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	<title>Stock Market News &#38; Stocks to Watch from StraightStocks &#187; Raytheon</title>
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		<title>Solid Quarter for Raytheon &#8211; Analyst Blog</title>
		<link>http://www.straightstocks.com/stock-watch/solid-quarter-for-raytheon-analyst-blog/</link>
		<comments>http://www.straightstocks.com/stock-watch/solid-quarter-for-raytheon-analyst-blog/#comments</comments>
		<pubDate>Thu, 22 Oct 2009 19:53:46 +0000</pubDate>
		<dc:creator>Zacks Market Commentaries</dc:creator>
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		<description><![CDATA[<br />
<strong>Raytheon Company </strong>(<a href="http://www.zacks.com/stock/quote/rtn">RTN</a>) has posted strong third quarter earnings of $499 million or $1.25 per diluted share -- better than the Zacks Consensus Estimate of $1.16 per share. Last year, the company had reported a net income of $437 million or $1.01 per share.<br />
 <br />
Operating income in the reported quarter grew by double digits (11%) to $765 million over the year-ago period. The boost came mainly from higher operating income in Technical Services (33%), Network Centric Systems (13%), Space and Airborne Systems (10%) and Integrated Defence Systems (5%). However, Intelligence &#38; Information Systems and Missile Systems registered no growth.<br />
 <br />
On the revenue front, Raytheon grew 6% during the quarter to $6.2 billion over the year-ago period. Top-line growth was fueled by all but the Intelligence &#38; Information Systems segment, owing to lower volumes in the e-Borders program.<br />
 <br />
Raytheon reported total bookings of $5.1 billion for the quarter, compared to $5.8 billion in the third quarter of 2008. The company ended the reported quarter with a backlog of $36.2 billion compared to $38.9 billion at the end of 2008 and $37.0 billion at the end of the third quarter 2008.<br />
 <br />
Raytheon has increased its full year outlook. The company now expects 2009 revenue in the range of $24.7 - $25.0 billion from the earlier guidance range of $24.5 - $25.0 billion. EPS for the year is now forecasted in the range of $4.70 - $4.80 from the earlier guidance range of $4.60 - $4.75. The company also forecasted 2010 EPS to be in the range of $4.75 - $4.90 and revenue in the range of $25.9 - $26.4 billion. We maintain our Outperform recommendation on the shares.<br /><a href="http://register.zacks.com/ucd/step1.php?ALERT=YAHOO_ZR&#38;d_alert=rd_final_rank&#38;ADID=GENSYND_ZER&#38;t=RTN">Read the full analyst report on "RTN"</a><br /><a href="http://www.zacks.com">Zacks Investment Research</a><br />]]></description>
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		<title>Raytheon Missiles Head East &#8211; Analyst Blog</title>
		<link>http://www.straightstocks.com/stock-watch/raytheon-missiles-head-east-analyst-blog/</link>
		<comments>http://www.straightstocks.com/stock-watch/raytheon-missiles-head-east-analyst-blog/#comments</comments>
		<pubDate>Fri, 11 Sep 2009 19:00:48 +0000</pubDate>
		<dc:creator>Zacks Market Commentaries</dc:creator>
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		<category><![CDATA[AGM-65 Maverick]]></category>
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		<guid isPermaLink="false">http://www.zacks.com/stock/news/24731/Raytheon+Missiles+Head+East+-+Analyst+Blog</guid>
		<description><![CDATA[<strong><br />
Raytheon Co.</strong> (<a href="http://www.zacks.com/stock/quote/RTN">RTN</a>) bagged a $77 million contract from the US Air Force for building missiles for Korea and Taiwan. According to terms of the contract, the company will produce AGM-65D and AGM-65G2 infrared-guided Maverick air-to-surface missiles for the two Asian nations.
<p align="left">Raytheon will manufacture and provide life-cycle support for more than 250 new missiles. The company began producing the missiles&#8217; infrared guidance and control sections in November 2008.</p>
<p align="left">The company&#8217;s AGM-65 Maverick is a class of air-to-ground tactical missile used by US Air Force, Navy, Marine Corps and 33 international customers. Its AGM-65D has a 125-pound warhead with a forward-firing, conical-shaped charge for armor penetrations. Raytheon&#8217;s AGM-65G2 employs a 300-pound blast fragmentation/penetrator warhead that was developed for maximum effectiveness against larger, reinforced targets. The company has manufactured more than 69,000 AGM-65 missiles till date.</p>
<p align="left">Raytheon is the one of the largest aerospace and defense companies in the U.S., with a well-diversified line of military products including missiles, radars, sensors, surveillance and reconnaissance equipment, communication and information systems, naval systems, air traffic control systems and technical services. We maintain our market outperform recommendation on the shares.</p><br /><a href="http://register.zacks.com/ucd/step1.php?ALERT=YAHOO_ZR&#38;d_alert=rd_final_rank&#38;ADID=GENSYND_ZER&#38;t=RTN">Read the full analyst report on "RTN"</a><br /><a href="http://www.zacks.com">Zacks Investment Research</a><br />]]></description>
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		<title>Green Light to Raytheon&#8217;s SM-6 &#8211; Analyst Blog</title>
		<link>http://www.straightstocks.com/stock-watch/green-light-to-raytheons-sm-6-analyst-blog/</link>
		<comments>http://www.straightstocks.com/stock-watch/green-light-to-raytheons-sm-6-analyst-blog/#comments</comments>
		<pubDate>Tue, 08 Sep 2009 17:59:44 +0000</pubDate>
		<dc:creator>Zacks Market Commentaries</dc:creator>
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		<guid isPermaLink="false">http://www.zacks.com/stock/news/24557/Green+Light+to+Raytheon%27s+SM-6+-+Analyst+Blog</guid>
		<description><![CDATA[<br />
Raytheon Missile Systems, an operating unit of <strong>Raytheon Company</strong> (<a href="http://www.zacks.com/stock/quote/rtn">RTN</a>), received a $93.9 million contract from the Naval Sea Systems Command, authorizing the start of production of Standard Missile-6 (SM-6).<br />
<br />
The anti-air warfare missile completed tests in August 2009, validating the go-ahead to initiate production. Work on the contract &#8211; expected to be completed by March 2012 &#8211; will be executed in Tucson, AZ, Camden, AR, Boston, MA and elsewhere.<br />
<br />
Raytheon Missile Systems&#8217; contractual backlog of late has witnessed a slide from $9.9 billion after the end of the fiscal 2008 to $7.6 billion after the end of the first-half of fiscal 2009. This was mainly due to the cancellation of the $2.4 billion KEI program. The initiation of production of the SM-6 missile generated another steady stream of orders for the company.<br />
<br />
Raytheon is the one of the largest aerospace and defense companies in the U.S. It boasts a well-diversified line of military products, including missiles, radars, sensors, surveillance and reconnaissance equipment, communication and information systems, naval systems, air traffic control systems and technical services.<br />
<br />
We continue to view Raytheon as one of the best-positioned among the large-cap defense firms due to its non-platform-centric focus, strong order bookings and order backlog, strong cash flow generation and focus on shareholder value. We maintain our market Outperform recommendation on the shares.<br /><a href="http://register.zacks.com/ucd/step1.php?ALERT=YAHOO_ZR&#38;d_alert=rd_final_rank&#38;ADID=GENSYND_ZER&#38;t=RTN">Read the full analyst report on "RTN"</a><br /><a href="http://www.zacks.com">Zacks Investment Research</a><br />]]></description>
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		<title>Raytheon Set to Acquire BBN Tech &#8211; Analyst Blog</title>
		<link>http://www.straightstocks.com/stock-watch/raytheon-set-to-acquire-bbn-tech-analyst-blog/</link>
		<comments>http://www.straightstocks.com/stock-watch/raytheon-set-to-acquire-bbn-tech-analyst-blog/#comments</comments>
		<pubDate>Thu, 03 Sep 2009 16:11:21 +0000</pubDate>
		<dc:creator>Zacks Market Commentaries</dc:creator>
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		<guid isPermaLink="false">http://www.zacks.com/stock/news/24444/Raytheon+Set+to+Acquire+BBN+Tech+-+Analyst+Blog</guid>
		<description><![CDATA[<br />
<strong>Raytheon Company</strong> (<a href="http://www.zacks.com/stock/quote/rtn">RTN</a>) is planning to acquire privately held BBN Technologies to boost its advanced networking and speech and language technologies. Raytheon expects to complete the transaction by year's end.<br />
<br />
BBN Technologies was set up in 1984 by Massachusetts Institute of Technology professors Richard Bolt and Leo Beranek with MIT graduate Robert Newman. The company has about 700 employees in its seven U.S. facilities.<br />
<br />
Raytheon&#8217;s acquisition of BBN Technologies has been planned in accordance with its focus on strengthening its Intelligence and Information Systems segment, whose importance rose in recent times with Pentagon&#8217;s emphasis on cyber security and mission-critical intelligence products.<br />
<br />
Intelligence and Information Systems segment is the dark horse for growth considering the Pentagon&#8217;s ire towards high-cost platform programs. However, Raytheon ended the second quarter of fiscal 2009 with a funded backlog of only $1.8 billion, the lowest among its six operating segments.<br />
<br />
Raytheon is the one of the largest aerospace and defense companies in the U.S., with a well-diversified line of military products, including missiles, radars, sensors, surveillance and reconnaissance equipment, communication and information systems, naval systems, air traffic control systems, and technical services. We maintain our market Outperform recommendation on the shares.<br /><a href="http://register.zacks.com/ucd/step1.php?ALERT=YAHOO_ZR&#38;d_alert=rd_final_rank&#38;ADID=GENSYND_ZER&#38;t=RTN">Read the full analyst report on "RTN"</a><br /><a href="http://www.zacks.com">Zacks Investment Research</a><br />]]></description>
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		<title>RA&#8217;s Daily Russian News Blast &#8211; August 20, 2009</title>
		<link>http://www.straightstocks.com/investing-in-russia-stocks/ras-daily-russian-news-blast-august-20-2009/</link>
		<comments>http://www.straightstocks.com/investing-in-russia-stocks/ras-daily-russian-news-blast-august-20-2009/#comments</comments>
		<pubDate>Thu, 20 Aug 2009 08:33:38 +0000</pubDate>
		<dc:creator>Robert Amsterdam</dc:creator>
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		<description><![CDATA[ TODAY: Medvedev admits terrorists have strong hand in Caucasus; proposes sidestepping trial by jury for special cases; technological breakthrough to solve missile defence situation?&#160; Ukraine-Russia issues still making waves; church reacts on exposé article.At a security conference on the...]]></description>
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		<title>Raytheon Beats Estimates, LMT &#8211; Analyst Blog</title>
		<link>http://www.straightstocks.com/stock-watch/raytheon-beats-estimates-lmt-analyst-blog/</link>
		<comments>http://www.straightstocks.com/stock-watch/raytheon-beats-estimates-lmt-analyst-blog/#comments</comments>
		<pubDate>Mon, 27 Jul 2009 18:58:35 +0000</pubDate>
		<dc:creator>Zacks Market Commentaries</dc:creator>
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		<description><![CDATA[<br />
<strong>Raytheon</strong> (<a href="http://www.zacks.com/stock/quote/rtn">RTN</a>) announced better-than-expected 2nd quarter results. The defense electronics giant -- in contrast to the flagship of defense contractors,<strong> Lockheed Martin Corporation</strong> (<a href="http://www.zacks.com/stock/quote/lmt">LMT</a>) -- reported 25% higher EPS of $1.24 over the year-ago quarter.<br />
<br />
Lockheed Martin reported 13% lower EPS over the year-ago quarter. While Lockheed was swept away by pension blues, Raytheon gained $11 million during the quarter from pension adjustments.<br />
<strong><br />
The Details</strong><br />
<br />
Raytheon exceeded both our and market expectations of $1.13 for the quarter. Operating income fell marginally year-over-year (1.9%) in the Integrated Defense Systems (IDS) and Missile Systems (MS, 7%) segments. This was more than made up by Network Centric Systems (NCS, 12.6%), Space and Airborne Systems (SAS, 24.1%) and Technical Services (TS, 17.8%), along with steady Intelligence and Information Systems (IIS).<br />
<br />
On the revenue front, although Raytheon grew 4% during the quarter to $6.1 billion, it failed to cross our expectations and that of the market of $6.2 billion. Topline growth was fueled by all but the IIS segment, owing to lower volumes in the e-Borders program.<br />
<br />
Raytheon suffered a $2.4 billion reversal in its backlog in June 2009 on account of the cancellation of the Kinetic Energy Interceptor (KEI) program. Notwithstanding, the company booked new orders worth $7.6 billion during the quarter and was able to offset most of the impact. Total backlog stood at $37.3 billion at the end of the quarter. The home-run was hit by the IDS, MS, SAS segments; each garnering more than $1 billion in new orders for the company during the quarter.<br />
<br />
Raytheon increased its full-year outlook reflecting solid perofrmance during the quarter. The company now expects 2009 revenue in the range of $24.5 - $25 billion, compared to the previous guidance of $24.4 - $24.9 billion. EPS for the year is forecasted between $4.60 and $4.75.<br />
<br />
<strong>Positive Sentiment</strong><br />
<br />
We continue to view Raytheon as one of the best-positioned among the large-cap defense primes due to its non-platform-centric focus, strong order bookings and order backlog, strong cash flow generation and focus on shareholder value. Specifically, revenue and earnings growth are driven by strong demand for missile and missile defense systems and network-centric mission solutions, including sensor and communication systems.<br />
<br />
The company also offers investors strong order bookings (notable contracts include the STOC II and FOCUS programs for the U.S. Army, AMRAAM for both international customers and the U.S. Air Force, Standard Missile-3 for the U.S. Navy and the Missile Defense Agency, and Evolved Sea Sparrow Missiles for international customers and the US Navy), an above industry ROE, an improving balance sheet and one of the highest dividend yields in the industry. In the first half of 2009, Raytheon witnessed a brisk pace in its order backlog with total bookings of $12.9 billion and an order backlog of $37.3 billion.<br />
<br />
<strong>Looking Ahead</strong><br />
<br />
Going forward, growth will be driven by focus on ISR unmanned systems, training, cyber security, Standard Missile-3, Patriot, Zumwalt and THAAD. Furthermore, the recent acquisition of Telemus Solutions, a provider of information security, intelligence and technical services, strengthens the company&#8217;s focus on the emerging cyber-security market.<br />
<br />
However, concerns about the future growth of defense spending on Raytheon programs, given continuing budget deficits as well as concerns related to the company&#8217;s program execution, remain ongoing risks.<br />
<br />
Over the past year, RTN traded within a range of 6.9x to 12.7x then current-year earnings estimates. Currently, RTN trades at only 9.3x and 8.9x, respectively, our 2009 and 2010 EPS estimates, or at a significant discount to its military electronics industry median and mean multiple values. Likewise, relative sales and cash-flow multiples both indicate a discount valuation of RTN.<br />
<br />
<strong>The Recommendation</strong><br />
<br />
Accordingly, with a predominantly bullish outlook, partially offset by several company-specific risks and an attractive valuation, we note a bias toward outperformance, and maintain our BUY recommendation on RTN stock with a six-month target price of $49.25, or 10.1x and 9.7x, respectively, our 2009 and 2010 EPS estimates. Price appreciation to our near-term valuation target, combined with the stock&#8217;s recently increased $0.31 per share quarterly cash dividend -- which we deem sustainable and secure based upon conservative projected payout ratios -- represents annualized total return potential of 20.7%.<br />
<br />
Raytheon Company is the one of the largest aerospace and defense companies in the U.S., with a well-diversified line of military products, including missiles, radars, sensors, surveillance and reconnaissance equipment, communication and information systems, naval systems, air traffic control systems and technical services.<br /><a href="http://register.zacks.com/ucd/step1.php?ALERT=YAHOO_ZR&#38;d_alert=rd_final_rank&#38;ADID=GENSYND_ZER&#38;t=RTN">Read the full analyst report on "RTN"</a><br /><a href="http://www.zacks.com">Zacks Investment Research</a><br />]]></description>
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		<title>Microsemi Beats on Bottom Line &#8211; Analyst Blog</title>
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		<comments>http://www.straightstocks.com/stock-watch/microsemi-beats-on-bottom-line-analyst-blog/#comments</comments>
		<pubDate>Mon, 27 Jul 2009 14:28:56 +0000</pubDate>
		<dc:creator>Zacks Market Commentaries</dc:creator>
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		<guid isPermaLink="false">http://www.zacks.com/stock/news/22783/Microsemi+Beats+on+Bottom+Line+-+Analyst+Blog</guid>
		<description><![CDATA[<br />
<strong>Microsemi Corporation&#8217;s</strong> (<a href="http://www.zacks.com/stock/quote/mscc">MSCC</a>) fiscal third quarter revenue missed the consensus by a sliver, but EPS beat by 3 cents. Revenue was at the high-end of the guided range, while the EPS exceeded the guidance by $0.01.<br />
<br />
<strong>Revenue</strong><br />
<br />
The company reported revenue of $107.0 million, which was up 1.2% sequentially and down 17.2% year over year.<br />
<br />
Microsemi&#8217;s Analog/Mixed Signal products cater to three end markets -- mobile/connectivity, industrial/semicap and notebooks/LCD TVs/display.<br />
<br />
The mobile/connectivity business (9% of revenue) grew 4.5% sequentially and declined 53.1% from the year-ago quarter. The business is currently being driven by the WLAN product line, as the high capital requirement of POE installations limit adoption in the current environment.<br />
<br />
The industrial/semicap business remains weak, generating just 6% of revenue in the last quarter. Segment revenue declined 17.6% sequentially and 30.1% year over year.<br />
<br />
Notebooks/LCD TVs/displays generated 5% of revenue, representing sequential and year-over-year declines of 6.3% and 63.2%. Although notebooks and LCD TVs grew strongly, this was more than offset by slower automotive and storage applications.<br />
<br />
<img src="http://www.zacks.com/images/upload_dir/1248697211.gif" alt="" /><br />
<br />
The High Reliability product line also caters to three end markets&#8212;defense, commercial air/space and medical.<br />
<br />
The defense segment generated 40% of third quarter revenue, up 8.6% sequentially and down 0.2% year over year. Acquisitions, new products, growing electronic content in defense equipment and pricing power helped growth in the last quarter. The company saw particular strength at <strong>Northrop Grumman </strong>(<a href="http://www.zacks.com/stock/quote/noc">NOC</a>) and <strong>Raytheon</strong> (<a href="http://www.zacks.com/stock/quote/rtn">RTN</a>).<br />
<br />
The commercial air/space markets generated 25% of revenue, growing 2.3% sequentially and 3.3% year over year. The slow growth is related to inventory at customers, especially <strong>Boeing</strong> (<a href="http://www.zacks.com/stock/quote/ba">BA</a>), as the recession has had a significant impact on air traffic. The satellite business was strong.<br />
<br />
The medical segment (15% of quarterly revenue) is usually more resilient. Revenue growth is currently being driven by ICDs. However, capital equipment spending has weakened, affecting MRI equipment sales. This has resulted in sequential and year-over-year declines of 7.9% and 0.9%, respectively. <br />
<br />
<strong>Orders</strong><br />
<br />
Bookings growth slowed, yielding a book-to-bill ratio of less than 1. Lead times in the analog/mixed signal business have shrunk from the normal level of 10-12 weeks. Last quarter, they were in the 6-week range. Overall high-reliability lead times have shrunk from 20-30 weeks to 15-26 weeks, although satellite lead times remain in the 36-week range.<br />
<strong><br />
Operating Results</strong><br />
<br />
The pro forma gross margin was 47.2%, up 15 basis points (bp) from the previous quarter&#8217;s 47.1%. The operating expenses of $29.1 million were lower than the previous quarter&#8217;s $34.5 million. Production efficiencies were primarily responsible for the growth in gross margin.<br />
<br />
The operating margin was 20.0%, up 550 bps sequentially from 14.5%. Lower SG&#38;A expenses were the primary reason for the higher margin, although lower COGS and R&#38;D also helped.<br />
<br />
 <img src="http://www.zacks.com/images/upload_dir/1248697230.gif" alt="" /><br />
<br />
The pro forma net income of $17.8 million, or 16.6% of sales, compares with $15.5 million, or 14.7%, in the previous quarter and $27.0 million, 20.9%, in the year-ago quarter. Special items in the last quarter were transitional idle capacity, profit on acquired inventory, restructuring charges, in-process R&#38;D and intangibles amortization, which had a net impact of -$0.12 per share on a tax adjusted basis. <br />
<br />
Including these items, the fully diluted GAAP EPS was $0.10 per share compared to loss of $0.21 per share in the previous quarter and income of $0.17 per share in the year-ago quarter.<br />
<br />
<strong>Balance Sheet</strong><br />
<br />
Microsemi has a strong, debt-free balance sheet. Inventories declined 5.1%, with inventory turns decreasing from 2.5x to 2.0x. The cash and investments balance at quarter-end was $180.5 million, down $5.3 million sequentially. The company spent $2.8 million on capex in the last quarter. DSOs went down significantly from 73 to 64 days.<br />
<br />
<strong>Guidance</strong><br />
<br />
Management has guided to a revenue increase of 1-4% in the fourth quarter, with the non-GAAP EPS expected to come in at around $0.22-0.23.<br /><a href="http://register.zacks.com/ucd/step1.php?ALERT=YAHOO_ZR&#38;d_alert=rd_final_rank&#38;ADID=GENSYND_ZER&#38;t=MSCC">Read the full analyst report on "MSCC"</a><br /><a href="http://register.zacks.com/ucd/step1.php?ALERT=YAHOO_ZR&#38;d_alert=rd_final_rank&#38;ADID=GENSYND_ZER&#38;t=NOC">Read the full analyst report on "NOC"</a><br /><a href="http://register.zacks.com/ucd/step1.php?ALERT=YAHOO_ZR&#38;d_alert=rd_final_rank&#38;ADID=GENSYND_ZER&#38;t=RTN">Read the full analyst report on "RTN"</a><br /><a href="http://register.zacks.com/ucd/step1.php?ALERT=YAHOO_ZR&#38;d_alert=rd_final_rank&#38;ADID=GENSYND_ZER&#38;t=BA">Read the full analyst report on "BA"</a><br /><a href="http://www.zacks.com">Zacks Investment Research</a><br />]]></description>
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		<title>The Long and the Short of it All</title>
		<link>http://www.straightstocks.com/financial/the-long-and-the-short-of-it-all/</link>
		<comments>http://www.straightstocks.com/financial/the-long-and-the-short-of-it-all/#comments</comments>
		<pubDate>Wed, 15 Jul 2009 17:34:12 +0000</pubDate>
		<dc:creator>Bullish Bankers</dc:creator>
				<category><![CDATA[Financial]]></category>
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		<guid isPermaLink="false">http://www.bullishbankers.com/?p=15019</guid>
		<description><![CDATA[We are presenting a list of companies which we believe are currently mispriced, based on our estimate of fair value, by the market. We develop our fair value ranges by projected free cash flow out one year and estimating an appropriate FCF multiple based on our assessment of risk and the strength of the balance sheet. ]]></description>
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		<title>Boeing’s Stock Grounded, How to Capitalize</title>
		<link>http://www.straightstocks.com/financial/boeing%e2%80%99s-stock-grounded-how-to-capitalize/</link>
		<comments>http://www.straightstocks.com/financial/boeing%e2%80%99s-stock-grounded-how-to-capitalize/#comments</comments>
		<pubDate>Fri, 26 Jun 2009 04:51:09 +0000</pubDate>
		<dc:creator>Bullish Bankers</dc:creator>
				<category><![CDATA[Financial]]></category>
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		<guid isPermaLink="false">http://www.bullishbankers.com/?p=14838</guid>
		<description><![CDATA[The week of June 26th was very bad to Boeing. After continued reassurance from CEO Jim McNerney that the company’s much anticipated (and previously delayed) Dreamliner 787 would be delivered by the 23rd, Boeing once again came up short. To investors, this was simply one slip-up too many… and a company that cannot fulfill promises [...]]]></description>
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		<title>Aerospace/Defense upgrade/downgrade &#8211; Goldman Sachs</title>
		<link>http://www.straightstocks.com/market-commentary/aerospacedefense-upgradedowngrade-goldman-sachs/</link>
		<comments>http://www.straightstocks.com/market-commentary/aerospacedefense-upgradedowngrade-goldman-sachs/#comments</comments>
		<pubDate>Mon, 18 May 2009 11:32:00 +0000</pubDate>
		<dc:creator>Notable Calls</dc:creator>
				<category><![CDATA[Market Commentary]]></category>
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		<guid isPermaLink="false">tag:blogger.com,1999:blog-29297569.post-8023034456556762578</guid>
		<description><![CDATA[div style="text-align: justify;"span style="font-weight: bold;"At the peak of one cycle and the trough of another/spanbr /br /We are at the peak of a decade long boom in Defense spending, and at the trough of a two year Aerospace bear market. span style="font-weight: bold;"Goldman Sachs is upgrading Aerospace to Attractive and downgrading Defense to Cautious,/span and expect Aamp;D investors to increasingly rotate out of the latter and into the former, particularly given that, at current trading levels, one pays the same price for trough Aerospace earnings as they do for peak Defense earnings.br /br /span style="font-weight: bold;"Firm is upgrading Aerospace to Attractive given:/spanbr /br /span style="font-weight: bold;"1) Traditional Buy signals are turning green./span The second derivative in yoy air traffic and the level of aircraft orders are both close to a bottom, which typically indicates the start of an upturn in the group.br /br /span style="font-weight: bold;"2) Expectations are low and sentiment is weak,/span as evidenced by the significant decline in consensus estimates as well as positive stock reactions to downward guidance revisions when companies report.br /br /span style="font-weight: bold;"3) Attractive valuation + positive catalysts. /spanIn prior cycles, Aerospace stocks consistently decline 50% peak to trough, which is where the group is today. Multiples have bounced off lows, but still near trough, and have potential to double. Several near-term positive catalysts could drive multiple expansion (BA conference, Paris Air Show, 787 first-flight).br /br /Goldman is upgrading Boeing to Neutral from Sell, Spirit to Buy from CL Sell, and Rockwell Collins to Buy from Neutral. Goodrich remains CL Buy rated. They also revise their estimates and price targets across the group.br /br /span style="font-weight: bold;"Firm is downgrading Defense to Cautious given:/spanbr /br /span style="font-weight: bold;"1) Defense spending has peaked, and history suggests an extended downturn is possible/span as Defense spending typically moves in decade long cycles. Defense stocks underperform when spending is declining.br /br /span style="font-weight: bold;"2) Defense is lower priority than it used to be./span It has become very clear in recent months that Defense is atthe lower end of the new Administration’s list of priorities, and could increasingly become a bill payer for other government spending.br /br /span style="font-weight: bold;"3) The stocks are not as inexpensive as they appear/span, and our analysis shows that the group could see relative multiple compression, coupled with earnings declines beyond the end of the decade.br /br /They are downgrading Northrop Grumman to Sell and adding it to the Conviction Sell List, and downgrading L-3 and Raytheon to Neutral from Buy. They also make modest downward revision to PT and estimates.br /br /span style="color: rgb(255, 0, 0);"Notablecalls:/span Plenty to choose from:br /br /span style="font-weight: bold; color: rgb(255, 0, 0);"- Aerospace:/span Spoke to one contact who thinks span style="font-weight: bold;"Boeing (NYSE:BA) /spanwill see some buying interest on the upgrade as Goldman has done a good job covering the stock. They stayed on Sell for a long time and have started gradually moving towards a more positive view over the past months, removing the Conviction Sell and now upgrading to Neutral.br /br /They are also adding SPR to their Buy list from Conv. Sell and raising tgt to $17 from $12.br /br /span style="color: rgb(255, 0, 0); font-weight: bold;"- Defense: /spanI like the span style="font-weight: bold;"Northrop-Grumman (NYSE:NOC) /spandowngrade to Conviction Sell with a $40 tgt. The squeeze is over.br /br /span style="font-weight: bold;"Additionally we have JP Morgan out with some cautious comments o/spann the Defense sector saying the recent rally is starting to look long in the tooth.br /br /After underperforming the Samp;P 500 by 21% from the end of January through mid March, the four largest defense primes have now outperformed by 19% over the past two months. The budget release, solid earnings, low valuations, and short covering have all driven the recent rally. However, they have difficulty seeing continued material outperformance due to a weak fundamental outlook and anbr /absence of positive catalysts.br /br /Valuations reached depressed levels by mid March, with the four primes trading at an average multiple of only 6.5x our 2010 earnings estimates. As they commented at the time, the stocks were ripe for a rally given where they were trading, the potential for the budget release to eliminate much of the uncertainty that was making investors flee from them, and the likelihood that Q1 earnings and guidance for 09 would be solid. Now that a rally has taken place, they see tougher outlook for relative performance.br /br /Several incremental data points have been negative. Beyond the well telegraphed budget cuts announced last month by Secretary Gates, they have seen a number of other data points recently that reinforce their belief that the administration has many other priorities that come before defense, intelligence, and space contracting.br //divdiv class="blogger-post-footer"img width='1' height='1' src='http://res1.blogblog.com/tracker/29297569-8023034456556762578?l=notablecalls.blogspot.com'//div]]></description>
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		<title>More Evidence of Pentagon Budget Cuts&#8230;Will it Actually Happen?</title>
		<link>http://www.straightstocks.com/investing-in-energy-markets/more-evidence-of-pentagon-budget-cutswill-it-actually-happen/</link>
		<comments>http://www.straightstocks.com/investing-in-energy-markets/more-evidence-of-pentagon-budget-cutswill-it-actually-happen/#comments</comments>
		<pubDate>Tue, 31 Mar 2009 18:17:00 +0000</pubDate>
		<dc:creator>Michael E. Brisky</dc:creator>
				<category><![CDATA[Energy Markets]]></category>
		<category><![CDATA[Market Commentary]]></category>
		<category><![CDATA[Carl Levin]]></category>
		<category><![CDATA[finance]]></category>
		<category><![CDATA[FULL]]></category>
		<category><![CDATA[michael brisky]]></category>
		<category><![CDATA[obama]]></category>
		<category><![CDATA[Pentagon]]></category>
		<category><![CDATA[Raytheon]]></category>
		<category><![CDATA[Robert Gates]]></category>
		<category><![CDATA[Senate]]></category>
		<category><![CDATA[Senate Armed Services Committee]]></category>

