Stock Market News & Stocks to Watch from StraightStocks » industry group

Furniture: The Worst May Be Over – Zacks Industry Rank Analysis

Charles Rotblut — Wed, 09 Sep 2009 05:00:00 +0000

Two seemingly unlikely candidates are sitting near the top of the Zacks Industry Rank List: Furniture and Retail-Home Furnishings.

Given the macroeconomic environment, it would be reasonable to assume that people are not spending on furniture. The numbers support this assessment. La-Z-Boy (LZB) recently reported an 18.3% drop in quarterly net sales. Ethan Allen (ETH) experienced a 41% drop.

Yet, several analysts have recently raised their fiscal 2010 profit forecasts on both companies.

The Worst May Be Over

Though the furniture industry is certainly not healthy right now, there are signs that the worst of the storm may have passed.

Bottom-line results for both companies surpassed expectations. ETH's positive surprise was its first in 4 quarters. The company lost 23 cents per share, 2 cents less than analysts had feared. LZB earned 5 cents per share, its second consecutive positive surprise.

The housing industry is moving towards stabilization. Both existing and new home sales have risen for 4 consecutive months. Though the increases are not large enough to spur significant increased demand for furniture, they are helping.

Most importantly, the economy is turning a corner. Consumer confidence has been negatively impacted by fears about job losses. Though the unemployment rate is continuing to rise, employers are cutting fewer jobs than they have in the past.

Opportunities in Furniture Companies

Though conditions continue to remain difficult for the furniture industry, analysts have been raising profit projections on several furniture-related companies. These positive revisions are creating a trading opportunity for investors with a high tolerance for risk.

Within the Furniture industry group, analysts have recently raised full-year earnings estimates on LZB, Herman Miller (MHLR) and Select Comfort (SCSS). In the Retail-Home Furnishings industry group, analysts have raised forecasts on ETH, Kirklands (KIRK) and Williams-Sonoma (WSM).

Sector Rank as of Sep 9
Sector	This Week's Zacks Rank	Last Week's Zacks Rank	FY09 Revisions Ratio	FY09 Estimates Revised Up	FY09 Estimates Revised Down
Consumer Staples	2.65	2.63	2.41	195	81
Conglomerates	2.73	2.65	3.80	19	5
Retail-Wholesale	2.74	2.74	1.92	576	300
Auto-Tires-Trucks	2.76	2.84	1.34	43	32
Computer and Technology	2.91	2.92	2.15	620	288
Medical	2.96	2.97	1.24	287	232
Construction	2.97	3.06	1.12	65	58
Consumer Discretionary	2.97	2.96	1.18	180	153
Oils-Energy	3.01	3.03	0.99	352	355
Business Services	3.01	2.99	1.38	58	42
Basic Materials	3.02	3.00	1.03	140	136
Industrial Products	3.03	3.04	1.04	119	114
Utilities	3.03	3.02	1.21	93	77
Finance	3.09	3.10	1.04	429	414
Aerospace	3.23	3.23	0.71	30	42
Transportation	3.23	3.21	0.66	79	120

Charles Rotblut, CFA, is the senior market analyst for Zacks.com. He can be reached at crotblut@zacks.com.

Zacks Investment Research

Better Conditions for E&P Companies – Zacks Industry Rank Analysis

Charles Rotblut — Wed, 12 Aug 2009 05:00:00 +0000

Last May, I discussed the possibility of a turnaround for oil & gas exploration and production (E&P) companies. Higher production and cost control measures led to positive earnings estimate revisions.

Three months later, the trend continues. Production levels, particularly in the North Sea and the Middle East, are increasing. Costs continue to be reined in. And analysts are raising their full-year profit forecasts further. During the past few weeks, 292 profit forecasts have been increased.

Commodity Prices Playing A Role

Rising oil prices are helping. Though significantly down from last year (crude peaked at $147.27 on Jul 11, 2008), crude rebounded throughout the second quarter. Furthermore, given the likelihood of economic expansion in the coming months, it is probable that a floor for oil prices has been set.

Natural gas prices may have hit a bottom. Natural gas started the year at $6.50 per million BTU and fell to under $4.25 by the end of the first quarter. The second-quarter drop was less severe, however, with natural gas ending June at about $4.

While there is still some weakness, a bottom seems to be setting.

Expenses Are Being Controlled

The biggest benefit to the E&P companies, however, has been costs.

CFOs have limited expansion to only what cash flows allowed. In addition, they've also worked to limit overhead costs.

The other positive factor is drilling costs. Apache's (APA) North American President, John A. Crum, noted on the conference call that his company "can drill and complete a well today for roughly two-thirds of last year's costs." In addition to higher demand last year for parts and services, several other commodities, such as steel, were also in a bubble.

Analysts May Have Been Too Pessimistic

Though conditions do seem to be improving for the industry, overly pessimistic profit forecasts are contributing to the upward revisions. Brokerage analysts factored in crude prices that were too low, underestimated cost reductions and incorrectly projected production rates.

We saw the impact of this with both the number of positive second-quarter surprises and the resulting increases in full-year earnings estimates:

Apache (APA) beat by 31 cents with earnings of $1.31 per share. Analysts subsequently raised their 2009 profit projections by 66 cents, resulting in a Zacks Consensus Estimate of $4.85 per share.
Concho Resources (CXO) beat by 15 cents with adjusted earnings of 34 cents per share. Analysts subsequently raised their 2009 profit projections by 25 cents, resulting in a Zacks Consensus Estimate of $1.12 per share.
Noble Energy (NBL) beat by 11 cents with earnings of 66 cents per share. Analysts subsequently raised their 2009 profit projections by 40 cents, resulting in a Zacks Consensus Estimate of $2.82 per share.
St. Mary Land & Exploration Company (SM) topped expectations for breakeven results with profits of 24 cents per share. Analysts subsequently raised their 2009 profit projections by 42 cents, resulting in a Zacks Consensus Estimate of 47 cents per share.
Newfield Exploration (NFX) beat by 20 cents with earnings of $1.28 per share. Analysts subsequently raised their 2009 profit projections by 43 cents, resulting in a Zacks Consensus Estimate of $4.47 per share.

