in January coupled with an up to 50% reduction in executive compensation.

Analysts have already slashed fiscal 2009 earnings estimates by 8 cents over the past month and by $2.22 over the past 60 days.

CAT is currently a Zacks #5 Rank ("Strong Sell") stock.

Company Description

iPCS Inc. is the Sprint PCS Affiliate of Sprint Nextel with the exclusive right to sell wireless mobility communications, network products and services under the Sprint brand in portions of Illinois, Michigan, Pennsylvania, Indiana, Iowa, Ohio and Tennessee.

The company covers over 10 million residents and nearly 700,000 subscribers. The company is headquartered in Schaumburg, IL where it employs about 550 people, and carries a market cap of roughly $170 million.

Out of the Red

On Mar 2 iPCS announced fourth-quarter results that included a earnings per share of 0 cents. While that alone seems disappointing, this was up from a net loss of 24 cents per share one year ago. Another plus was that analysts were expecting a 27 cent loss.

Estimates Spike

After the wireless company announced earnings analysts drastically revised their forecasts. The consensus estimate for 2009 is currently 28 cents, up from a loss of 49 cents one week ago. Estimates for 2010 are now averaging $1.49, up from 89 cents.

These projections would be greater than 200% growth in 2009 and more than 400% in 2010.

The Chart

Shares of IPCS have been building momentum since January. Take a look at the chart below.

Zacks Investment Research