		<guid isPermaLink="false">tag:blogger.com,1999:blog-819581243324579563.post-6269431351333355161</guid>
		<description><![CDATA[Yesterday I mentioned Raytheon (a href="http://finance.yahoo.com/q?s=rtn"RTN/a)  for an investment at these levels.  Today, a href="http://www.breitbart.com/article.php?id=D9794LL81"we find a little more news on the subject./abr /br /span class="lingo_region"blockquoteA Senate defense committee chairman says Pentagon budget will include large, painful cuts. Senate Armed Services Committee Chairman Carl Levin said Tuesday that major program cuts will not be pushed off until the 2011 budget, but will be included when Defense Secretary Robert Gates sends his spending plan to the president later this month. p Levin's comments confirmed what many contractors and military leaders have expected, but he offered no details on which programs may be axed. He said Pentagon officials have indicated they will not be able to submit the much-anticipated spending plan by April 21, as initially hoped. /p/blockquotepbr //ppWhat does this mean?  For now, not much.  This thesis has been priced into all defense stocks, and thats why I like Raytheon's valution.  I'm actually a believer that we spend far too much money on certain aspects of defense, and there would be a lot of ways to intelligently trim the budget.  But the government doesn't really work that way.  Its more likely to move in larger, more sweeping movements.  And although President Obama was in favor of making some major changes, as of right now, he appears to be becoming more conservative in terms of policy (I don't mean fiscally conservative, I mean conservative as in not changing). br //ppSo what I mean is that its still unlikely to see a huge cut in defense spending.  If significant changes do come, it won't be for a few years and the near term outlook for these stocks, especially Raytheon, remains strong.  They just raised their dividend and have a strong balance sheet.  I like the stock in the near term. br //ppNo current position, but considering.  br //p/spandiv class="blogger-post-footer"img width='1' height='1' src='http://res1.blogblog.com/tracker/819581243324579563-6269431351333355161?l=briskycapital.blogspot.com'//div]]></description>
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		<item>
		<title>GM: Does it Matter to the Market?</title>
		<link>http://www.straightstocks.com/investing-in-energy-markets/gm-does-it-matter-to-the-market/</link>
		<comments>http://www.straightstocks.com/investing-in-energy-markets/gm-does-it-matter-to-the-market/#comments</comments>
		<pubDate>Mon, 30 Mar 2009 19:38:00 +0000</pubDate>
		<dc:creator>Michael E. Brisky</dc:creator>
				<category><![CDATA[Energy Markets]]></category>
		<category><![CDATA[Market Commentary]]></category>
		<category><![CDATA[finance]]></category>
		<category><![CDATA[FULL]]></category>
		<category><![CDATA[michael brisky]]></category>
		<category><![CDATA[Raytheon]]></category>