CXO is a Zacks #1 Rank ("strong buy") stock. NBL, NFX and SM are Zacks #2 Rank ("buy") stocks. APA is a Zacks #3 Rank ("hold") stock. (Apache's rating is hurt by the fact that nearly one-third of the covering analysts have yet to adjust their profit forecasts. This, however, does leave open the possibility of more positive estimate revisions occurring over the next several weeks.)

All of these stocks belong to the Oil-US Exploration & Production industry group.

Related ETFs

Though there are several energy-related ETFs, iShares Dow Jones U.S. Oil & Gas Exploration & Production (IEO) provides the best exposure. The fund has a good combination of focusing on the E&P companies and a high level of average daily trading volume.

Zacks Premium and Zacks Elite subscribers can view the Zacks Industry Rank List at http://www.zacks.com/zrank/zrank_inds.php. This interactive list allows you to see all of the companies, and their Zacks Rank, within more than 200 industries. Shown below is the Zacks Sector Rank List, which shows the trend in estimate revisions on a broader scale.

Sector Rank as of Aug 12
Sector	This Week's Zacks Rank	Last Week's Zacks Rank	FY09 Revisions Ratio	FY09 Estimates Revised Up	FY09 Estimates Revised Down
Consumer Staples	2.65	2.67	3.12	405	130
Conglomerates	2.67	2.78	1.15	62	54
Retail-Wholesale	2.74	2.75	2.21	711	321
Computer and Technology	2.87	2.87	1.69	1692	1002
Consumer Discretionary	2.93	2.90	1.32	475	359
Auto-Tires-Trucks	2.93	3.04	1.04	88	85
Medical	2.95	2.94	1.91	1311	685
Oils-Energy	2.97	2.99	1.19	762	640
Business Services	2.97	2.98	1.49	234	157
Utilities	3.04	3.00	0.74	168	227
Basic Materials	3.08	3.11	1.00	325	326
Industrial Products	3.10	3.07	1.09	317	291
Finance	3.14	3.12	1.06	1433	1357
Construction	3.18	3.17	1.04	161	155
Aerospace	3.20	3.28	0.70	88	125
Transportation	3.36	3.45	0.57	213	371

Charles Rotblut, CFA, is the senior market analyst for Zacks.com. He can be reached at crotblut@zacks.com.

Zacks Investment Research

Why I Personally Invest In ETFs

Zacks Market Commentaries — Fri, 15 May 2009 08:30:46 +0000

Several years ago, I started adding ETFs to my own portfolio. As the number of ETFs has grown, so has my personal use of them.

Don't get me wrong, I still own individual stocks and mutual funds, but increasingly, a greater proportion of my portfolio is allocated to ETFs. The reason is that there are several advantages that make ETFs very attractive.

ETFs Are Less Expensive Than Mutual Funds

The majority of mutual funds are actively managed, which means investors not only have to pay for a fund manager, but also a staff of analysts

These expenses hurt your return. This wouldn't be a problem if the performance was spectacular, but it's not. According to Standard & Poor's, 71.9% of actively managed large cap funds underperform the S&P 500. So while there are some funds that are worth paying extra for (and the Zacks Mutual Fund Rank will help you find them), most aren't worth the high fees.

ETFs, conversely, track an index. There is no staff of research analysts because the fund manager's job is easy - replicate the index. This in turn lowers costs dramatically. And every cent you save on expenses is a penny more you make. Over the course of a lifetime, these savings can make a dramatic difference in your wealth.

ETFs Are Far More Tax Efficient

Ever wonder how mutual funds got their name? They're called "mutual" funds because they are a pool of shared investment dollars. When you buy shares of a mutual fund, you add your dollars to a pool of money for the fund manager to invest.

The upside is that you get access to professional money management for a pretty small investment. The downside, however, is that the IRS holds you responsible for every profit realized by the mutual fund.

In fact, it is very possible to see the value of the mutual fund drop and still owe capital gains taxes on your investment. Taxes are realized the second the fund manager sells a stock at a profit. Ouch!

ETFs have fewer transactions because they track an index. Other than rebalancing or changes to the index, no transactions are made. That means fewer taxable events.

Sounds good, huh? Well, it gets even better.

ETF managers can conduct value-in-kind transactions. This means they can trade shares with an agent and avoid taxable transactions completely.

For example, one of the ETFs I personally own is the Vanguard Large-Cap ETF (VV). When a change in the index that VV follows is made, the ETF manager has a list of people ("agents") he can contact to swap the stock(s). Since he is not technically selling the shares, no transaction is made and shareholders don't owe any taxes.

ETFs Are Transparent

ETFs trade like stocks. You buy and sell them just like stocks. This means you always know the price you are buying and selling at.

Plus, since ETFs track an index, you know what assets they are holding. There is nothing to hide, because an index is designed to track the performance of a benchmark, not beat it.

There is a term for this - transparency. More transparency is always better.

(Mutual funds lack transparency. This is partially because their value can only be determined at the end of the day and partially because fund managers don't want to tell competitors what stocks they are holding.)

ETFs Allow You to Hold Short Positions in an IRA

Yes, you read that last line correctly; you can short indexes in your retirement account by using ETFs. And, yes, it is completely legal.

How is this possible? Federal regulations allow you to buy any ETF you want. When you purchase an ETF, you are buying shares of a fund and are paying cash up front for it. Therefore, no margin is used and the transaction is completely legal.