		<guid isPermaLink="false">tag:blogger.com,1999:blog-819581243324579563.post-8939576382449721790</guid>
		<description><![CDATA[Today's big news is about GM. I'm not so sure the market reaction has much to do with GM though.  We are in a position where if we want to move higher, a pullback was necessary.  I'm not convinced that we're out of the woods yet with this market (and surely not with the economy). br /br /I've been doing a little trading lately, but with the market whipping back and forth, it has made it hard to hold onto positions, especially if I set stops too tight. br /br /Picked up some Mosiac (a href="http://finance.yahoo.com/q?s=MOS"MOS/a) today on the heels of an analyst downgrade.  This stock always has fast money behind it if the market rallies. br /br /A couple of names I've added to the radar:br /br /Diamond Offshore (a href="http://finance.yahoo.com/q?s=DOamp;.yficrumb=wUDGTtnMzWB"DO/a).  I used to be a Noble (a href="http://finance.yahoo.com/q?s=neamp;.yficrumb=wUDGTtnMzWB"NE/a) fan but may be shifting my favorite in the sector.  They are both good companies though. br /br /Raytheon (a href="http://finance.yahoo.com/q?s=RTNamp;.yficrumb=wUDGTtnMzWB"RTN/a).  I think this stock has gotten to low based on "Obama will cut military spending."  He's actually ramping up activity right now. br /br /The market has bounced off its lows around 780 a couple of times today.  If it breaks below that, I'd expect some more to the downside.div class="blogger-post-footer"img width='1' height='1' src='http://res1.blogblog.com/tracker/819581243324579563-8939576382449721790?l=briskycapital.blogspot.com'//div]]></description>
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		<item>
		<title>Just How Much Does Size Matter?</title>
		<link>http://www.straightstocks.com/financial/just-how-much-does-size-matter/</link>
		<comments>http://www.straightstocks.com/financial/just-how-much-does-size-matter/#comments</comments>
		<pubDate>Sat, 28 Mar 2009 11:00:31 +0000</pubDate>
		<dc:creator>Bullish Bankers</dc:creator>
				<category><![CDATA[Financial]]></category>
		<category><![CDATA[Market Commentary]]></category>
		<category><![CDATA[3g]]></category>
		<category><![CDATA[3G networks;]]></category>
		<category><![CDATA[AT&T Inc.]]></category>
		<category><![CDATA[Bank]]></category>
		<category><![CDATA[Barack Obama]]></category>
		<category><![CDATA[bullish bankers]]></category>
		<category><![CDATA[Citigroup]]></category>
		<category><![CDATA[Exelon Corporation]]></category>
		<category><![CDATA[Exxon Mobil]]></category>
		<category><![CDATA[financial subsidiary]]></category>
		<category><![CDATA[GE Capital]]></category>
		<category><![CDATA[General Electric]]></category>
		<category><![CDATA[industrial conglomerate;]]></category>
		<category><![CDATA[inelastic medical products;]]></category>
		<category><![CDATA[Information Technology]]></category>
		<category><![CDATA[Jamie Dimon]]></category>
		<category><![CDATA[Johnson]]></category>
		<category><![CDATA[JP Morgan Chase]]></category>
		<category><![CDATA[JP-Morgan]]></category>
		<category><![CDATA[lackluster product;]]></category>
		<category><![CDATA[Latin America]]></category>
		<category><![CDATA[Microsoft Corporation]]></category>
		<category><![CDATA[Monsanto Company]]></category>
		<category><![CDATA[Nike]]></category>
		<category><![CDATA[Raytheon]]></category>
		<category><![CDATA[Sp 500]]></category>
		<category><![CDATA[telecommunications giant;]]></category>
		<category><![CDATA[the Target;]]></category>
		<category><![CDATA[USD]]></category>
		<category><![CDATA[Utilities]]></category>
		<category><![CDATA[Wal Mart Stores Inc]]></category>
		<category><![CDATA[wireless]]></category>
		<category><![CDATA[Yahoo]]></category>

		<guid isPermaLink="false">http://www.bullishbankers.com/?p=11490</guid>
		<description><![CDATA[Amidst this economic downturn, investors are consistently looking to invest in companies with the ability to &#8220;weather&#8221; the storm.  A frequently mentioned characteristic of the companies deemed qualified to handle the current recession are size, in particular market cap.  But how has size held up thus far in this market?  The following [...]]]></description>
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		<item>
		<title>Stimulus Package Extravaganza</title>
		<link>http://www.straightstocks.com/politics-and-your-money/stimulus-package-extravaganza/</link>
		<comments>http://www.straightstocks.com/politics-and-your-money/stimulus-package-extravaganza/#comments</comments>
		<pubDate>Sat, 14 Feb 2009 20:19:01 +0000</pubDate>
		<dc:creator>Jeffrey Miller</dc:creator>
				<category><![CDATA[Politics & Your Money]]></category>
		<category><![CDATA[Athena;]]></category>
		<category><![CDATA[broadband]]></category>
		<category><![CDATA[Cisco]]></category>
		<category><![CDATA[Corning]]></category>
		<category><![CDATA[election stocks]]></category>
		<category><![CDATA[F5 Networks;]]></category>
		<category><![CDATA[Foundry Networks;]]></category>
		<category><![CDATA[General Dynamics]]></category>
		<category><![CDATA[General Electric]]></category>
		<category><![CDATA[Halliburton]]></category>
		<category><![CDATA[Harris Corp;]]></category>
		<category><![CDATA[Health Information Technology;]]></category>
		<category><![CDATA[healthcare]]></category>
		<category><![CDATA[healthcare  category;]]></category>
		<category><![CDATA[Information Technology]]></category>
		<category><![CDATA[Jeffrey Miller]]></category>
		<category><![CDATA[Jim Cramer]]></category>
		<category><![CDATA[Juniper Networks]]></category>
		<category><![CDATA[Lockheed Martin]]></category>
		<category><![CDATA[Motorola]]></category>
		<category><![CDATA[Multimedia Networking Index Fund;]]></category>
		<category><![CDATA[Northrop Grumman]]></category>
		<category><![CDATA[PARTIAL]]></category>
		<category><![CDATA[Qualcomm]]></category>
		<category><![CDATA[Raytheon]]></category>
		<category><![CDATA[Tellabs;]]></category>
		<category><![CDATA[United Technologies]]></category>
		<category><![CDATA[USD]]></category>

		<guid isPermaLink="false">http://electionstocks.com/2009/02/14/stimulus-package-extravaganza/</guid>
		<description><![CDATA[We all know that the stimulus package is going to be the big spending bill of the year, making it the #8216;pork barrel#8217; - so to speak. The fact that there is going to be quite limited appropriations of cash for the rest of 09, this does a lot for us in determining the timing [...]img src="http://feeds.feedburner.com/~r/ElectionStocks/~4/539806996" height="1" width="1"/]]></description>
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		<title>The Trading Day Ahead &#8211; 01/29/09</title>
		<link>http://www.straightstocks.com/stock-watch/the-trading-day-ahead-012909/</link>
		<comments>http://www.straightstocks.com/stock-watch/the-trading-day-ahead-012909/#comments</comments>
		<pubDate>Thu, 29 Jan 2009 11:38:59 +0000</pubDate>
		<dc:creator>Daniel Shepard</dc:creator>
				<category><![CDATA[Stocks to Watch]]></category>
		<category><![CDATA[Altria Group]]></category>
		<category><![CDATA[Eastman Kodak]]></category>
		<category><![CDATA[Ford]]></category>
		<category><![CDATA[International Paper;]]></category>
		<category><![CDATA[Raytheon]]></category>

		<guid isPermaLink="false">http://www.navivest.com/blog/?p=547</guid>
		<description><![CDATA[An extension of yesterday's stellar, across the board rally, would be very welcomed by the investment community today. However, that likelihood is threatened by key economic reports that are due out today.]]></description>
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		<slash:comments>0</slash:comments>
		</item>
		<item>
		<title>Cashing in on Dividends.  &#8211; Screen of the Week</title>
		<link>http://www.straightstocks.com/stock-watch/cashing-in-on-dividends-screen-of-the-week/</link>
		<comments>http://www.straightstocks.com/stock-watch/cashing-in-on-dividends-screen-of-the-week/#comments</comments>
		<pubDate>Tue, 27 Jan 2009 00:00:00 +0000</pubDate>
		<dc:creator>Kevin Matras</dc:creator>
				<category><![CDATA[Stocks to Watch]]></category>
		<category><![CDATA[2 Rank;]]></category>
		<category><![CDATA[4 Rank;]]></category>
		<category><![CDATA[finance]]></category>
		<category><![CDATA[finance sector]]></category>
		<category><![CDATA[McDonald's Corp.]]></category>
		<category><![CDATA[Pfizer]]></category>
		<category><![CDATA[Raytheon]]></category>
		<category><![CDATA[Raytheon Company;]]></category>
		<category><![CDATA[Republic Services Inc.;]]></category>
		<category><![CDATA[Sp 500]]></category>
		<category><![CDATA[Sunoco Inc.]]></category>
		<category><![CDATA[Waste Management Inc.]]></category>
		<category><![CDATA[Wyeth]]></category>
		<category><![CDATA[Zacks Investment Research]]></category>
		<category><![CDATA[Zacks Market Commentaries]]></category>

		<guid isPermaLink="false">http://www.zacks.com/commentary/9870/Cashing+in+on+Dividends.++-+Screen+of+the+Week</guid>
		<description><![CDATA[<i>Stocks featured in this article are: <b>McDonalds Corp.</b> (<a href="http://www.zacks.com/research/report.php?t=MCD">MCD</a>), <b>Republic Services, Inc.</b> (<a href="http://www.zacks.com/research/report.php?t=RSG">RSG</a>), <b>Raytheon</b> (<a href="http://www.zacks.com/research/report.php?t=RTN">RTN</a>), <b>Sunoco, Inc.</b> (<a href="http://www.zacks.com/research/report.php?t=SUN">SUN</a>), and <b>Waste Management Inc.</b> (<a href="http://www.zacks.com/research/report.php?t=WMI">WMI</a>).</i><p> 

<table align="right"><tr><td></td></tr></table>

There has been a lot of talk about dividends lately. </p><p> 

Unfortunately, much of the talk is about who's going to cut theirs. </p><p>

We've all read or heard about mainstream companies suddenly deciding to slash dividends or cut them altogether. </p><p>

Pfizer is one example, although they were apparently trying to finance their purchase of Wyeth. But regardless of the reason, the investor who was told his dividend would be slashed by 50% was likely none too happy. </p><p>

Most of the bad news however has come from the financial sector, where companies have been forced to stop their payouts. </p><p>

But there's no reason to quit looking for good stocks with good dividends. </p><p>

Smaller growth companies will typically not pay a dividend as they pour all their money into growing their business. </p><p>

However, larger companies with solid earnings - but without the aggressive growth rates (or aggressive growth rate opportunities) that may have marked their earlier years - will often reward investors thru dividend distribution (i.e., paying out a portion of their earnings to shareholders). </p><p>

Many of these companies probably have solid cash positions and generate great earnings, but lack the kind of earnings growth that many investors crave. </p><p>

But make money they do, and they pass a portion on to their investors. </p><p>

In this week's screen, we're going to look for stocks with good payout ratios and a track record of excellent growth and payment history. </p><p>

<ul> 

<li><b>Zacks Rank &#60;= 3</b><br />
This will give us Zacks #1 Rank, Zacks #2 Rank and Zacks #3 Rank companies. But will exclude Zacks #4 Rank and Zacks #5 Rank companies, which are Sells and Strong sells. <p>

<li><b>5 Year Historical Growth Rate &#62;= 10%</b><br />
We want to see a history of solid growth. <p>

<li><b>Next 3-5 Year Projected Growth Rate &#62;= 10%</b><br />
(In addition to a track record of solid earnings, it's important to have a successful future of solid growth as well. (Otherwise, your dividend could be in jeopardy.) <p>

<li><b> Year Average Dividend Yield &#62;= Average for the S&#38;P 500</b><br />
(Above average market yields we're looking for.) <p>

<li><b>Current Dividend Yield &#62;= 5 Year Average Dividend Yield</b><br />
(We're also insisting that their current yield be greater than their average dividend yield.) <p>

<li><b>Sector  Finance (that means NO finance companies)</b><br />
Because of the shaky environment with financial companies, we're going to
exclude the finance sector entirely. <p>

</p></li></p></li></p></li></p></li></p></li></p></li></ul>

Of course, this screen will not preclude that a company will decide to cut their dividend in the future. But these additional measures should help us find some of the best dividend paying companies with a history of success. </p><p>

Here are 5 stocks from  this week's screen: </p><p>

<a href="http://www.zacks.com/stock/quote/MCD">MCD</a> McDonalds Corp.<br />

<a href="http://www.zacks.com/stock/quote/RSG">RSG</a> Republic Services, Inc.<br />

<a href="http://www.zacks.com/stock/quote/RTN">RTN</a> Raytheon Company<br />

<a href="http://www.zacks.com/stock/quote/SUN">SUN</a> Sunoco, Inc.<br />

<a href="http://www.zacks.com/stock/quote/WMI">WMI</a> Waste Management, Inc.</p><p>

Get the rest of the stocks on this list and start finding top dividend paying companies on your own today. It's easy to do. Sign up for a free trial to the Research Wizard today. </p><p> 

<a href="http://www.zacks.com/researchwizard/index.php?site=screen"> Click Here for your free trial to the Research Wizard </a> </p><p>

<i> Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. </i></p><p>



<br /><a href="http://register.zacks.com/ucd/step1.php?ALERT=YAHOO_ZR&#38;d_alert=rd_final_rank&#38;ADID=YAHOO_content_ZRANK&#38;t=WMI">"WMI" Free Stock Analysis: Buy? Sell? Hold?</a><br /><a href="http://register.zacks.com/ucd/step1.php?ALERT=YAHOO_ZR&#38;d_alert=rd_final_rank&#38;ADID=YAHOO_content_ZRANK&#38;t=RSG">"RSG" Free Stock Analysis: Buy? Sell? Hold?</a><br /><a href="http://register.zacks.com/ucd/step1.php?ALERT=YAHOO_ZR&#38;d_alert=rd_final_rank&#38;ADID=YAHOO_content_ZRANK&#38;t=MCD">"MCD" Free Stock Analysis: Buy? Sell? Hold?</a><br /><a href="http://register.zacks.com/ucd/step1.php?ALERT=YAHOO_ZR&#38;d_alert=rd_final_rank&#38;ADID=YAHOO_content_ZRANK&#38;t=RTN">"RTN" Free Stock Analysis: Buy? Sell? Hold?</a><br /><a href="http://www.zacks.com">Zacks Investment Research</a><br /></p>]]></description>
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		</item>
		<item>
		<title>Maverick Capital Management 13F &#124; Lee Ainslie Hedge Fund Holdings Analysis</title>
		<link>http://www.straightstocks.com/investing-in-hedge-funds/maverick-capital-management-13f-lee-ainslie-hedge-fund-holdings-analysis/</link>
		<comments>http://www.straightstocks.com/investing-in-hedge-funds/maverick-capital-management-13f-lee-ainslie-hedge-fund-holdings-analysis/#comments</comments>
		<pubDate>Mon, 22 Sep 2008 12:41:00 +0000</pubDate>
		<dc:creator>Richard C. Wilson</dc:creator>
				<category><![CDATA[Hedge Funds]]></category>
		<category><![CDATA[Advanced Micro Devices]]></category>
		<category><![CDATA[America Movil]]></category>
		<category><![CDATA[Autozone]]></category>
		<category><![CDATA[Avon Products]]></category>
		<category><![CDATA[Bank of New York Mellon]]></category>
		<category><![CDATA[Baxter Intl]]></category>
		<category><![CDATA[Berkshire Hathaway]]></category>
		<category><![CDATA[Cardinal Health]]></category>
		<category><![CDATA[Cigna Corp]]></category>
		<category><![CDATA[Citizens Republic Bancorp]]></category>
		<category><![CDATA[Citrix]]></category>
		<category><![CDATA[Crm]]></category>
		<category><![CDATA[Crocs]]></category>
		<category><![CDATA[Digital River Inc]]></category>
		<category><![CDATA[Free Daily]]></category>
		<category><![CDATA[google]]></category>
		<category><![CDATA[Hanesbrands]]></category>
		<category><![CDATA[HANS]]></category>
		<category><![CDATA[Hedge Fund]]></category>
		<category><![CDATA[JP Morgan Chase]]></category>
		<category><![CDATA[Julian Robertson]]></category>
		<category><![CDATA[Leap Wireless]]></category>
		<category><![CDATA[Lee Ainslie]]></category>
		<category><![CDATA[Lexmark]]></category>
		<category><![CDATA[Liberty Media Corp]]></category>
		<category><![CDATA[Loews (L) Move Inc]]></category>
		<category><![CDATA[Lone Pine Capital]]></category>
		<category><![CDATA[Marsh & Mclennan]]></category>
		<category><![CDATA[Maverick Capital Hedge Fund]]></category>
		<category><![CDATA[Maverick Capital LP LTD LLC]]></category>
		<category><![CDATA[Maverick Capital Management]]></category>
		<category><![CDATA[Monsanto]]></category>
		<category><![CDATA[MSCI Inc]]></category>
		<category><![CDATA[Mylan Inc.]]></category>
		<category><![CDATA[National City Corp.]]></category>
		<category><![CDATA[Nordstrom]]></category>
		<category><![CDATA[Nucor]]></category>
		<category><![CDATA[OfficeMax]]></category>
		<category><![CDATA[Polo Ralph Lauren]]></category>
		<category><![CDATA[Potash]]></category>
		<category><![CDATA[Qualcomm]]></category>
		<category><![CDATA[Raytheon]]></category>
		<category><![CDATA[Research-In-Motion]]></category>
		<category><![CDATA[Sears]]></category>
		<category><![CDATA[Securities And Exchange Commission]]></category>
		<category><![CDATA[Sohu.com Inc.]]></category>
		<category><![CDATA[South Financial Group]]></category>
		<category><![CDATA[Starbucks]]></category>
		<category><![CDATA[Stephen Mandel Jr.]]></category>
		<category><![CDATA[Suntrust Banks]]></category>
		<category><![CDATA[Textron Inc]]></category>
		<category><![CDATA[Ultra Clean Holdings]]></category>
		<category><![CDATA[USD]]></category>
		<category><![CDATA[Viacom Inc]]></category>
		<category><![CDATA[Wyeth]]></category>
		<category><![CDATA[Zimmer Holdings]]></category>

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		<description><![CDATA[<h1><b>Maverick Capital<br /></b></h1><h2><b><span style="rgb(102, 0, 0);">Maverick Capital Management Holdings Analysis</span><br /></b></h2><a href="http://2.bp.blogspot.com/_wM_OZdOMR_Y/SNcybtEydMI/AAAAAAAAB28/dwzD4Sv8wbk/s1600-h/Maverick-Capital-Management-Hedge-fund.jpg"><img style="106px;" src="http://2.bp.blogspot.com/_wM_OZdOMR_Y/SNcybtEydMI/AAAAAAAAB28/dwzD4Sv8wbk/s200/Maverick-Capital-Management-Hedge-fund.jpg" alt="" border="0" /></a>This post is being written as part of HedgeFundBlogger.com's <a title="Investment Securities Holdings" href="http://richard-wilson.blogspot.com/2008/09/investment-securities-and-holdings-of.html">Investment Securities Tool</a> which analyzes the holdings of hedge fund managers.<br /><br />Lee Ainslie started Maverick Capital back in 1993 with $38 million. Nowadays, the fund is worth $10 billion. Ainslie, like many of the other fund managers I've profiled, has a background rooted in learning from legendary great Julian Robertson at Tiger Management. So, due to the fact that these proteges learned from the best and have had great success running their own <a title="hedge fund" href="http://richard-wilson.blogspot.com/2008/03/hedge-funds.html">hedge funds</a>, I continually try to find a reason not to follow these funds. And, needless to say I'm never successful. Some contacts over at Maverick have explained that their <a href="http://richard-wilson.blogspot.com/2008/03/hedge-fund-strategy.html" title="hedge fund strategy">hedge fund strategy</a> is straight up stock picking, both long and short. They made it clear though, that they do not employ pairs trades. Although, some of their long/short setups might be in the same sector. They try to hedge their positions like a true <a href="http://richard-wilson.blogspot.com/">hedge fund</a> by picking out the shining stars in certain sectors, as well as identifying the pieces of garbage. Now, of course, this presents us with a problem in that the 13F filings only show long positions (unless they're holding puts on a name, we can see those). So, a good amount of Maverick's portfolio (the entire short side) is unbeknownst to us, because they have reported zero put positions. But, let's look on the bright side in that we can see all their long positions. Maverick uses a value approach (obviously learned from Julian) and one of their most popular metrics is finding companies and comparing their enterprise value to sustainable free cash flow.<br /><br />So, now that we've got a little background on Maverick, let's see what they were up to.  The following are Maverick Capital's current <a title="Investment Securities Holdings" href="http://richard-wilson.blogspot.com/2008/09/investment-securities-and-holdings-of.html">holdings</a> as of June 30th 2008, as released in their most recent 13F filing with the SEC. The positions in this most recent 13F were compared to last quarter's 13F and here are the changes made to their portfolio:<br /><br /><span style="bold;">New Positions:</span><br />First Solar (FSLR): 1,202,118 shares.  This position is 2.93% of Maverick's portfolio.<br />Lorillard (LO): 3,820,856 shares.  This position is 2.36% of Maverick's portfolio.<br />CVS Caremark (CVS): 5,912,073 shares.  This position is 2.09% of Maverick's portfolio.<br />Netapp (NTAP): 9,331,862 shares.  This position is 1.81% of Maverick's portfolio.<br />ITT Educational Services (ESI): 2,422,090  shares.  This position is 1.79% of Maverick's portfolio.<br />Macy's (M): 9,008,174 shares.  This position is 1.56% of Maverick's portfolio.<br />Hansen Natural (HANS): 5,712,952 shares.  This position is 1.47% of Maverick's portfolio.<br />Polo Ralph Lauren (RL): 2,431,244 shares.  This position is 1.36% of Maverick's portfolio.<br />Dicks Sporting Goods (DKS): 7,589,473 shares.  This position is 1.20% of Maverick's portfolio.<br />Cigna Corp (CI): 2,931,045 shares.  This position is 0.93% of Maverick's portfolio.<br />Digital River Inc (DRIV): 1,974,144 shares.  This position is 0.68% of Maverick's portfolio.<br />Viacom Inc (VIA): 2,442,500 shares.  This position is 0.67% of Maverick's portfolio.<br />Forest Labs (FRX): 1,789,900 shares.  This position is 0.56% of Maverick's portfolio.<br />Lamar Advertising (LAMR): 1,542,918 shares.  This position is 0.50% of Maverick's portfolio.<br />Visa (V): 565,005 shares.  This position is 0.41% of Maverick's portfolio.<br />South Financial Group (TSFG): 50,000 shares.  This position is 0.38% of Maverick's portfolio.<br />Athena Health (ATHN): 1,245,819 shares.  This position is 0.34% of Maverick's portfolio.<br />National City Corp (NCC): 6,625,176 shares.  This position is 0.28% of Maverick's portfolio.<br />Sohu.com Inc (SOHU): 170,485 shares.  This position is 0.11% of Maverick's portfolio.<br />MSCI Inc (MXB): 287,186 shares.  This position is 0.09% of Maverick's portfolio.<br />Universal American (UAM): 1,004,391 shares.  This position is 0.09% of Maverick's portfolio.<br />Comscore (SCOR): 436,640 shares.  This position is 0.09% of Maverick's portfolio.<br />Citizens Republic Bancorp (CRBC): 937,500 shares.  This position is 0.02% of Maverick's portfolio.<br /><br /><br /><span style="bold;">Added to:</span><br />Berkshire Hathaway (BRK.B): Increased position by 1412%.  Position is now 0.45% of their portfolio.<br />Gmarket (GMKT): Increased position by 317%.  Position is now 0.19% of their portfolio.<br />Infinera (INFN): Increased position by 171%.  Position is now 0.54% of their portfolio.<br />American Capital (ACAS): Increased position by 141%.  Position is now 0.30% of their portfolio.<br />Nordstrom (JWN): Increased position by 136.61%.  Position is now 2.79% of their portfolio.<br />America Movil (AMX): Increased position by 129.88%.  Position is now 3.91% of their portfolio.<br />Lexmark (LXK): Increased position by 109.39%.  Position is now 1.42% of their portfolio.<br />Citrix (CTXS): Increased position by 109.36%.  Position is now 2.20% of their portfolio.<br />Bank of New York Mellon (BK): Increased position by 55.42%.  Position is now 3.15% of their portfolio.<br />Baxter Intl (BAX): Increased position by 51.69%.  Position is now 2.90% of their portfolio.<br />Advanced Micro Devices (AMD): Increased position by 45.89%.  Position is now 2.87% of their portfolio.<br />Raytheon (RTN): Increased position by 41.72%.  Position is now 2.58% of their portfolio.<br />Fidelity National Info (FIS): Increased position by 40.56%.  Position is now 2.05% of their portfolio.<br />Covidien (COV): Increased position by 32.99%.  Position is now 2.32% of their portfolio.<br />Liberty Media Corp (LMDIA): Increased position by 28.09%.  Position is now 1.59% of their portfolio.<br />Resmed (RMD): Increased position by 26.46%.  Position is now 0.74% of their portfolio.<br />Burlington Northern (BNI): Increased position by 22.73%.  Position is now 1.83% of their portfolio.<br />Google (GOOG): Increased position by 22.27%.  Position is now 1.72% of their portfolio.<br />Genentech (DNA): Increased position by 21.38%.  Position is now 1.40% of their portfolio.<br />Zimmer Holdings (ZMH): Increased position by 20.28%.  Position is now 1.73% of their portfolio.<br />Cypress Bioscience (CYPB): Increased position by 19.98%.  Position is now 0.20% of their portfolio.<br />Apple (AAPL): Increased position by 19.45%.  Position is now 4.09% of their portfolio.<br />Research in Motion (RIMM): Increased position by 15.41%.  Position is now 4.08% of their portfolio.<br />MetroPCS Comm (PCS): Increased position by 13.6%.  Position is now 0.77% of their portfolio.<br />Home Inns &#38; Hotels (HMIN): Increased position by 7.72%.  Position is now 0.54% of their portfolio.<br />Gilead Sciences (GILD): Increased position by 6.66%.  Position is now 2.37% of their portfolio.<br />Marvell Technology (MRVL): Increased position by 5.24%.  Position is now 3.08% of their portfolio.<br />Newstar Financial (NEWS): Increased position by 5.21%.  Position is now 0.14% of their portfolio.<br />Cardinal Health (CAH): Increased position by 3.33%.  Position is now 1.56% of their portfolio.<br />Amylin Pharma (AMLN): Increased position by 2.84%.  Position is now 0.58% of their portfolio.<br />Discovery Holding (DISCA): Increased position by 1.74%.  Position is now 1.21% of their portfolio.<br />Palm (PALM): Increased position by 1.40%.  Position is now 0.51% of their portfolio.<br />Lumber Liquidators (LL): Increased position by 1.14%.  Position is now 0.26% of their portfolio.<br />China Nepstar (NPD): Increased position by 0.75%.  Position is now 0.18% of their portfolio.<br />First Advantage (FADV): Increased position by 0.65%.  Position is now 0.15% of their portfolio.<br />Under Armour (UA): Increased position by 0.17%.  Position is now 0.83% of their portfolio.<br />Mylan Inc (MYL): Increased position by 0.06%.  Position is now 1.09% of their portfolio.<br />Monsanto (MON): Increased position by 0.04%.  Position is now 1.68% of their portfolio.<br />Potash (POT): Increased position by 0.03%.  Position is now 2% of their portfolio.<br /><br /><br /><span style="bold;">Reduced positions:<br /></span>Thermo Fisher (TMO): Reduced their position by 4.91%.  Position is now 1.68% of their portfolio.<br />Western Union (WU): Reduced their position by 10.2%.  Position is now 2.08% of their portfolio.<br />Marsh &#38; Mclennan (MMC): Reduced their position by 12%.  Position is now 1.55% of their portfolio.<br />Textron Inc (TXT): Reduced their position by 18.93%.  Position is now 1.44% of their portfolio.<br />Wyeth (WYE): Reduced their position by 20.6%.  Position is now 1.46% of their portfolio.<br />Leap Wireless (LEAP): Reduced their position by 23.40%.  Position is now 0.39% of their portfolio.<br />Trubion Pharma (TRBN): Reduced their position by 24.38%.  Position is now 0.04% of their portfolio.<br />Dish Network (DISH): Reduced their position by 27.75%.  Position is now 1.13% of their portfolio.<br />Avon Products (AVP): Reduced their position by 33.23%.  Position is now 1.36% of their portfolio.<br />JP Morgan Chase (JPM): Reduced their position by 38.68%.  Position is now 0.89% of their portfolio.<br />Cognizant (CTSH): Reduced their position by 42.97%.  Position is now 0.85% of their portfolio.<br />DirecTV (DTV): Reduced their position by 49.69%.  Position is now 0.83% of their portfolio.<br />Suntrust Banks (STI): Reduced their position by 50%.  Position is now 0.16% of their portfolio.<br />Gamestop (GME): Reduced their position by 51.64%.  Position is now 0.81% of their portfolio.<br />Corcept (CORT): Reduced their position by 57.49%.  Position is now 0.01% of their portfolio.<br />Bluefly (BFLY): Reduced their position by 90%.  Position is now 0.11% of their portfolio.<br />Berkshire Hathaway (BRK.A): Reduced their position by 95%.  Position is now 0.66% of their portfolio.<br /><br /><br /><span style="bold;">Removed Positions (Positions Maverick sold out of completely):</span><br />Hanesbrands (HBI)<br />Autozone (AZO)<br />Bankrate (RATE)<br />CNET (CNET)<br />Crocs (CROX)<br />Cumulus Media (CMLS)<br />Harmonic (HLIT)<br />Loews (L)<br />Move Inc (MOVE)<br />Nucor (NUE)<br />OfficeMax (OMX)<br />Qualcomm (QCOM)<br />Salesforce (CRM)<br />Sandisk (SNDK)<br />Sears (SHLD)<br />Starbucks (SBUX)<br />UnitedHealth (UNH)<br /><br /><br /><span style="bold;">Positions with no change:</span><br />VMWare (VMW).  Position is 0.59% of their portfolio.<br />BPW Acquisition (BPW).  Position is 0.18% of their portfolio.<br />FIrst Marblehead (FMD).  Position is 0.05% of their portfolio.<br />Ultra Clean Holdings (UCTT).  Position is 0.01% of their portfolio.<br />Vivus (VVUS).  Position is 0.01% of their portfolio.<br /><br /><br /><span style="bold;"><span style="bold;">Top 20 holdings by % of portfolio:<span style="bold;"><br /></span></span></span>1. Apple (AAPL): 4.09% of the portfolio<br />2. Research in Motion (RIMM): 4.08% of the portfolio<br />3. America Movil (AMX): 3.91% of the portfolio<br />4. Bank of New York Mellon (BK): 3.15% of the portfolio<br />5. Marvell Tech (MRVL): 3.08% of the portfolio<br />6. First Solar (FSLR): 2.93% of the portfolio<br />7. Baxter Intl (BAX): 2.90% of the portfolio<br />8. Advanced Micro (AMD): 2.87% of the portfolio<br />9. Nordstrom (JWN): 2.79% of the portfolio<br />10. Raytheon (RTN): 2.58% of the portfolio<br />11. Gilead (GILD): 2.37% of the portfolio<br />12. Lorillard (LO): 2.36% of the portfolio<br />13. Covidien (COV): 2.32% of the portfolio<br />14. Citrix (CTXS): 2.20% of the portfolio<br />15. CVS Caremark (CVS): 2.09% of the portfolio<br />16. Western Union (WU): 2.08% of the portfolio<br />17. Fidelity National Info (FIS): 2.05% of the portfolio<br />18. Potash (POT): 2.00% of the portfolio<br />19. Burlington Northern (BNI): 1.83% of the portfolio<br />20. Netapp (NTAP): 1.81% of the portfolio<br /><br />----------------------------------------------------<br /><br /><span style="bold;">Breakdown:</span> Maverick changed up their portfolio a decent amount over the past quarter. Most notable are their changes within their top 10 holdings. Hedge fund favorite Qualcomm (QCOM) was Maverick's 3rd largest holding last filing. This filing, they no longer even hold a position. Additionally, they were selling off chunks of other top 10 holdings from last quarter. They sold off 33% of their position in Avon Products (AVP), which was their 4th largest holding just one quarter ago. They also sold over 51% of their Gamestop (GME) position, which last quarter was their 7th largest holding. With those positions vacating their place in the top 10 holdings of Maverick's portfolio, new holdings obviously took their place. America Movil (AMX), another hedge fund favorite, was Maverick's 9th largest holding last time. This time, they increased their position by 129% and it is now their 3rd largest holding. They obviously used the weakness in this name to add to their position, just like fellow 'Tiger Cub' fund Lone Pine Capital. Maverick also added heavily to Nordstrom (JWN), increasing their position by 136% and making it now their 9th largest holding.<br /><br />Maverick was out adding to tech across the board. Apple (AAPL) and Research in Motion (RIMM) are their top 2 largest holdings respectively, as they boosted their positions in both by over 14% each. Additionally, they added to their Marvell (MRVL) position, bringing it up to the fund's 5th largest position now. Maverick also continues to build a position in Advanced Micro Devices (AMD), as it now is their 8th largest holding.<br /><br />Among their new positions this quarter are First Solar (FSLR), Lorillard (LO), and CVS Caremark (CVS). I highlight these three in particular because Maverick started large, new positions in all three names. First Solar (FSLR) was brought up all the way to the fund's 6th largest holding after not even owning shares last quarter. They started a new position in CVS Caremark (CVS) and brought it up to the fund's 15th largest holding. Also, they added heavily to Lorillard (LO) as well, making this new position their 12th largest holding. This position is interesting because we also saw Lone Pine Capital (ran by Stephen Mandel Jr.) start a new position in this exact same name. And, actually, this is not the only position that both Maverick and Lone Pine both started together. In this 13F filing, we see that Maverick started a position in Hansen Natural (HANS). And, Lone Pine recently disclosed that they have a 7.8% stake in HANS. It's definitely common to see many similar positions within the portfolios of various 'Tiger Cub' managers who now run their own funds because they all undoubtedly keep in touch and come from the same school of thought.<br /><br />One last thing I would like to point out is Maverick selling completely out of various consumer related names. They sold completely out of their positions in Autozone (AZO), Hanesbrands (HBI), Sears (SHLD), Starbucks (SBUX), Crocs (CROX), and OfficeMax (OMX).<br /><br />You can view their most recent 13F as filed with the SEC <a rel="nofollow" target="_blank" href="http://www.sec.gov/Archives/edgar/data/934639/000094787108000476/ss44011_13fhr.txt">here</a>.<br /><br />Guest post by <a rel="nofollow" target="_blank" href="http://marketfolly.com/">Market Folly</a><br /><br /><a href="http://richard-wilson.blogspot.com/2008/03/hedge-fund-newsletter.html" title="Hedge Fund Newsletter">Free Daily Hedge Fund Newsletter</a><br /><h4>Related to Investment Securities/Holding Tool:</h4><ul><li><b><a href="http://richard-wilson.blogspot.com/2008/06/52-most-popular-hedge-fund-articles.html" title="Hedge Fund Articles">Top 52 Most Popular Articles</a></b></li><li><a href="http://richard-wilson.blogspot.com/2008/08/hedge-fund-tracker-tool.html" title="Hedge Fund Tracker Tool">Hedge Fund Tracker Tool</a></li><li><a title="Financial Certification" href="http://richard-wilson.blogspot.com/2008/08/financial-certification.html">Financial Certification</a></li><li><a title="Hedge Fund Forum" href="http://richard-wilson.blogspot.com/2008/08/hedge-fund-forum.html">Hedge Fund Forum</a></li><li><a href="http://richard-wilson.blogspot.com/2008/08/hedge-fund-accountant.html" title="Hedge Fund Accountant">Hedge Fund Accountants</a></li><li><a href="http://richard-wilson.blogspot.com/2008/08/investment-consultants.html" title="Investment Consultants">Investment Consultants</a><span style="bold;"><b> </b></span></li><li><a title="investment book" href="http://richard-wilson.blogspot.com/2008/08/investment-book.html">Investment Book</a></li><li><a title="Hedge Fund Terms" href="http://richard-wilson.blogspot.com/2008/03/hedge-fund-terms.html">Hedge Fund Terms and Definitions</a></li><li><a title="hedge fund guides" href="http://richard-wilson.blogspot.com/2008/08/geographical-guide-to-hedge-funds.html">Geographical Hedge Fund Guides</a></li><li><a href="http://richard-wilson.blogspot.com/2008/01/fund-of-hedge-funds-database.html" title="hedge fund databases">Hedge Fund Database</a></li></ul>Permanent Link: Maverick Capital Management 13F Holdings Analysis<br /><br />Tags: Maverick Capital Management, Maverick Capital Hedge Fund, Maverick Capital New York London, Maverick Capital LP LTD LLC Inc, Maverick Capital Lee Ainslie, Hedge Fund<div class="feedflare">
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		<title>War Stocks</title>
		<link>http://www.straightstocks.com/current-market-news/war-stocks/</link>
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		<pubDate>Fri, 19 Sep 2008 06:39:00 +0000</pubDate>
		<dc:creator>Fred Fuld</dc:creator>
				<category><![CDATA[Current Market News]]></category>
		<category><![CDATA[Stocks to Watch]]></category>
		<category><![CDATA[aerospace products]]></category>
		<category><![CDATA[aerospace stocks]]></category>
		<category><![CDATA[Airborne Systems]]></category>
		<category><![CDATA[Alliant Techsystems Inc.]]></category>
		<category><![CDATA[automation solutions]]></category>
		<category><![CDATA[Aviation Electronics]]></category>
		<category><![CDATA[aviation products]]></category>
		<category><![CDATA[Boeing]]></category>
		<category><![CDATA[Brazil]]></category>
		<category><![CDATA[CAE Inc.]]></category>
		<category><![CDATA[components and systems]]></category>
		<category><![CDATA[defense electronic products]]></category>
		<category><![CDATA[defense products]]></category>
		<category><![CDATA[defense systems]]></category>
		<category><![CDATA[DRS Technologies Inc.]]></category>
		<category><![CDATA[Elbit Systems Ltd.]]></category>
		<category><![CDATA[electro-optic and space technologies]]></category>
		<category><![CDATA[electronic intelligence systems]]></category>
		<category><![CDATA[electronics]]></category>
		<category><![CDATA[Embraer]]></category>
		<category><![CDATA[Empresa Brasileira De Aeronutica S.A.]]></category>
		<category><![CDATA[F-16]]></category>
		<category><![CDATA[F-22]]></category>
		<category><![CDATA[F-35 Joint Strike Fighter]]></category>
		<category><![CDATA[General Dynamics Corp.]]></category>
		<category><![CDATA[Goodrich Corp]]></category>
		<category><![CDATA[Honeywell International Inc.]]></category>
		<category><![CDATA[information systems]]></category>
		<category><![CDATA[launch systems]]></category>
		<category><![CDATA[Lockheed Martin Corporation]]></category>
		<category><![CDATA[military communications systems]]></category>
		<category><![CDATA[military support services]]></category>
		<category><![CDATA[missile defense systems]]></category>
		<category><![CDATA[Missile Systems]]></category>
		<category><![CDATA[Network Centric Systems]]></category>
		<category><![CDATA[Northrop Grumman Corp.]]></category>
		<category><![CDATA[Prince Edward Island]]></category>
		<category><![CDATA[Raytheon]]></category>
		<category><![CDATA[Rockwell Collins Inc.]]></category>
		<category><![CDATA[simulation]]></category>
		<category><![CDATA[simulation equipment]]></category>
		<category><![CDATA[Space]]></category>
		<category><![CDATA[Technical Services]]></category>
		<category><![CDATA[transportation systems]]></category>
		<category><![CDATA[unmanned air vehicles]]></category>
		<category><![CDATA[USD]]></category>
		<category><![CDATA[weapons  systems]]></category>