The ETF, on the other hand, is not bound by the same rules that an IRA account is. Therefore, the ETF can go long or short.

Let me give you an example. The Short Dow30 ProShares (DOG), as the name implies, shorts the Dow Jones Industrial Average ($DJI). So, when you buy SH, you are hoping the S&P 500 falls in value. From a regulatory standpoint - and this is key - you initiated a long position. You are hoping that SH increases in value.

Remember, you are using cash to buy an ETF that you think will increase in value, meaning you are going long. The strategy that the ETF uses is not relevant.

ETFs Make It Easy to Invest in Commodities

Since ETFs can be bought and sold like stocks, it's real easy to invest in commodities - even with retirement accounts.

For example, say you want to invest in gold. You could deal with the hassles of buying and storing physical gold or you could simply buy shares in SPDR Gold (GLD), which invests directly in gold bullion.

Think oil is headed higher? Your options are to stop driving, learn how to trade futures, or just simply buy shares in PowerShares DB Oil (DBO).

And if you think commodities are heading lower, you can easily short commodity-based ETFs too with a regular (non-retirement) brokerage account. It really is that easy.

ETFs Can Help You Profit from Industry Trends

I saved the biggest advantage for last - ETFs allow you take advantage of industry trends.

How big an advantage are we talking about? Well, consider this - investing in the right industry gives you a 4-1 performance advantage over investing in the wrong industry. That's a big difference.

Often, I when write my weekly Industry Rank Analysis column, I see business trends that are driving up earnings estimates on several companies within the same industry. Now, you could buy some of the stocks within that industry group, or you could simply buy the entire industry with just a single ETF.

In other words, ETFs allow to you profit from the industry trend and diversify across several stocks at once. That's a win-win situation.

As I said at the beginning, I don't solely invest in ETFs, but I do allocate a significant portion of my portfolio to them. Given their advantages, it just makes a lot of sense to incorporate ETFs as part of a broader investment strategy.

Wishing you prosperity,
Charles Rotblut, CFA

Charles is our world-class expert on industry trends and runs the Industry Analysis section on Zacks.com. Now he's also pinpointing market trends that underlie big stock moves through the Zacks ETF Trader.

This brand-new service exploits the earnings-based Zacks Industry Rank to tap today's hottest industries through ETFs. This offers mega-profit potential, with stocks from Zacks' top 50% industries outperforming the lower half by a margin of 4-to-1.

Charles chooses the best ETFs from among more than 800 alternatives. As his article explains, with the right Exchange Traded Funds, you can benefit from entire industries and trends - without the added expense and risk of buying numerous stocks.

Important: You're invited to claim exceptional savings on the ETF Trader today. This opportunity ends 11:59 pm, May 19.

Learn more now >>

Zacks Investment Research

Zacks Industry Rank Analysis Highlights: Best Buy Co., Inc., Conn’s, Inc., GameStop Corp. and Corning Incorporated – Press Releases

Charles Rotblut — Thu, 09 Apr 2009 11:01:36 +0000

For Immediate Release

Chicago, IL - April 9, 2009 - Zacks.com releases the latest Zacks Industry Rank. Stocks featured in this week's analysis include Best Buy Co., Inc. (BBY), Conn's, Inc. (CONN), GameStop Corp. (GME) and Corning Incorporated (GLW).

Zacks Industry Rank Analysis is written by Charles Rotblut, CFA, Senior Market Analyst for Zacks.com.

This Week: Better Profits for Electronics Stores?

Profit forecasts for electronics retailers are rising in a significant manner. During just the past 2 weeks, more than 40% of all earnings estimates for Retail-Consumer Electronics have been revised upwards - a very bullish sign.

The biggest beneficiary of the optimism has been Best Buy Co., Inc. (BBY).

A couple of weeks ago, BBY shocked analysts with better-than-expected fiscal fourth-quarter earnings of $1.61 per share. Though same-store sales were down, the dollar amount of the average purchase rose. More importantly, gross margins widened by 90 basis points.

BBY also provided upbeat guidance. The company expects fiscal 2010 profits to total between $2.50 and $2.90 per share; the consensus had called for earnings of $2.36 per share.

Nearly all of the covering analysts adjusted their projections to be inline with BBY's guidance. The consensus estimate is now at $2.77 per share.

It's not just Best Buy that is responsible for the overall improvement in the industry group's outlook, however.

Competitor Conn's, Inc. (CONN) also beat estimates and said that gross margins improved. Video game retailer GameStop Corp. (GME) generated same-store sales growth of 9.6%. Both companies provided an upbeat outlook.

Without a doubt, the demise of Circuit City is helping all 3 companies.

Another trend helping BBY and CONN is that consumers are still buying LCD TVs. Some of this might be attributable to the digital conversion, though declining prices and aging analog sets are also playing a role.

Corning Incorporated (GLW) recently said that it has been "experiencing increasing glass orders." As a result, the company is now guiding for first-quarter glass volume of flat to down 5%, versus previous guidance for a 20% to 25% drop. (GLW is a major manufacturer of glass for flat panel displays.)

Finally, tough economic conditions are causing more consumers to stay at home then go out. A DVD or a video game can cost less than taking a family of four out for a night. This trend favors companies like BBY, CONN and GME.

Finally, as I discussed last month, retail earnings in general have not been as bad as feared. This has led to multiple positive revisions across the retail sector.

CONN is a Zacks #1 Rank ("strong buy") stock. BBY and GME are Zacks #2 Rank ("buy") stocks. All 3 are classified in Retail-Consumer Electronics. GLW is a Zacks #2 Rank stock classified in Fiber Optics.