		<guid isPermaLink="false">tag:blogger.com,1999:blog-23020893.post-7728658198134690225</guid>
		<description><![CDATA[<a href="http://3.bp.blogspot.com/_T9VXVyuEITg/SNQrIKPsVxI/AAAAAAAAAXk/P3n5xddC0so/s1600-h/armytank.jpg"><img style="hand;" src="http://3.bp.blogspot.com/_T9VXVyuEITg/SNQrIKPsVxI/AAAAAAAAAXk/P3n5xddC0so/s320/armytank.jpg" border="0" /></a><br />If you still haven't put any defense and aerospace stocks in your portfolio, you should seriously consider doing so before October. There are plenty of these 'war' stocks to choose from including <a href="http://stockerblog.blogspot.com/2008/07/top-yielding-defense-and-aerospace.html">ones that pay high yields</a>. Here are some that you may want to site your scopes on and possibly pull the trigger. All of these have market caps over $1 billion.<br /><br />Alliant Techsystems Inc. (ATK) manufactures and markets aerospace and defense products and ammunition. The stock has a PE of 16, and a PEG of 1.56.<br /><br />Boeing (BA) makes and markets jets, military aircraft, missile defense systems, satellites, and launch systems. The stock has a PE of 11, a PEG of 0.83, and pays a yield of 2.8%.<br /><br />CAE Inc. (CGT) makes and markets simulation equipment and services to the civil aviation industry, military organizations, and defense organizations. The stock has a PE of 17, and pays a yield of 1.2%.<br /><br />DRS Technologies Inc. (DRS) a provider of defense electronic products, defense systems, and military support services. The stock has a PE of 19, a PEG of 1.34 , and pays a yield of 0.2%. <br /><br />Elbit Systems Ltd. (ESLT) is an Israeli company that makes unmanned air vehicles; advanced electro-optic and space technologies, electronic warfare suites, airborne warning systems, electronic intelligence systems, military communications systems. The stock has a PE of 18, a PEG of 1.77, and pays a yield of 1.7%.<br /><br />Embraer, also known as Empresa Brasileira De Aeronutica S.A. (ERJ) based in Brazil, makes and markets jets and aircraft for defense and civil aviation markets. The stock has a PE of 14, a PEG of 0.86, and pays a yield of 3.9%.<br /><br />General Dynamics Corp. (GD) manufactures aviation products, combat vehicles, weapons systems, and munitions. The stock has a PE of 14, a PEG of 1.32, and pays a yield of 1.7%.<br /><br />Goodrich Corp. (GR) makes and markets components and systems for the commercial and general aviation airplane markets, and the defense and space markets. The stock has a PE of 10, a PEG of 0.62, and pays a yield of 2%.<br /><br />Honeywell International Inc. (HON) is involved in the business of aerospace, automation solutions, specialty materials, and transportation systems. The stock has a PE of 13, a PEG of 1.05, and a yield of 2.5%.<br /><br />Lockheed Martin Corporation (LMT) manufactures military aircraft, and air vehicles, including the F-35 Joint Strike Fighter, the F-22 air dominance attack aircraft, and the F-16 multi-role fighter. The stock has a PE of 15, a PEG of 1.25, and pays a yield of 1.6%.<br /><br />Northrop Grumman Corp. (NOC) provides aerospace products, electronics, and shipbuilding to the military, government, and commercial customers. The stock has a PE of 13, a PEG of 1.03 , and pays a yield of 2.5%.<br /><br />Raytheon (RTN) has six divisions: Integrated Defense Systems, Intelligence and Information Systems, Missile Systems, Network Centric Systems, Space and Airborne Systems, and Technical Services. The stock has a PE of 15, a PEG of 1.11, and pays a yield of 2%.<br /><br />Rockwell Collins Inc. (COL) makes and markets communications and aviation electronics. The stock has a PE of 13, a PEG of 0.8, and pays a yield of 2%. <br /><br />If you like high yield stocks, you should also consider <a href="http://stockerblog.blogspot.com/2008/07/top-monthly-dividend-stocks-for-july.html">Top Monthly Dividend Stocks</a>, <a href="http://stockerblog.blogspot.com/2008/07/top-yielding-nyse-stocks.html">Top Yielding NYSE Stocks</a>, and <a href="http://stockerblog.blogspot.com/2008/07/over-200-stocks-with-tax-free-dividends.html">Stocks with Tax Free Dividends</a>.<br /><br /><em>Author does not own any of the above.</em><br /><br />By <a href="http://Stockerblog.com">Stockerblog.com</a><div class="blogger-post-footer"><div class='adsense' style='0px 3px 0.5em 3px;'>



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		<title>Consumer Discretionary and Financial Firms in the Basement</title>
		<link>http://www.straightstocks.com/stock-watch/consumer-discretionary-and-financial-firms-in-the-basement/</link>
		<comments>http://www.straightstocks.com/stock-watch/consumer-discretionary-and-financial-firms-in-the-basement/#comments</comments>
		<pubDate>Mon, 11 Aug 2008 00:00:00 +0000</pubDate>
		<dc:creator>Zacks Market Commentaries</dc:creator>
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		<description><![CDATA[In China, 8 is considered a lucky number. As of Friday, 8/8/08, we were 88.8% done with the second quarter earnings season. The results have been mixed; encouraging in median EPS growth terms, but downright awful in terms of total net income growth.
<p ALIGN="left">
Positive surprises are leading disappointments by a 2.4:1 ratio, which is only slightly below recent historical norms. The median surprise is also inline with recent history at 3.09%.
</p><p ALIGN="left">
The median year-over-year EPS growth rate of 9.45% is wonderful news for the market. And it looks like it will probably hold up. Given the expectations for those that have yet to report that seems possible. The median expected EPS growth rate for the firms that are yet to report is 16.9%. Given the propensity for positive surprises to outnumber disappointments, on a median EPS basis, double-digit growth is possible.
</p><p ALIGN="left">
<table align="right"><tr><td></td></tr></table>
Energy is finished reporting and currently holds the gold medal spot with growth of 25.4%. Tech is in silver, with median EPS growth of 22.2%. This is based on the results of 60 companies, or 84.5% of the total Tech firms in the index. Absent some significant positive surprises it seems unlikely to overtake Energy in the median EPS growth event. Telecom is in the bronze medal spot with 17.8%, and it should hold on to its place on the podium.
</p><p ALIGN="left">
On the surprise front, two sectors have been particularly impressive. Health Cares median EPS growth rate is 14.3%.  Health Care is showing more than 6 positive surprises for each disappointment, with a median surprise of 4.69%. This is not based on just a handful or results either, as over 98% of Health Care reports are already in. The Industrials have been just as impressive, with growth of 13.6%, a 7.0 surprise ratio and a 5% median surprise.
</p><p ALIGN="left">
The Financials have been the weakest sector by far, with the median EPS dropping by 17.4% from a year ago. The sector is responsible for one third of all the earnings disappointments to this point. The Consumer Discretionary sector is the only other one to show negative year-over-year growth on a median EPS basis (-4.3%).
</p><p ALIGN="left">
The expected results for the remaining Financials are even worse the ones which have already reported, at -156.2%, but relatively few remain. The remaining Consumer Discretionary firms are expected to show a 1.1% increase, meaning that there should not be a big change from what has already been reported.
</p><p ALIGN="left">
Some of the factors which should help median EPS growth are share repurchases, which though have slowed in recent months, will still reflect what happened last year. Oddly, increased share counts will also help boost EPS among the Financials. Since the ones that have increased their share counts the most (by going hat in had to the sovereign wealth funds looking for new capital) are also the ones that are likely to reports losses, so the loss per share will be less.
</p><p ALIGN="left">
In addition, to the extent that firms have large operations overseas, they should benefit from the currency translation effects of the weak dollar. The weak dollar has also boosted those companies that export a substantial portion of their sales.
</p><p ALIGN="left">
Keep in mind that median growth rates are inherently equally weighted, so the growth rate for <b>Cabot Oil and Gas</b> (<a href="http://www.zacks.com/stock/quote/COG">COG</a>) is just as significant to the results for the Energy sector as the growth rate for <b>Exxon</b> (<a href="http://www.zacks.com/stock/quote/XOM">XOM</a>).
</p><p ALIGN="left">
</p><p ALIGN="left">
<table cellpadding="3" cellspacing="1" bgcolor="#ffffff">
<tr> <th COLSPAN="10"><b>Second-Quarter Scorecard (Reported)</b><font size="2"></font></th> </tr>
	<tr bgcolor="#A2D39C"><td align="left"><b><u>	Sector	</u></b></td>	<td align="center"><b><u>	Q2 08 Median<br />Growth Rep. 	</u></b></td>	<td align="center"><b><u>	Q3 08 Median<br />Proj. Growth.	</u></b></td>	<td align="center"><b><u>	2007 Median<br />Rep. Growth	</u></b></td>	<td align="center"><b><u>	2008 Median<br />Proj. Growth	</u></b></td>	<td align="center"><b><u>	% Reported	</u></b></td>	<td align="center"><b><u>	Median %<br />Surprise	</u></b></td>	<td align="center"><b><u>	# Pos<br />Surprise	</u></b></td>	<td align="center"><b><u>	# Neg<br />Surprise	</u></b></td>	<td align="center"><b><u>	# Match	</u></b></td></tr>
	<tr bgcolor="#E6F3E7"><td align="left">	Energy	</td>	<td align="center">	25.35%	</td>	<td align="center">	37.68%	</td>	<td align="center">	12.83%	</td>	<td align="center">	28.56%	</td>	<td align="center">	100.00%	</td>	<td align="center">	2.65%	</td>	<td align="center">	26	</td>	<td align="center">	11	</td>	<td align="center">	2	</td></tr>
	<tr bgcolor="#E6F3E7"><td align="left">	Tech	</td>	<td align="center">	22.22%	</td>	<td align="center">	11.11%	</td>	<td align="center">	13.76%	</td>	<td align="center">	14.15%	</td>	<td align="center">	84.51%	</td>	<td align="center">	4.17%	</td>	<td align="center">	37	</td>	<td align="center">	15	</td>	<td align="center">	8	</td></tr>
	<tr bgcolor="#E6F3E7"><td align="left">	Telecom	</td>	<td align="center">	17.76%	</td>	<td align="center">	2.11%	</td>	<td align="center">	9.16%	</td>	<td align="center">	7.43%	</td>	<td align="center">	88.89%	</td>	<td align="center">	4.66%	</td>	<td align="center">	5	</td>	<td align="center">	1	</td>	<td align="center">	2	</td></tr>
	<tr bgcolor="#E6F3E7"><td align="left">	Healthcare	</td>	<td align="center">	14.29%	</td>	<td align="center">	7.55%	</td>	<td align="center">	17.92%	</td>	<td align="center">	13.07%	</td>	<td align="center">	98.08%	</td>	<td align="center">	4.69%	</td>	<td align="center">	37	</td>	<td align="center">	6	</td>	<td align="center">	8	</td></tr>
	<tr bgcolor="#E6F3E7"><td align="left">	Industrial	</td>	<td align="center">	13.64%	</td>	<td align="center">	11.11%	</td>	<td align="center">	14.57%	</td>	<td align="center">	13.73%	</td>	<td align="center">	92.73%	</td>	<td align="center">	5.00%	</td>	<td align="center">	42	</td>	<td align="center">	6	</td>	<td align="center">	3	</td></tr>
	<tr bgcolor="#E6F3E7"><td align="left">	Cons. Stap.	</td>	<td align="center">	10.28%	</td>	<td align="center">	6.58%	</td>	<td align="center">	11.49%	</td>	<td align="center">	10.30%	</td>	<td align="center">	82.93%	</td>	<td align="center">	2.59%	</td>	<td align="center">	22	</td>	<td align="center">	6	</td>	<td align="center">	6	</td></tr>
	<tr bgcolor="#E6F3E7"><td align="left">	Utilities	</td>	<td align="center">	8.12%	</td>	<td align="center">	4.96%	</td>	<td align="center">	8.70%	</td>	<td align="center">	4.85%	</td>	<td align="center">	90.32%	</td>	<td align="center">	5.47%	</td>	<td align="center">	16	</td>	<td align="center">	10	</td>	<td align="center">	2	</td></tr>
	<tr bgcolor="#E6F3E7"><td align="left">	Materials	</td>	<td align="center">	6.58%	</td>	<td align="center">	3.67%	</td>	<td align="center">	12.20%	</td>	<td align="center">	6.55%	</td>	<td align="center">	100.00%	</td>	<td align="center">	4.17%	</td>	<td align="center">	19	</td>	<td align="center">	7	</td>	<td align="center">	3	</td></tr>
	<tr bgcolor="#E6F3E7"><td align="left">	Cons. Disc.	</td>	<td align="center">	-4.30%	</td>	<td align="center">	2.93%	</td>	<td align="center">	8.43%	</td>	<td align="center">	0.99%	</td>	<td align="center">	71.43%	</td>	<td align="center">	3.27%	</td>	<td align="center">	37	</td>	<td align="center">	16	</td>	<td align="center">	7	</td></tr>
	<tr bgcolor="#E6F3E7"><td align="left">	Financial	</td>	<td align="center">	-17.41%	</td>	<td align="center">	-7.58%	</td>	<td align="center">	5.25%	</td>	<td align="center">	-4.71%	</td>	<td align="center">	94.38%	</td>	<td align="center">	0.00%	</td>	<td align="center">	40	</td>	<td align="center">	39	</td>	<td align="center">	5	</td></tr>
	<tr bgcolor="#E6F3E7"><td align="left">	S&#38;P 500	</td>	<td align="center">	10.61%	</td>	<td align="center">	6.96%	</td>	<td align="center">	12.25%	</td>	<td align="center">	10.30%	</td>	<td align="center">	72.80%	</td>	<td align="center">	3.33%	</td>	<td align="center">	233	</td>	<td align="center">	94	</td>	<td align="center">	37	</td></tr>
</table>
</p><p ALIGN="left">
</p><p ALIGN="center">

<table cellpadding="3" cellspacing="1" bgcolor="#ffffff">
<tr> <th COLSPAN="8"><b>Second-Quarter Yet-to-Report</b></th> </tr>
<tr bgcolor="#A2D39C"><td align="left"><b><u>	Sector	</u></b></td>	<td align="center"><b><u>	Q2 08<br />Proj. Growth	</u></b></td>	<td align="center"><b><u>	Q3 08<br />Proj. Growth	</u></b></td>	<td align="center"><b><u>	2007<br />Rep. Growth	</u></b></td>	<td align="center"><b><u>	2008<br />Proj. Growth	</u></b></td></tr>
<tr bgcolor="#E6F3E7"><td align="left">	Utilities	</td>	<td align="center">	69.57%	</td>	<td align="center">	16.18%	</td>	<td align="center">	13.33%	</td>	<td align="center">	12.16%	</td></tr>
<tr bgcolor="#E6F3E7"><td align="left">	Industrial	</td>	<td align="center">	31.47%	</td>	<td align="center">	19.45%	</td>	<td align="center">	31.13%	</td>	<td align="center">	21.21%	</td></tr>
<tr bgcolor="#E6F3E7"><td align="left">	Telecom	</td>	<td align="center">	28.57%	</td>	<td align="center">	4.00%	</td>	<td align="center">	-2.94%	</td>	<td align="center">	8.08%	</td></tr>
<tr bgcolor="#E6F3E7"><td align="left">	Tech	</td>	<td align="center">	24.29%	</td>	<td align="center">	8.72%	</td>	<td align="center">	22.66%	</td>	<td align="center">	18.89%	</td></tr>
<tr bgcolor="#E6F3E7"><td align="left">	Healthcare	</td>	<td align="center">	17.05%	</td>	<td align="center">	20.18%	</td>	<td align="center">	9.90%	</td>	<td align="center">	15.26%	</td></tr>
<tr bgcolor="#E6F3E7"><td align="left">	Cons. Stap.	</td>	<td align="center">	11.76%	</td>	<td align="center">	11.43%	</td>	<td align="center">	13.25%	</td>	<td align="center">	10.63%	</td></tr>
<tr bgcolor="#E6F3E7"><td align="left">	Cons. Disc.	</td>	<td align="center">	1.06%	</td>	<td align="center">	0.12%	</td>	<td align="center">	6.57%	</td>	<td align="center">	7.23%	</td></tr>
<tr bgcolor="#E6F3E7"><td align="left">	Financial	</td>	<td align="center">	-156.20%	</td>	<td align="center">	-17.82%	</td>	<td align="center">	-39.13%	</td>	<td align="center">	-30.17%	</td></tr>
<tr bgcolor="#E6F3E7"><td align="left">	S&#38;P 500	</td>	<td align="center">	16.91%	</td>	<td align="center">	7.14%	</td>	<td align="center">	12.43%	</td>	<td align="center">	11.13%	</td></tr>
</table>

</p><p ALIGN="left">
</p><p ALIGN="left">
<b>Total Net Income Growth</b>
</p><p ALIGN="left">
While on a median EPS growth basis, things might look okay, the same is not true on a total net income basis. This is shaping up to be yet another very ugly quarter.
</p><p ALIGN="left">
The blame for net income decline once again goes to the Financials (with best supporting actor nomination for the Consumer Discretionary). On a percentage basis, total earnings have collapsed even more for the Discretionary firms (-83.5%) than for the Financials (-81.9%). However, the Financials are normally a much bigger sector in terms of total profits. Last year, the Financials accounted for 27.4% of all net income reported at this point, this year they account for just 6.3%. By contrast, last year the Discretionary firms chipped in just 5.9% of all earnings. Overall, the second quarter is even weaker than the first quarter.
</p><p ALIGN="left">
Total net income for the S&#38;P 500 is expected to be 21.0% below the second quarter of 2007, which is not much of a change from the 20.8% decline posted so far. This is a weaker overall showing than in the first quarter (down 15.6%) and roughly inline with the fourth-quarter decline of 21.2%).
</p><p ALIGN="left">
Looking ahead, the consensus is currently for very weak but positive growth in net income (up 2.2%), thanks to very high expectations for the Energy sector, and the Financials only being kicked in the stomach, not a little lower on the anatomy.
</p><p ALIGN="left">
Total net income for all the S&#38;P 500 firms that have reported so far is $161.8 billion versus $204.2.4 billion a year ago. That is however a slight improvement on a sequential basis from the $158.7 billion these same 444 firms posted in the first quarter. While the overall pie is smaller, the size of the slices has moved dramatically. With the Financials share shrinking dramatically, the shares for most other sectors have expanded. Energy is getting the biggest slice, almost 26%, up from 17.5% a year ago. Techs slice of the pie is up to 14.2% from 9.4% a year ago.
</p><p ALIGN="left">
Surprisingly, Tech is leading in total net income growth reported so far, up 19.1%. Energy is in the Silver medal spot, but Tech is expected to fade at the end allowing it to take the gold. Health Care should make the platform, but with a distant third of 8.3% growth, but taking the second largest slice of the pie at 15.2%.
</p><p ALIGN="left">
</p><p ALIGN="center">
<table cellpadding="3" cellspacing="1" bgcolor="#ffffff">
<tr> <th COLSPAN="9"><b>Total Net Income Growth (Reported)</b></th> </tr>
<tr bgcolor="#A2D39C"><td align="left"><b><u>	Sector	</u></b></td>	<td align="center"><b><u>	Q4 07<br />Rep. Growth	</u></b></td>	<td align="center"><b><u>	Q1 08<br />Rep. Growth	</u></b></td>	<td align="center"><b><u>	Q2 08<br />Rep. Growth	</u></b></td>	<td align="center"><b><u>	Q3 08<br />Proj. Growth	</u></b></td>	<td align="center"><b><u>	2007<br />Rep. Growth	</u></b></td>	<td align="center"><b><u>	2008<br />Proj. Growth	</u></b></td>	<td align="center"><b><u>	2009<br />Proj. Growth	</u></b></td></tr>
<tr bgcolor="#E6F3E7"><td align="left">	Technology	</td>	<td align="center">	30.36%	</td>	<td align="center">	11.22%	</td>	<td align="center">	19.07%	</td>	<td align="center">	6.33%	</td>	<td align="center">	21.95%	</td>	<td align="center">	15.92%	</td>	<td align="center">	17.60%	</td></tr>
<tr bgcolor="#E6F3E7"><td align="left">	Energy	</td>	<td align="center">	23.12%	</td>	<td align="center">	25.75%	</td>	<td align="center">	17.33%	</td>	<td align="center">	52.90%	</td>	<td align="center">	5.92%	</td>	<td align="center">	40.14%	</td>	<td align="center">	13.06%	</td></tr>
<tr bgcolor="#E6F3E7"><td align="left">	Health Care	</td>	<td align="center">	17.95%	</td>	<td align="center">	3.32%	</td>	<td align="center">	8.43%	</td>	<td align="center">	1.71%	</td>	<td align="center">	18.81%	</td>	<td align="center">	8.70%	</td>	<td align="center">	10.33%	</td></tr>
<tr bgcolor="#E6F3E7"><td align="left">	Utilities	</td>	<td align="center">	12.24%	</td>	<td align="center">	6.91%	</td>	<td align="center">	5.81%	</td>	<td align="center">	1.04%	</td>	<td align="center">	10.52%	</td>	<td align="center">	6.65%	</td>	<td align="center">	10.54%	</td></tr>
<tr bgcolor="#E6F3E7"><td align="left">	Industrial	</td>	<td align="center">	4.99%	</td>	<td align="center">	4.54%	</td>	<td align="center">	5.56%	</td>	<td align="center">	2.15%	</td>	<td align="center">	9.59%	</td>	<td align="center">	8.35%	</td>	<td align="center">	10.99%	</td></tr>
<tr bgcolor="#E6F3E7"><td align="left">	Materials	</td>	<td align="center">	-2.24%	</td>	<td align="center">	14.68%	</td>	<td align="center">	3.07%	</td>	<td align="center">	6.02%	</td>	<td align="center">	8.04%	</td>	<td align="center">	12.18%	</td>	<td align="center">	14.94%	</td></tr>
<tr bgcolor="#E6F3E7"><td align="left">	Cons.Stap.	</td>	<td align="center">	5.79%	</td>	<td align="center">	13.48%	</td>	<td align="center">	-0.14%	</td>	<td align="center">	4.61%	</td>	<td align="center">	9.24%	</td>	<td align="center">	-0.25%	</td>	<td align="center">	10.56%	</td></tr>
<tr bgcolor="#E6F3E7"><td align="left">	Telecom	</td>	<td align="center">	31.92%	</td>	<td align="center">	1.08%	</td>	<td align="center">	-1.16%	</td>	<td align="center">	-6.60%	</td>	<td align="center">	18.28%	</td>	<td align="center">	0.59%	</td>	<td align="center">	9.07%	</td></tr>
<tr bgcolor="#E6F3E7"><td align="left">	Financials	</td>	<td align="center">	-116.62%	</td>	<td align="center">	-76.20%	</td>	<td align="center">	-81.90%	</td>	<td align="center">	-32.78%	</td>	<td align="center">	-19.87%	</td>	<td align="center">	-48.55%	</td>	<td align="center">	90.65%	</td></tr>
<tr bgcolor="#E6F3E7"><td align="left">	Cons. Disc.	</td>	<td align="center">	10.73%	</td>	<td align="center">	-24.35%	</td>	<td align="center">	-83.46%	</td>	<td align="center">	-8.63%	</td>	<td align="center">	-11.86%	</td>	<td align="center">	-18.53%	</td>	<td align="center">	62.81%	</td></tr>
<tr bgcolor="#E6F3E7"><td align="left">	S&#38;P	</td>	<td align="center">	-20.64%	</td>	<td align="center">	-15.45%	</td>	<td align="center">	-20.78%	</td>	<td align="center">	2.95%	</td>	<td align="center">	1.78%	</td>	<td align="center">	-0.50%	</td>	<td align="center">	23.64%	</td></tr>
</table>
</p><p ALIGN="left">
</p><p ALIGN="center">
<table cellpadding="3" cellspacing="1" bgcolor="#ffffff">
<tr> <th COLSPAN="9"><b>Total Reported ($)</b></th> </tr>
<tr bgcolor="#A2D39C"><td align="left"><b><u>	Sector	</u></b></td>	<td align="center"><b><u>	Q2 08<br />Rep. Growth	</u></b></td>	<td align="center"><b><u>	Q2 07<br />Rep. Growth	</u></b></td>	<td align="center"><b><u>	Q1 08<br />Rep. Growth	</u></b></td>	<td align="center"><b><u>	Q1 07<br />Rep. Growth	</u></b></td>	<td align="center"><b><u>	Q2 08%<br />Rep. Growth	</u></b></td>	<td align="center"><b><u>	Q2 07%<br />Rep. Growth	</u></b></td></tr>
<tr bgcolor="#E6F3E7"><td align="left">	Energy	</td>	<td align="center">	$42,018 	</td>	<td align="center">	25.97%	</td>	<td align="center">	$35,812 	</td>	<td align="center">	17.53%	</td>	<td align="center">	21.63%	</td>	<td align="center">	15.69%	</td></tr>
<tr bgcolor="#E6F3E7"><td align="left">	Health Care	</td>	<td align="center">	$24,587 	</td>	<td align="center">	15.20%	</td>	<td align="center">	$22,676 	</td>	<td align="center">	11.10%	</td>	<td align="center">	15.79%	</td>	<td align="center">	12.10%	</td></tr>
<tr bgcolor="#E6F3E7"><td align="left">	Industrial	</td>	<td align="center">	$23,110 	</td>	<td align="center">	14.28%	</td>	<td align="center">	$21,892 	</td>	<td align="center">	10.72%	</td>	<td align="center">	15.03%	</td>	<td align="center">	11.91%	</td></tr>
<tr bgcolor="#E6F3E7"><td align="left">	Technology	</td>	<td align="center">	$22,893 	</td>	<td align="center">	14.15%	</td>	<td align="center">	$19,226 	</td>	<td align="center">	9.41%	</td>	<td align="center">	13.85%	</td>	<td align="center">	9.45%	</td></tr>
<tr bgcolor="#E6F3E7"><td align="left">	Cons. Stap.	</td>	<td align="center">	$15,906 	</td>	<td align="center">	9.83%	</td>	<td align="center">	$15,929 	</td>	<td align="center">	7.80%	</td>	<td align="center">	8.46%	</td>	<td align="center">	7.34%	</td></tr>
<tr bgcolor="#E6F3E7"><td align="left">	Financials	</td>	<td align="center">	$10,118 	</td>	<td align="center">	6.25%	</td>	<td align="center">	$55,887 	</td>	<td align="center">	27.36%	</td>	<td align="center">	7.54%	</td>	<td align="center">	28.39%	</td></tr>
<tr bgcolor="#E6F3E7"><td align="left">	Materials	</td>	<td align="center">	$8,277 	</td>	<td align="center">	5.12%	</td>	<td align="center">	$8,031 	</td>	<td align="center">	3.93%	</td>	<td align="center">	5.60%	</td>	<td align="center">	4.44%	</td></tr>
<tr bgcolor="#E6F3E7"><td align="left">	Telecom	</td>	<td align="center">	$7,201 	</td>	<td align="center">	4.45%	</td>	<td align="center">	$7,286 	</td>	<td align="center">	3.57%	</td>	<td align="center">	4.89%	</td>	<td align="center">	5.33%	</td></tr>
<tr bgcolor="#E6F3E7"><td align="left">	Utilities	</td>	<td align="center">	$5,676 	</td>	<td align="center">	3.51%	</td>	<td align="center">	$5,365 	</td>	<td align="center">	2.63%	</td>	<td align="center">	4.69%	</td>	<td align="center">	3.62%	</td></tr>
<tr bgcolor="#E6F3E7"><td align="left">	Cons. Disc.	</td>	<td align="center">	$2,007 	</td>	<td align="center">	1.24%	</td>	<td align="center">	$12,132 	</td>	<td align="center">	5.94%	</td>	<td align="center">	2.53%	</td>	<td align="center">	1.73%	</td></tr>
<tr bgcolor="#E6F3E7"><td align="left">	S&#38;P	</td>	<td align="center">	$161,795 	</td>	<td align="center">	100.00%	</td>	<td align="center">	$204,236 	</td>	<td align="center">	100.00%	</td>	<td align="center">	100.00%	</td>	<td align="center">	100.00%	</td></tr>
</table>