Related ETFs

There are a few exchange-traded funds that focus on retailers. SPDR S&P Retail (XRT) provides good overall coverage of the sector. Furthermore, Best Buy is the fund's fourth-largest holding, though no single position accounts for more than 2.5% of XRT's portfolio.

Zacks "Profit from the Pros" e-mail newsletter offers continuous coverage of the industries and the stocks poised to outperform the market. Subscribe to this free newsletter today by visiting http://at.zacks.com/?id=2564.

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 3:1 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 by going to http://www.zacks.com/performance.

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

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.

Contact: Charles Rotblut, CFA
Company: Zacks.com
Phone: 312-265-9352
Email: pr@zacks.com
Visit: www.Zacks.com

Zacks Investment Research

Better Profits for Electronics Stores? – Zacks Industry Rank Analysis

Charles Rotblut — Wed, 08 Apr 2009 05:00:00 +0000

Highlighted stocks include Best Buy Co., Inc. (BBY), Conn's, Inc. (CONN), GameStop Corp. (GME) and Corning Incorporated (GLW).

The biggest beneficiary of the optimism has been Best Buy Co., Inc. (BBY).

< ?DART(15);?>

BBY also provided upbeat guidance. The company expects fiscal 2010 profits to total between $2.50 and $2.90 per share; the consensus had called for earnings of $2.36 per share.

Nearly all of the covering analysts adjusted their projections to be inline with BBY's guidance. The consensus estimate is now at $2.77 per share.

It's not just Best Buy that is responsible for the overall improvement in the industry group's outlook, however.

Without a doubt, the demise of Circuit City is helping all 3 companies.

Finally, as I discussed last month, retail earnings in general have not been as bad as feared. This has led to multiple positive revisions across the retail sector.

Related ETFs

The Zacks Rank is a quantitative short-term indicator designed to determine a stock's relative performance over a period of 1 to 3 months.

Sector Rank as of Apr 8
Sector	This Week's Zacks Rank	Last Week's Zacks Rank	FY09 Revisions Ratio	FY09 Estimates Revised Up	FY09 Estimates Revised Down
Medical	2.61	2.62	0.66	249	377
Retail-Wholesale	2.81	2.78	0.59	223	381
Computer and Technology	2.82	2.84	0.57	305	532
Consumer Discretionary	2.94	2.99	0.49	106	215
Business Services	3.02	3.06	0.33	35	107
Consumer Staples	3.03	3.06	0.44	86	195
Oils-Energy	3.12	3.17	0.22	175	796
Utilities	3.15	3.06	0.35	58	164
Construction	3.17	3.12	0.27	27	101
Aerospace	3.18	3.10	0.20	12	59
Basic Materials	3.22	3.24	0.28	84	303
Auto-Tires-Trucks	3.25	3.15	0.12	10	81
Finance	3.27	3.25	0.20	183	902
Industrial Products	3.33	3.32	0.08	18	237
Transportation	3.35	3.31	0.10	31	305
Conglomerates	3.39	3.46	0.07	5	69

Charles Rotblut, CFA, is the senior market analyst for Zacks.com. He can be reached at crotblut@zacks.com.

Zacks Investment Research

And Then There’s This…Tuesday, February 3rd, 2009

Contrarian Profits — Tue, 03 Feb 2009 20:40:04 +0000

pAfter Friday#8217;s lousy action in the gold and silver price#8230;and their shares, it was no surprise to me that the boyz hit the price right at the open in Far East trading early Monday morning. They weren#8217;t even trying to hide#8230;it was like a two by four right between the eyes. Every rally was crushed#8230;and once the London p.m. fix was in at 10:00 a.m. New York time, they really went to work on the price. This continued through what was left of Comex trading#8230;and then into the electronic Globex trading after./p pHere#8217;s the 3-year gold chart. Hopefully this put the current situation in some sort of historical perspective./p tr a href="javascript:openKKCImage('1233663379-sc12.png',465,487);"/a /tr tr a style="text-decoration: none;" href="javascript:openKKCImage('1233663379-sc12.png',465,487);"emclick to enlarge/em/a /tr pSilver was similar. Its price was driven down all through Far#8230;/p

China Accelerates Filling Up Its Oil Reserves

Larry Edelson — Wed, 07 Jan 2009 17:50:04 +0000

pJan 5, 2009 (WALL STREET JOURNAL) -- As the U.S. seeks to stockpile oil, China has been doing the same, observers say, and is expected to quicken the pace -- a development that already may be helping to boost oil prices./ppOn Friday, the U.S. Department of Energy said that amid low oil prices, it aims to fill the country's Strategic Petroleum Reserve to capacity this year./ppThat news followed a rare public statement last week from China's top energy official, Zhang Guobao, head of the National Energy Administration, in the People's Daily newspaper that China should take advantage of the falling global energy demand to increase its oil reserves. Mr Zhang said China will quot;encourage companies to utilize idle storage capacity to increase inventories.quot;/ppOil prices have been rising lately. On Friday, oil closed up 3.9% to $46.34 a barrel on the New York Mercantile Exchange./ppThough China doesn't disclose its oil inventories on a regular basis, some energy watchers think the country has been building its stockpiles for some time. China has increased crude oil imports in recent months, and quot;the increase of imports is certainly caused by them fillingquot; the strategic reserve, said John Kingston, global director of oil at Platts, an energy-reporting service./ppbr /Paul Ting, a U.S.-based energy analyst, estimates that about 25 million barrels of crude oil have been injected into China's strategic tanks since August./ppThe U.S. buying isn't expected to significantly affect oil prices over the long term. The U.S. Energy Information Administration expects global oil consumption to fall to 85.3 million barrels a day./ppBut the Chinese government's hunger for oil has more potential to influence prices. quot;In our opinion, China's inventory policy will be a critically important factor in determining global oil price,quot; said Mr. Ting./ppThe U.S. suspended adding oil to the emergency reserve in May 2008 after oil prices soared to over $100 a barrel. It is widely believed that China stopped its filling efforts after oil prices reached $70 a barrel around August 2007, according to industry observers./ppChina recently completed construction of four oil-reserve bases -- together representing the first phase of its strategic oil-reserve plan. Those bases can hold 102 million barrels of crude oil, and China is now pushing ahead with the construction of the second phase, which could store an additional 170 million barrels, Mr. Zhang said in the article./ppIn the next few months, China is likely to fill the fourth base -- in Dalian -- from the first phase, for 19 million barrels, says Kang Wu, a senior fellow who follows China's energy policies at East-West Center, a Honolulu-based think tank./ppMeanwhile, hundreds of nonstate oil distributors and refiners in China are currently sitting on what could amount to more than one billion barrels of idle storage capacity, according to the petroleum distribution committee of the China General Chamber of Commerce, an industry group. Massive storage facilities have been built up by oil companies since the mid-1990s after China opened up its oil markets to nonstate and foreign players. However, oil-importing licenses are basically controlled by state-owned companies, and private companies ended up sitting on empty tanks./ppAnalysts now expect the government might facilitate consolidation between state-run companies and private ones to use the idle capacity. Still, changes aren't expected immediately, given that policy modifications can take time and that storage is often scattered and small scale./ppIn mid-December, the petroleum-distribution committee submitted a proposal to various government agencies, asking to contribute to the state petroleum reserve, according to Zhao Youshan, the committee director. He said in an interview the agencies have yet to respond.br /nbsp;/p