</p><p ALIGN="left">
</p><p ALIGN="center">

<table cellpadding="3" cellspacing="1" bgcolor="#ffffff">
<tr> <th COLSPAN="9"><b>Total Earnings Growth: Yet-to-Report</b></th> </tr>
<tr bgcolor="#A2D39C"><td align="left"><b><u>	Sector	</u></b></td>	<td align="center"><b><u>	Q4 07<br />Rep. Growth	</u></b></td>	<td align="center"><b><u>	Q1 08<br />Rep. Growth	</u></b></td>	<td align="center"><b><u>	Q2 08<br />Proj. Growth	</u></b></td>	<td align="center"><b><u>	Q3 08<br />Proj. Growth	</u></b></td>	<td align="center"><b><u>	2007<br />Rep. Growth	</u></b></td>	<td align="center"><b><u>	2008<br />Proj. Growth	</u></b></td>	<td align="center"><b><u>	2009<br />Proj. Growth	</u></b></td></tr>
<tr bgcolor="#E6F3E7"><td align="left">	Industrials	</td>	<td align="center">	50.93%	</td>	<td align="center">	40.53%	</td>	<td align="center">	15.77%	</td>	<td align="center">	5.00%	</td>	<td align="center">	28.80%	</td>	<td align="center">	28.54%	</td>	<td align="center">	17.99%	</td></tr>
<tr bgcolor="#E6F3E7"><td align="left">	Health Care	</td>	<td align="center">	-1.30%	</td>	<td align="center">	0.80%	</td>	<td align="center">	6.86%	</td>	<td align="center">	12.98%	</td>	<td align="center">	15.60%	</td>	<td align="center">	16.85%	</td>	<td align="center">	13.85%	</td></tr>
<tr bgcolor="#E6F3E7"><td align="left">	Cons. Stap.	</td>	<td align="center">	9.13%	</td>	<td align="center">	6.04%	</td>	<td align="center">	5.23%	</td>	<td align="center">	12.16%	</td>	<td align="center">	19.38%	</td>	<td align="center">	12.52%	</td>	<td align="center">	9.70%	</td></tr>
<tr bgcolor="#E6F3E7"><td align="left">	Telecom	</td>	<td align="center">	15.25%	</td>	<td align="center">	24.00%	</td>	<td align="center">	0.25%	</td>	<td align="center">	-3.09%	</td>	<td align="center">	-9.80%	</td>	<td align="center">	16.30%	</td>	<td align="center">	0.93%	</td></tr>
<tr bgcolor="#E6F3E7"><td align="left">	Technology	</td>	<td align="center">	18.42%	</td>	<td align="center">	16.02%	</td>	<td align="center">	-0.09%	</td>	<td align="center">	9.18%	</td>	<td align="center">	17.79%	</td>	<td align="center">	12.24%	</td>	<td align="center">	15.51%	</td></tr>
<tr bgcolor="#E6F3E7"><td align="left">	Utilities	</td>	<td align="center">	27.52%	</td>	<td align="center">	32.44%	</td>	<td align="center">	-10.43%	</td>	<td align="center">	20.25%	</td>	<td align="center">	8.70%	</td>	<td align="center">	10.78%	</td>	<td align="center">	13.32%	</td></tr>
<tr bgcolor="#E6F3E7"><td align="left">	Cons. Disc.	</td>	<td align="center">	-11.33%	</td>	<td align="center">	-12.97%	</td>	<td align="center">	-23.67%	</td>	<td align="center">	-35.56%	</td>	<td align="center">	5.53%	</td>	<td align="center">	-4.78%	</td>	<td align="center">	10.04%	</td></tr>
<tr bgcolor="#E6F3E7"><td align="left">	Financials	</td>	<td align="center">	-178.27%	</td>	<td align="center">	-116.50%	</td>	<td align="center">	-83.26%	</td>	<td align="center">	5.10%	</td>	<td align="center">	-35.58%	</td>	<td align="center">	-67.06%	</td>	<td align="center">	187.13%	</td></tr>
<tr bgcolor="#E6F3E7"><td align="left">	S&#38;P	</td>	<td align="center">	-26.63%	</td>	<td align="center">	-16.79%	</td>	<td align="center">	-22.64%	</td>	<td align="center">	-5.73%	</td>	<td align="center">	3.42%	</td>	<td align="center">	-2.08%	</td>	<td align="center">	19.48%	</td></tr>
</table>

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</p><p ALIGN="center">

<table cellpadding="3" cellspacing="1" bgcolor="#ffffff">
<tr> <th COLSPAN="9"><b>Total Earnings Growth: Combined</b></th> </tr>
<tr bgcolor="#A2D39C"><td align="left"><b><u>	Sector	</u></b></td>	<td align="center"><b><u>	Q4 07<br />Rep. Growth	</u></b></td>	<td align="center"><b><u>	Q1 08<br />Rep. Growth	</u></b></td>	<td align="center"><b><u>	Q2 08<br />Proj. Growth	</u></b></td>	<td align="center"><b><u>	Q3 08<br />Proj. Growth	</u></b></td>	<td align="center"><b><u>	2007<br />Rep. Growth	</u></b></td>	<td align="center"><b><u>	2008<br />Proj. Growth	</u></b></td>	<td align="center"><b><u>	2009<br />Proj. Growth	</u></b></td></tr>
<tr bgcolor="#E6F3E7"><td align="left">	Energy	</td>	<td align="center">	23.12%	</td>	<td align="center">	25.75%	</td>	<td align="center">	17.33%	</td>	<td align="center">	52.90%	</td>	<td align="center">	5.92%	</td>	<td align="center">	40.14%	</td>	<td align="center">	13.06%	</td></tr>
<tr bgcolor="#E6F3E7"><td align="left">	Technology	</td>	<td align="center">	28.60%	</td>	<td align="center">	11.99%	</td>	<td align="center">	15.65%	</td>	<td align="center">	6.76%	</td>	<td align="center">	21.32%	</td>	<td align="center">	15.38%	</td>	<td align="center">	17.30%	</td></tr>
<tr bgcolor="#E6F3E7"><td align="left">	Health Care	</td>	<td align="center">	17.26%	</td>	<td align="center">	3.25%	</td>	<td align="center">	8.37%	</td>	<td align="center">	2.06%	</td>	<td align="center">	18.70%	</td>	<td align="center">	8.97%	</td>	<td align="center">	10.45%	</td></tr>
<tr bgcolor="#E6F3E7"><td align="left">	Industrial	</td>	<td align="center">	6.14%	</td>	<td align="center">	5.58%	</td>	<td align="center">	6.02%	</td>	<td align="center">	2.26%	</td>	<td align="center">	10.19%	</td>	<td align="center">	9.08%	</td>	<td align="center">	11.29%	</td></tr>
<tr bgcolor="#E6F3E7"><td align="left">	Utilities	</td>	<td align="center">	13.21%	</td>	<td align="center">	8.90%	</td>	<td align="center">	4.24%	</td>	<td align="center">	2.55%	</td>	<td align="center">	10.36%	</td>	<td align="center">	7.00%	</td>	<td align="center">	10.78%	</td></tr>
<tr bgcolor="#E6F3E7"><td align="left">	Materials	</td>	<td align="center">	-2.24%	</td>	<td align="center">	14.68%	</td>	<td align="center">	3.07%	</td>	<td align="center">	6.02%	</td>	<td align="center">	8.04%	</td>	<td align="center">	12.18%	</td>	<td align="center">	14.94%	</td></tr>
<tr bgcolor="#E6F3E7"><td align="left">	Cons.Stap.	</td>	<td align="center">	6.48%	</td>	<td align="center">	11.45%	</td>	<td align="center">	0.94%	</td>	<td align="center">	6.04%	</td>	<td align="center">	11.15%	</td>	<td align="center">	2.33%	</td>	<td align="center">	10.37%	</td></tr>
<tr bgcolor="#E6F3E7"><td align="left">	Telecom	</td>	<td align="center">	31.57%	</td>	<td align="center">	1.41%	</td>	<td align="center">	-1.14%	</td>	<td align="center">	-6.54%	</td>	<td align="center">	17.75%	</td>	<td align="center">	0.82%	</td>	<td align="center">	8.94%	</td></tr>
<tr bgcolor="#E6F3E7"><td align="left">	Cons. Disc.	</td>	<td align="center">	1.96%	</td>	<td align="center">	-18.84%	</td>	<td align="center">	-63.38%	</td>	<td align="center">	-19.50%	</td>	<td align="center">	-5.73%	</td>	<td align="center">	-13.10%	</td>	<td align="center">	39.97%	</td></tr>
<tr bgcolor="#E6F3E7"><td align="left">	Financials	</td>	<td align="center">	-120.20%	</td>	<td align="center">	-78.62%	</td>	<td align="center">	-82.00%	</td>	<td align="center">	-31.62%	</td>	<td align="center">	-20.88%	</td>	<td align="center">	-49.52%	</td>	<td align="center">	93.95%	</td></tr>
<tr bgcolor="#E6F3E7"><td align="left">	S&#38;P	</td>	<td align="center">	-21.18%	</td>	<td align="center">	-15.60%	</td>	<td align="center">	-20.96%	</td>	<td align="center">	2.20%	</td>	<td align="center">	1.92%	</td>	<td align="center">	-0.64%	</td>	<td align="center">	23.27%	</td></tr>
</table>
</p><p ALIGN="left">
</p><p ALIGN="left">
<b>The Zacks Revisions Ratio</b>
</p><p ALIGN="left">
To help gauge the direction of the market, we take note of what analysts are thinking. By tallying their EPS changes, we can determine our revisions ratio. This ratio simply divides the total number of positive estimate revisions by the total number of estimate cuts. Thus, a high ratio is a bullish indicator and a low ratio is bearish. For the S&#38;P 500 as a whole, a number below 0.80 or above 1.25 is generally significant. For individual sectors the distance from 1.0 should be greater for the numbers to be significant.
</p><p ALIGN="left">
With positive surprises outnumbering disappointments by almost 5:2, it is not a shock that the revisions ratio has started to climb from the depths. After all second quarter earnings are part of full year 2008 earnings, so if a company posts a positive surprise and the analysts dont raise full year earnings, they are implicitly cutting estimates for the third or fourth quarters.
</p><p ALIGN="left">
The ratio is now at 1.05, a reading that is neutral, up from 0.98 last week, and 0.81 two weeks ago. The overall pace of estimate revisions continues its rise, and is approaching its seasonal peak. Over the last four weeks there have been 3,600 changes in estimates: 1,841 up and 1,759 down. (In comparison, last week there were 3,017 changes: 1,521 up and 1,556. This week or next should mark the peak of total revisions activity for the quarter. The ratio of firms with rising mean estimates to falling mean estimates is 0.95, slightly weaker than the revisions ratio, but also in neutral territory.
</p><p ALIGN="left">
On the back of their strong surprise ratios, Health Care and Industrials have moved into the top slots for the 2008 revisions ratio, with readings of 3.11 and 2.24. Surprises have not been as strong for Energy (1.7:1 ratio, 1.42% median surprise), but it still has a respectable reading of 1.40. Financials and Discretionary are the weak sisters with readings of 0.49 and 0.63, respectively.
</p><p ALIGN="left">
Notable Health Care stocks on the upside include <b>Abbott Labs</b> (<a href="http://www.zacks.com/stock/quote/ABT">ABT</a>), <b>Johnson &#38; Johnson</b> (<a href="http://www.zacks.com/stock/quote/JNJ">JNJ</a>) and <b>St. Jude</b> (<a href="http://www.zacks.com/stock/quote/STJ">STJ</a>). The Aerospace and Defense names were particularly strong among the Industrials, including <b>General Dynamics</b> (<a href="http://www.zacks.com/stock/quote/GD">GD</a>), <b>Lockheed Martin</b> (<a href="http://www.zacks.com/stock/quote/LMT">LMT</a>) and <b>Raytheon</b> (<a href="http://www.zacks.com/stock/quote/RTN">RTN</a>).
</p><p ALIGN="left">
In the Consumer Discretionary sector, the analysts checked out of the hotel companies <b>Marriot</b> (<a href="http://www.zacks.com/stock/quote/MAR">MAR</a>) and <b>Starwood</b> (<a href="http://www.zacks.com/stock/quote/HOT">HOT</a>). The Financials included in the Dow 30 seemed under particular pressure, including <b>American International Group</b> (<a href="http://www.zacks.com/stock/quote/AIG">AIG</a>), <b>American Express</b> (<a href="http://www.zacks.com/stock/quote/AXP">AXP</a>), <b>Citigroup</b> (<a href="http://www.zacks.com/stock/quote/C">C</a>), and <b>J.P. Morgan</b> (<a href="http://www.zacks.com/stock/quote/JPM">JPM</a>).
</p><p ALIGN="left">
</p><p ALIGN="center">
<table cellpadding="3" cellspacing="1" bgcolor="#ffffff" width="80%">
<tr bgcolor="#A2D39C"><td align="left"><b><u>	Avg. 4wk EPS<b>Change (FY08) 	</b></u></b></td>	<td align="center"><b><u>	Avg. 4wk EPS<br />Change (FY08) 	</u></b></td>	<td align="center"><b><u>	Revisions<br />Ratio 	</u></b></td>	<td align="center"><b><u>	Firms With FY08<br />EPS Increase 	</u></b></td>	<td align="center"><b><u>	Firms With FY08<br />EPS Decrease	</u></b></td></tr>
<tr bgcolor="#E6F3E7"><td align="left">	Health Care	</td>	<td align="center">	-1.90%	</td>	<td align="center">	3.11	</td>	<td align="center">	37 	</td>	<td align="center">	15 	</td></tr>
<tr bgcolor="#E6F3E7"><td align="left">	Industrials	</td>	<td align="center">	1.12%	</td>	<td align="center">	2.24	</td>	<td align="center">	34 	</td>	<td align="center">	19 	</td></tr>
<tr bgcolor="#E6F3E7"><td align="left">	Telecom	</td>	<td align="center">	0.64%	</td>	<td align="center">	1.41	</td>	<td align="center">	4 	</td>	<td align="center">	4 	</td></tr>
<tr bgcolor="#E6F3E7"><td align="left">	Energy	</td>	<td align="center">	-1.43%	</td>	<td align="center">	1.40	</td>	<td align="center">	25 	</td>	<td align="center">	14 	</td></tr>
<tr bgcolor="#E6F3E7"><td align="left">	Utilities	</td>	<td align="center">	-0.31%	</td>	<td align="center">	1.11	</td>	<td align="center">	15 	</td>	<td align="center">	12 	</td></tr>
<tr bgcolor="#E6F3E7"><td align="left">	Consumer Staple	</td>	<td align="center">	-1.20%	</td>	<td align="center">	1.08	</td>	<td align="center">	17 	</td>	<td align="center">	19 	</td></tr>
<tr bgcolor="#E6F3E7"><td align="left">	Materials	</td>	<td align="center">	-0.11%	</td>	<td align="center">	1.02	</td>	<td align="center">	13 	</td>	<td align="center">	16 	</td></tr>
<tr bgcolor="#E6F3E7"><td align="left">	Technology	</td>	<td align="center">	-3.22%	</td>	<td align="center">	0.87	</td>	<td align="center">	30 	</td>	<td align="center">	37 	</td></tr>
<tr bgcolor="#E6F3E7"><td align="left">	Consumer Disc	</td>	<td align="center">	-5.57%	</td>	<td align="center">	0.63	</td>	<td align="center">	28 	</td>	<td align="center">	48 	</td></tr>
<tr bgcolor="#E6F3E7"><td align="left">	Financial Services	</td>	<td align="center">	-19.52%	</td>	<td align="center">	0.49	</td>	<td align="center">	28 	</td>	<td align="center">	59 	</td></tr>
<tr bgcolor="#E6F3E7"><td align="left">	S&#38;P 500	</td>	<td align="center">	-5.10%	</td>	<td align="center">	1.05	</td>	<td align="center">	231 	</td>	<td align="center">	243 	</td></tr>
</table>