Gold Leads Precious Metals Slide on Firmer Dollar

Contrarian Profits — Mon, 05 Jan 2009 20:30:02 +0000

pDollar rises to 3-week high vs euro on stimulus hopes#8230; Oil prices fail to hold gains above $48 a barrel#8230; Abu Dhabi Dec gold sales fall 40 pct month on month. /p pGold slid more than 3 percent in Europe on Monday as the strengthening dollar knocked the metal#8217;s appeal as a currency hedge, and oil prices retreated from highs. /p pOther precious metals tumbled in gold#8217;s wake, with silver falling 8 percent, platinum 3 percent and palladium 6 percent. /p p Spot gold was quoted at $851.65/853.65 an ounce at 1445 GMT, down from $873.20 an ounce late in New York on Friday, having touched a session low of $843.50. /p p U.S. gold futures for February delivery on the COMEX division of the New#8230;/p

Auto Bailout Awaits Congressional Approval with Millions of Jobs at Stake

Contrarian Profits — Thu, 11 Dec 2008 14:59:23 +0000

pCongressional Democrats and the White House yesterday (Wednesday) finalized a short-term package that’ll supply General Motors Corp (a href="http://finance.google.com/finance?q=gm" target="_blank"GM/a), and a href="http://finance.google.com/finance?q=chrysler+LLC" target="_blank"Chrysler LLC/a with $14 billion in emergency loans./p pThe bill clearly falls short of the $34 billion the Big Three were asking for, but should be enough to keep the automakers running through January, when the new Congress and Obama administration take the wheel./p pAs previously reported in strongema href="http://www.moneymorning.com" class="alinks_links"Money Morning/a/em/strong, a href="http://www.moneymorning.com/2008/12/08/big-three-bailout-2/" target="_blank"there will be limits on executive pay, prohibitions for golden parachutes and requirements that the automakers get rid of their corporate aircraft and not pay dividends while loans are outstanding/a. The bill also provides a #8220;car czar,#8221; or presidential appointee, to oversee keep tabs on the companies’ restructuring efforts./p pOf course, the bill is still#8230;/p

Gloomy Sales Forecasts Mean Little Joy In Tech Stocks

Irwin Greenstein — Mon, 24 Nov 2008 17:33:07 +0000

pProjections for high-tech hardware makers are looking grim for the coming years. As a result, investors with shares in semiconductor companies or PC makers would be wise to eat their losses - unless they have the stomach to grind it out perhaps into 2010 or 2011./p pA rash of recent reports clearly indicates that the hardware makers will endure shrinking revenues. The usual suspects are a work here. It’s mostly the credit crunch that is tightening the spending for both business and consumers when it comes to high-end computer systems or PCs for the family./p pSince 2001, forecasts from ChangeWave Research have ranked as among the most reliable for predicting buying patterns in the high-tech market. Every quarter, the group surveys about#8230;/p

TDS Priced Near Fair Value – Analyst Blog

Zacks Market Commentaries — Fri, 07 Nov 2008 14:16:46 +0000

We maintain our Hold recommendation for Telephone & Data Systems Inc. (TDS), following the release of recent quarterly results. Although the management has reduced its 2008 outlook for revenue and subscriber additions, it continues with share repurchase initiatives.

TDS is focusing on improving profitability through network technology upgrades, strengthening its brand image and expansion of network coverage through acquisitions. Although recent quarterly results were above of our expectations, we are not yet convinced that the company can sustain the earnings momentum in future reporting periods, principally due to higher expenses for wireless infrastructure upgrades and promotional campaigns.

TDS is trading at 9.1x estimated earnings for 2008, which is at a discount to both the S&P 500 and the industry group (wireline/integrated telecom service providers) average. On the basis of enterprise value (EV) to estimated 2008 EBITDA, the stock is also trading at a discount to its industry peer group.

We believe the shares are priced near fair value, considering that the company's above-average growth rate is derived from the wireless unit United States Cellular Corporation (USM). Valuations for cellular holdings have been mixed, spurred by recent merger activities, but also impacted by overall economic conditions. We have reduced our six-month price target to $27.50 based on a 2008 earnings multiple of approximately 9.5x.

Anindya Barman contributed to the report.