</p><p ALIGN="left">
</p><p ALIGN="left">
Unlike 2008, there is no mechanical reason for analysts to raise their numbers for 2009 in response to an earnings surprise. While it did rise, it remains in negative territory. It rose to, 0.79, from 0.76 last week, and 0.66 two weeks ago.
</p><p ALIGN="left">
The Energy sector, with a revisions ratio of 2.15, remains the strongest. Health Care also put in a decent showing at 1.91 Energy firms showing noteworthy strength include the Oil Service majors, <b>Baker Hughes</b> (<a href="http://www.zacks.com/stock/quote/BHI">BHI</a>), <b>Halliburton</b> (<a href="http://www.zacks.com/stock/quote/HAL">HAL</a>), <b>National Oilwell Varco</b> (<a href="http://www.zacks.com/stock/quote/NOV">NOV</a>) and <b>Schlumberger</b> (<a href="http://www.zacks.com/stock/quote/SLB">SLB</a>).
</p><p ALIGN="left">
The revisions picture for the Financial sector is even worse for 2009 than it is for 2008, coming in at 0.24, or over four cuts for every increase. Revisions like these will eat away at the robust earnings rebound seen for 2009 (unless 2008 gets cut faster). If the Financials were excluded, the revisions index would pop to 1.04. We do not seem to be getting out of the woods on the Financial sector front. While there is weakness throughout the sector, major regional banks seem to be the worst hit. In particular, weakness at <b>BB&#38;T</b> (<a href="http://www.zacks.com/stock/quote/BBT">BBT</a>), <b>Comerica</b> (<a href="http://www.zacks.com/stock/quote/CMA">CMA</a>), <b>SunTrust</b> (<a href="http://www.zacks.com/stock/quote/STI">STI</a>), <b>Regions Financial</b> (<a href="http://www.zacks.com/stock/quote/RF">RF</a>) and <b>Zion</b> (<a href="http://www.zacks.com/stock/quote/ZION">ZION</a>) was noteworthy.
</p><p ALIGN="left">
The total number of revisions for the whole S&#38;P 500 for 2009 is also near its seasonal peak. There were a total of 3,087 revisions: 1,360 up and 1,727 down. This is up 33.1% from 2,752 (1,189 up and 1,563 down) last week. The ratio of firms with rising mean estimates to falling mean estimates is 0.78, in line with the revisions ratio.
</p><p ALIGN="left">
</p><p ALIGN="center">
<table cellpadding="3" cellspacing="1" bgcolor="#ffffff" width="80%">
<tr bgcolor="#A2D39C"><td align="left"><b><u>	Avg. 4wk EPS<b>Change (FY09) 	</b></u></b></td>	<td align="center"><b><u>	Avg. 4wk EPS<br />Change (FY09) 	</u></b></td>	<td align="center"><b><u>	Revisions<br />Ratio 	</u></b></td>	<td align="center"><b><u>	Firms With FY09<br />EPS Increase 	</u></b></td>	<td align="center"><b><u>	Firms With FY09<br />EPS Decrease	</u></b></td></tr>
<tr bgcolor="#E6F3E7"><td align="left">	Energy	</td>	<td align="center">	3.92%	</td>	<td align="center">	2.15	</td>	<td align="center">	33 	</td>	<td align="center">	6 	</td></tr>
<tr bgcolor="#E6F3E7"><td align="left">	Health Care	</td>	<td align="center">	0.48%	</td>	<td align="center">	1.91	</td>	<td align="center">	33 	</td>	<td align="center">	19 	</td></tr>
<tr bgcolor="#E6F3E7"><td align="left">	Industrials	</td>	<td align="center">	-0.16%	</td>	<td align="center">	1.27	</td>	<td align="center">	24 	</td>	<td align="center">	30 	</td></tr>
<tr bgcolor="#E6F3E7"><td align="left">	Consumer Staples	</td>	<td align="center">	-1.06%	</td>	<td align="center">	1.21	</td>	<td align="center">	18 	</td>	<td align="center">	16 	</td></tr>
<tr bgcolor="#E6F3E7"><td align="left">	Utilities	</td>	<td align="center">	-0.05%	</td>	<td align="center">	1.21	</td>	<td align="center">	12 	</td>	<td align="center">	12 	</td></tr>
<tr bgcolor="#E6F3E7"><td align="left">	Telecom	</td>	<td align="center">	1.07%	</td>	<td align="center">	0.95	</td>	<td align="center">	5 	</td>	<td align="center">	4 	</td></tr>
<tr bgcolor="#E6F3E7"><td align="left">	Materials	</td>	<td align="center">	-1.75%	</td>	<td align="center">	0.90	</td>	<td align="center">	10 	</td>	<td align="center">	18 	</td></tr>
<tr bgcolor="#E6F3E7"><td align="left">	Technology	</td>	<td align="center">	-3.53%	</td>	<td align="center">	0.65	</td>	<td align="center">	29 	</td>	<td align="center">	37 	</td></tr>
<tr bgcolor="#E6F3E7"><td align="left">	Consumer Discr	</td>	<td align="center">	-6.75%	</td>	<td align="center">	0.42	</td>	<td align="center">	21 	</td>	<td align="center">	54 	</td></tr>
<tr bgcolor="#E6F3E7"><td align="left">	Financial Services	</td>	<td align="center">	-7.23%	</td>	<td align="center">	0.24	</td>	<td align="center">	20 	</td>	<td align="center">	68 	</td></tr>
<tr bgcolor="#E6F3E7"><td align="left">	S&#38;P 500	</td>	<td align="center">	-4.98%	</td>	<td align="center">	0.79	</td>	<td align="center">	205 	</td>	<td align="center">	264 	</td></tr>
</table>
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<b>Market Cap versus Total Earnings</b>
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When making investment decisions, growth should always be looked at in conjunction with how much you are paying for a stock. Thus, it makes sense to look at the total earnings expected for a sector, relative to that sectors total market capitalization. This is basically a variation on looking at the P/E.
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The chart below shows the share of total earnings for 2007, 2008 and 2009, as well as the share of total market capitalization for each sector (the final bar shown). Since the S&#38;P 500 is a market cap weighted index, this is the same as its index weight. On the chart below, the difference between the sizes of the first three bars shows if a sector is gaining or losing earnings share. The difference between the final bar and the first three bars shows if the sector is selling for an above or below market P/E. If the final bar is smaller than the other bars, the sector is selling for a below market P/E. However, as opposed to just showing the sector P/Es, it also shows the relative importance of the sectors to the overall index.
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For years, the Financials were the dominate force in the market, both in terms of market cap, and even more so in terms of total earnings. They have now been decisively dethroned on both counts. On the market cap front, Financials just recaptured 2nd place from Energy. However, the sector has now slipped into 5th place based on 2008 earnings. Still, despite their current problems, the Financials are still a very significant influence on the market.
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Even with all the disasters in the sector, for 2007, the Financials accounted for 21.9% of the total net income for the S&#38;P 500. In 2008, that is currently expected to decline to 11.0% before rebounding to 17.4% in 2009. However, in recent years the sector has accounted for well over a quarter of all earnings.
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Energy has usurped the crown this year, with its earnings share climbing to 21.8% from 15.6% in 2007. Energy should keep the earnings crown for 2009 as well, gathering 20.0% of all the earnings of the S&#38;P 500.
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On the market cap (and index weight) front, Tech overtook the Financials a few months ago and currently stands at 17.6%. The Financials have plunged to 14.7% of the index. As recently as the end of February, Financials had a 17.2% index weighting versus 15.7% for Tech and 13.0% for Energy.
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Keep in mind that these numbers are snapshots, when you should be thinking about a movie. At the end of February (the first time we had a complete read on 2009), the Financials were expected to gather 22.1% of all earnings for 2008, and Energy was expected to only get 16.0%. For 2009, the expected earnings shares were 15.0% for Energy and 22.4% for Financials. A year ago, before the credit crunch hit, Financials were expected to gather 26.3% of 2008 earnings and held a 19.4% weighting in the index.
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Energy represented just 10.9% of the total market capitalization and was expected to get 12.9% of the total earnings in 2008.  In general it seems as if the Energy sector is consistently gaining 0.2% of share for each year every week, with a similar decline for the Financials. If those trends continue, then Energy could be as dominate on the earnings front in 2008 and 2009 as the Financials were in 2007 or 2006.
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For many years, Financials were clearly the dominate factor in the overall market, despite generally selling for below market P/Es. Due to an implosion in earnings that has been far worse than the dismal market performance of the sector, the Financials now have the highest P/Es based on 2008 earnings, displacing the perennial high P/E sector Technology. Based on 2008 earnings, the Financials have a P/E of 19.4x. However, given the expectation that the bleeding will stop next year, the P/E based on 2009 earnings is just 10.0x. (The true P/E is probably higher since the actual earnings will be significantly lower.)
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Energy has just taken the throne as the cheapest based on 2008 earnings trading at 8.8x, and 7.8x based on 2009 expectations. There is no question in my mind that Energy is the cheapest sector of the market, and every portfolio should be overweight in it. The Tech sector is still a bit on the expensive side, trading for 17.7x 2008 and 15.1x 2009 expectations. Health Care looks interesting trading at 14.4x 2008 and 13.0x 2009 earnings.
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Keep your eyes on the revisions, they give you the best clue as to if the earnings will be achieved and if the P/Es are for real. While the recent declines in oil prices may cause the upwards revisions to moderate for the Energy sector, most analysts are using very conservative price assumptions.
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The S&#38;P 500 as a whole is trading for 14.6x and 11.7x 2008 and 2009 earnings, respectively. Based on a blend of 50% 2008 earnings and 50% 2009 earnings; that translates to a 7.60% earnings yield, which looks extremely cheap relative to a 3.93% ten year T-note. Even against the A rated corporate bond yield of 6.11% it looks attractive. However, the current level of expectations for corporate earnings still implies that profits will stay well above their historical averages as a share of GDP. That would be an exceedingly rare occurrence during a recession. The comparison between the earnings yield on the S&#38;P and the 10 year T-note is in my opinion more a reflection of the extreme unattractiveness of long term T-notes at this point than stocks looking particularly cheap in general, however there are attractive stocks out there. It appears that the flight to quality has caused a massive bubble in the price of T-notes. This is far and away, in my opinion, the most significant bubble in the market today, not the price of oil. The prices are hard to justify given the risk that the massive injections of liquidity by the Fed to ameliorate the credit crunch will end up fueling the fires of inflation.
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</p><p ALIGN="center">
<img src="http://www.zacks.com/images/upload_dir/1218475675.jpg"/>
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</p><p ALIGN="center">
<img src="http://www.zacks.com/images/upload_dir/1218475747.jpg"/>
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</p><p ALIGN="left">
Neil Malkin contributed significantly to this report.
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Data in this report, unless stated otherwise, is through the close on Thursday, 8/7/2008
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