Read the full analyst report on TDS

Read the full analyst report on USM

"TDS" Free Stock Analysis: Buy? Sell? Hold?
"USM" Free Stock Analysis: Buy? Sell? Hold?
Zacks Investment Research

Treasury and FDIC Team Up to Aid Homeowners at Risk for Foreclosure

CEO Blogger — Fri, 24 Oct 2008 17:13:32 +0000

Foreclosures continue to plague the U.S. housing market, but government agencies are working to develop a plan to aid struggling homeowners, and in turn, strengthen the U.S. economy.

Foreclosure activity saw a huge spike in the third quarter, as one in every 475 U.S. homes either received a default or auction sale notice, or was repossessed by a bank, according a report released yesterday (Thursday) by industry group RealtyTrac. It was a 71% jump over third quarter foreclosure activity in 2007 and a 3% increase from the second quarter of this year.

Foreclosure filings actually decreased 12% in September from August, but not due to an improving housing market.

“Much of the 12% decrease in September can be attributed to changes in…

As S&P Cut The Credit Rating, Russia’s Crisis Wends On Down Its Long Winding Road

Edward Hugh — Wed, 22 Oct 2008 11:38:00 +0000

Russia's long-term sovereign credit rating outlook was lowered yesterday (Thursday) - to negative - by Standard & Poor's Ratings Services due to their assessment that the cost of the government's "bank rescue operation'' may increase. S&P cut their outlook from stable, a move which reflects the increased probability of a downgrade at some point in the future. Russia has committed as much as 15 percent of gross domestic product in budgetary and reserve funds to maintain banking liquidity, according to calculations made by the rating agency. At the same time S&P affirmed Russia's BBB+ long-term foreign currency and the A- long-term local currency ratings and the short-term ratings of A-2.

``We expect Russian corporate and financial sector default rates to increase as
debtors' access to official funds will vary,'' S&P said in the statement.
``Other uncertainties remain regarding what the economic policy response will be
to weakening growth, and whether the ongoing concentration of the financial
system in state hands is permanent or temporary.''

Russia's reserves fell $14.9 billion last week to $515.7 billion according to the latest data from the central bank. This was the third straight week of decline, and the fall comes after the central bank sold foreign currency to prop up the ruble. Obviously there are plenty of reserves left, but this is down from around $550 billion in August, so it can't go on forever, either. The ruble weakened yesterday by as much as 0.5 percent to hit 27.0664 to the dollar at one point, the lowest since July 2006. It later rebounded and was 0.1 percent lower on the day at 26.9538 at the close in Moscow.

Russian government bonds fell, with the yield on the 7.5 percent bond due 2030 rising 8 basis points to 10.94 percent, the highest for more than six years. The 12.75 percent bond maturing 2028 yielded 10.56 percent, up 84 basis points to a six-year high. The yield on the 11 percent bond due 2018 jumped 93 points to 8 percent, the most since 2004.

Micex Closes Again

Russia's Micex Stock Exchange slid again today, and suspended trading at 2:10 p.m. until next week. The next session will start on October 28, but with the Russian bourses now closed almost as often as they are open, it is hard to be sure about anything at this point. The so-called technical index fell more than 10 percent, triggering the halt, according to information available on the stock exchange Web site.

Russian stocks dropped for a third day, led by banks, on concern the turmoil in the country's equity markets is spreading to bonds and the ruble. OAO Sperbank, Russia's largestest bank, slid 15 percent and VTB Group, the second-largest, dropped 3.9 percent following a decline in Asian financial stocks. OAO Rosneft tumbled 9.4 percent as oil fell.

Crude dropped 1.7 percent to $69.68 a barrel in New York trading yesterday, after slumping 4.5 percent on Wednesday. Urals crude, Russia's export blend, fell 4.3 percent to $66.16 a barrel. Urals needs to average $70 a barrel next year for the country's budget to balance, according to the Finance Ministry.

Aid For The Crisis Hit Property Sector

Russia's government will decide "within days'' on how to help developers and reassure banks on loans for the building industry during an economic slowdown, according to Arkady Dvorkovich, an economic aide to President Dmitry Medvedev. Construction, agriculture, machine-tools building and retail are the non-financial industries the government plans to boost, along with small businesses across the economy.

Dvorkovich told reporters that the Russian government is discussing two possible mechanisms to help reassure banks vis a vis their lending to construction companies.

The government may offer to buy unsold apartments at a fixed price in residential buildings that are still under construction, once the buildings are completed. Another possibility is that the OAO Agency for Housing Mortgage Lending, the state-run mortgage agency, will refinance loans once construction of a residential building is completed.

Finance Minister Alexei Kudrin said earlier in the week that Russia's "overheated'' construction industry is facing difficult times,. Bank loans to construction companies increased 80 percent last year, compared with a 64 percent increase in borrowing for real-estate purchases, a sign that developers are over-building, according to Kudrin.

Soyuzcement, an industry group, have reported that cement producers are reducing plans for new factories as the credit crunch derails construction projects, while companies in industrial and services sectors right across the Russian economy are cutting back on jobs and investments.

Russia plans to establish a margin of spare oil production capacity as an alternative to cutting output, in order to indirectly influence prices according to Deputy Prime Minister Igor Sechin. He said Russia would not be joining in the OPEC cut back and argued that maintaining extra output capacity may allow Russia to produce oil ``at a volume that would allow more effective price parameters to be reached, ". According to Sechin "Oil has become more of a financial instrument than a commodity.''

Russian state revenue will more than likely fall sharply as the price of oil, the country's biggest export, plunges and capital flight accelerates on concern the global economy will enter a recession.

Russian companies and banks have applied for almost $100 billion of loans from state development bank Vnesheconombank to refinance foreign debt after credit markets worldwide seized up, threatening economic growth. Banks have asked for $64 billion, while companies have requested $33 billion, according to bank Chairman Vladimir Dmitriev. The bank's supervisory board plans to review the first 10 projects, from commodities and manufacturing companies, "in the near future". Prime Minister Vladimir Putin is chairman of the bank board.

Russia's government allocated $50 billion to Vnesheconombank, or VEB, as part of a more than $200 billion package to stem the country's worst financial crisis since 1998. Companies can apply for loans of between $100 million and $2.5 billion, Dmitriev said Oct. 13. Vnesheconombank will receive rescue funds after reviewing applications, Dmitriev said today.

Russian companies may default on almost a third of local-currency bonds as soaring borrowing costs make it "impossible'' to refinance the debt, according to Denis Gaevski, head of capital markets at Bank of Moscow, which the third-biggest arranger of ruble bonds. Companies may default on between 20 and 30 percent of the bonds, with retailers particularly vulnerable, he said.

Russian companies are estimated to have sold 406 billion rubles ($15.2 billion) of bonds this year, with almost all of the sales taking place before August, when Russia's invasion of Georgia triggered an investor exodus during which around $63 billion have left the country, according to a UniCredit estimate.

The average price of ruble-denominated corporate debt dropped to an all-time low of 86 percent of face value on Wednesday, from more than 100 percent in June, according to the MICEXCBI index of bonds traded on Moscow's Micex Stock Exchange. Bonds payable in 2009 by Moscow-based property developer Mirax Group traded for as little as 30 percent earlier this month, and were priced at 54 percent of face value in the middle of this week.

The average interest rate Russian banks charge to lend money to each other overnight - the so called MosPrime rate - oreached a record 21 percent last week, but was back down to 7.67 percent yesterday.

Slumping commodities prices, the war with Georgia and the seizing up of global capital markets prompted investors to pull money out of Russia, despite the best efforst of the Russian government to restore confidence and to inject money into the system to brake the slowdown. Last month the Russian government has pledged more than $200 billion for banks and companies to stem the worst financial crisis since 1998.

Pipeline Partnerships Crash UP

Richard Shaw — Sat, 18 Oct 2008 17:30:32 +0000

Last week Barron’s mentioned master limited partnerships as juicy yield opportunities with strong appreciation potential. Reuters followed up the next day with an article about the Barron’s article. Investors seem to have rallied around those articles causing major gains among pipeline companies. It certainly is refreshing to see a group that has not been viewed as [...]

Pipeline Partnerships Crash UP

Richard Shaw — Sat, 18 Oct 2008 17:30:32 +0000

ADC Telecom a Buy on Valuation – Analyst Blog

Zacks Market Commentaries — Fri, 05 Sep 2008 15:33:00 +0000

ADC Telecommunications (ADCT) declared third fiscal 2008 financial results below our estimates. The companys business was impacted by general macroeconomic weakness that resulted in restricted capital spending on the part of telecom service providers and original equipment manufacturers.

According to our assessment, the long-run business fundamentals remain intact for ADCT as increasing demand for video streaming and larger investments by enterprise customers for high-density data centers are expected to foster telecom carrier implementations for high-speed wireless and FTTX networking.

Deployment of fiber based networks continues to grow as a result of massive demand for greater bandwidth. Telecom service providers are likely to increase, or at least proportionate, capital expenditures for fiber connectivity following two years of ongoing industry consolidation.

The companys ongoing restructuring is expected to result in meaningful cost savings over the next two years. While international business for the company accounted for 44% of its total third quarter 2008 sales, wireless coverage capacity solutions remain significant growth opportunities for the company. Acquisitions of LGC Wireless and Century Man improved the companys financials.

ADCT is trading at 7.9x our estimated fiscal 2009 forward earnings, which represents a significant discount to both the forward P/E ratio for the industry group and the S&P 500 average. With respect to other selected valuation metrics, the stock is also trading below its peers. However, near-term earnings fluctuations may continue due to general macroeconomic uncertainties. We maintain our Buy rating with a six-month target price of $18 based on 15.5x P/E using our fiscal 2009 earnings estimates, at par with the peer average.

Nalak Das contributed to the report.

Read the full analyst report on ADCT

"ADCT" Free Stock Analysis: Buy? Sell? Hold?
Zacks Investment Research

TDS Growth Engine US Cellular

Zacks Market Commentaries — Fri, 22 Aug 2008 10:30:14 +0000

We maintain our Hold recommendation for Telephone & Data Systems, Inc. (TDS) following the release of recent quarterly results. The wireless business (U.S. Cellular - USM), driven by gains in service and data revenues, remains the growth engine for the company, which offset declines in wireline segment revenue and loss of physical access lines.

The company continues to maintain low churn (customer switch) while increasing operating return per subscriber. The management continues its share buyback initiative and has provided a positive outlook for 2008, focusing on improving profitability through network technology upgrades and strengthening its brand image.

Although recent quarterly results were slightly above of our expectations, we are not yet convinced that the company can sustain the earnings momentum in future reporting periods, principally due to higher expenses for wireless infrastructure upgrades and promotional campaigns.

TDS is trading at 14.6x estimated earnings for 2008, which is at a premium to the S&P 500 and at a discount to the industry group (wireline/integrated telecom service providers) average. On the basis of enterprise value (EV) to estimated 2008 EBITDA, the stock is trading at a discount to its industry peer group.

We believe the shares are trading near fair value, considering that the companys above-average growth rate is derived from the wireless unit U.S. Cellular. Valuations for cellular holdings have been mixed, spurred by recent merger activities, but also impacted by overall economic conditions. Our $40.00 price target for TDS is based on a 2008 earnings multiple of approximately 15x.

Anindya Barman contributed to the report.

Read the full analyst report on TDS

Read the full analyst report on USM

"TDS" Free Stock Analysis: Buy? Sell? Hold?
Zacks Investment Research

Centurytel Remains on Hold

Zacks Market Commentaries — Fri, 15 Aug 2008 16:39:06 +0000

Centurytel Inc. (CTL) is one of the leading pure-play rural local exchange carriers. The company continues to invest in broadband services in order to offset the decline in fixed voice access lines.

The companys latest financial results indicate strength in its data and fiber CLEC businesses, while losses continue in the network access segment. CTL is focused on improving returns to its shareholders as demonstrated by its recent ten-fold increase in annual dividend payout (from $0.27 per share to $2.80 per share) and accelerated share repurchases.

However, we remain concerned about the highly leveraged balance sheet and the decline of Universal Services Fund receipts which are expected to impact revenue levels in 2008. A Hold rating is maintained as we assess the probability of bottom-line earnings improvement, albeit off a decline in the number of shares outstanding and lower revenue projections.

CenturyTel is trading at 11x our estimated earnings for 2008, which is at a discount compared to the P/E ratio for the industry group (fixed-line telecom carriers) and the S&P 500 average. On the basis of Enterprise Value (EV) to EBITDA, CenturyTel is trading at 5.5x EBITDA for 2008, which represents a premium to the peer group average. Our $38.00 target price is based on our belief that the current EV/EBITDA of 5.5x 2008 adequately represents growth parameters demonstrated by improved financial performance, offset by general economic conditions.

Anindya Barman contributed to the report.

Read the full analyst report on CTL

"CTL" Free Stock Analysis: Buy? Sell? Hold?
Zacks Investment Research

Cincinnati Bell Limiting Losses

Zacks Market Commentaries — Fri, 15 Aug 2008 14:38:44 +0000

We are maintaining our Hold recommendation for Cincinnati Bell Inc. (CBB) as the company continues to experience a gradual decline in fixed access lines, albeit less severe than its competitors.

Cincinnati Bell plans to build out a 3G network in 2008 utilizing the AWS spectrum which is expected to drive revenue growth in future reporting periods. Furthermore, the companys earnings and cash flow have experienced meaningful growth as the company completed the final stage of its refinancing plan and as management remains optimistic about opportunities for its wireless business.

The companys strategy of offering attractively priced service bundles, including customized blends of local phone service, long-distance, broadband Internet access (DSL), and wireless, have limited market share losses to competitors. The company is focused on bundling and diversifying its revenue base and effectively using share repurchase initiatives to add value to shareholders. Our main concern remains limited liquidity and a highly leveraged balance sheet.

Cincinnati Bell is trading at 10.5x our estimated earnings for 2008, which represents discount to the S&P 500 and the industry group. On the basis of Enterprise Value (EV) to EBITDA, Cincinnati Bell is trading at 6.1x estimated 2008 EBITDA versus a representation of industry peers of 5.3x. Our $4.00 price target is based on approximately 10.3x our 2008 EPS estimate.

Anindya Barman contributed to the report.

Read the full analyst report on CBB

"CBB" Free Stock Analysis: Buy? Sell? Hold?
Zacks Investment Research

Flowserve Corp.

Alex Kolb — Fri, 15 Aug 2008 00:00:00 +0000

Flowserve Corp. (FLS) recently posted record results for the second quarter and hiked its guidance by a significant margin. The companys full-year 2008 guidance ranges between $7.20 to $7.50, versus the previous range of $5.90 to $6.20. Wall Street is forecasting $6.47, up from last months $6.31.

Company Description

Flowserve supplies pumps, valves, seals automation and services to the power, oil, gas, chemical and other industries. With more than 14,000 employees, the company operates in more than 56 countries.

Record Results Signal Growth

In late July, the company reported record results for the second quarter. Operating income of $171.6 million jumped 77% year-over-year. Second-quarter sales were a record $1.16 billion, up 24% from $931 million.

Flowserve also announced record second-quarter bookings of $1.31 billion, up 24% from last year. The bookings increase was attributed to continued strong growth of both original equipment and aftermarket business.

"As a leader in its industry, Flowserve is continuing to execute well against both its original equipment and aftermarket strategies," said Lewis Kling, Flowserve President and CEO. "We also continue to see strength in our large project infrastructure business globally in the oil and gas, power, chemical and water markets."

Competitive Income

FLS declared a dividend of 25 cents per share in late May. The dividend was paid out on July 9, 2008. Flowserves dividend yield of 0.8% is ahead of the industry average as most companies within Flowserves industry group pay no dividends.

Bullish Forecasts

The company hiked its guidance by a significant margin. Flowserves full-year 2008 guidance ranges between $7.20 to $7.50, versus the previous range of $5.90 to $6.20. Wall Street is forecasting $6.47, up from last months $6.31.
"DIR" Free Stock Analysis: Buy? Sell? Hold?
Zacks Investment Research

High cost of oil affects sushi prices

Tony Sagami — Wed, 04 Jun 2008 23:51:41 +0000

There is no question in my mind that rising energy prices will work their way into the prices of all goods and services. Look at what is going to happen to the price of my favorite food --- sushi! The fuel costs for so-called long- range tuna ships have doubled in a year, the Financial Times quoted Japan Tuna, an industry group, as saying. A fifth of Japans 360 ships may suspend fishing for four months from July. A further 140 ships in Taiwan, the mainland and South Korea have already decided not to fish, according to the Organization for the Promotion of Responsible Tuna Fisheries.

A Powerful Natural Gas Stock Ready To Explode

Joshua Hayes — Tue, 27 May 2008 11:43:28 +0000

Whenever it comes to buying a stock I always let technical analysis make my final decision. However, since I know everyone invest in their own way I am going to bring a stock to your attention that I am looking to take a large position in sometime in the future. This stock is Natural Gas Services [...]