Hearst Corporation and Lagardere SCA Enter Into Exclusive Negotiations for Hearst’s Acquisition of Lagardere’s International Press and Magazine Business
NEW YORK, NY--(Marketwire - December 31, 2010) - Hearst Corporation and Lagardère SCA announced today that they have entered into an agreement providing for exclusive negotiations until January 30, 2011 for the acquisition by Hearst of Lagardère's international press and magazine business in an all cash transaction.
What is a Real Earnings Surprise? – Weekend Wisdom
As we close the books on 2010, we are coming face to face with another important earnings season. And one of the most confusing questions about earnings season is: Why do some stocks skyrocket on a positive earnings surprise while others fall off a cliff?
In this article we are going to tackle this little understood issue. Better yet, I will share with you two ways to profit from earnings surprises. More on that later.
3 Reasons Stocks Can Drop After an Earnings Surprise
1) Estimates vs. Expectations: The standard definition of an earnings surprise is when actual earnings come in higher than earnings estimates. But those estimates are the "published" numbers from the brokerage analysts. Quite often investors tend to develop their own unique set of expectations that can differ greatly from the Wall Street analysts. If there is too much optimism ahead of the release, then actual earnings will need to be a blowout in order to appease the inflated expectations of investors. This is the most common reason why some stocks fall after a "supposed" earnings beat.
2) Quality of Earnings: The highest quality earnings come from having robust revenue growth. This means that the company's products or services are in high demand and should stay that way. However, these days far too much of the earnings being reported is generated from cost cutting and other "accounting gimmickry". The problem is that the benefits of these moves don't last. When the market gets a whiff that the earnings are unsustainable, no matter how strong the beat, shares will most likely drop.
3) Forward Guidance: Plain and simple, when you buy a stock you are taking an ownership stake. And what owners of companies care about is the stream of future earnings. So if a company beats earnings for the quarter just reported, but warns that future quarters will see lower earnings, then that stock will go down...and go down fast.
2 Ways to Make Money on Earnings Surprises
So now that we have outlined things that can go wrong after earnings surprises, let's shift gears and talk about something even more important; how to turn a profit from earnings surprises. Here are two ways to go about it.
Good Way: Buy shares in any company that had an earnings surprise and rose the day following the news. These stocks experience what academics call the "Post Earnings Announcement Drift," Studies clearly show that these stocks usually outperform the market over the next 9 months. Conversely, you should sell any stock in your portfolio that misses its earnings numbers as it likely to underperform the market for the next few quarters. The downside of this approach is that there are literally thousands of stocks to choose from every quarter.
Best Way: Find stocks where the earnings "whispers" tip you off that a big surprise is coming. Buy the shares shortly before the announcement and enjoy quick gains of 10%, 15%, 20% when the earnings surprise is officially reported.
I know what you're thinking. There are no Magic 8-balls for the stock market, so how is this possible??? But fret not; this isn't a magic show. It's pure science.
The concept of finding a profitable source of earnings whispers has long been the Holy Grail of stock investing. Many experts have tried and failed to make this work. In fact, we have been researching this for 3 straight years.
Early on we found clues that told us stocks more likely to surprise, but not necessarily rise in price. Not til this past Summer did we discover the right combination of elements that predicted surprises 77.96% of the time. Better yet, we backtested this strategy over the last ten years and it produced an astounding +62.1% average annual return. (I probably don't need to remind you, but over the last 10 years the S&P delivered negative returns for investors).
Where to Find These Stocks
This new system relies on two little-known factors coming from the brokerage analyst community. They’re layered on top of other time-tested elements such as the Zacks Rank and Zacks Industry Rank to find only the best stocks in the best industries.
To get our Zacks members ready for January earnings season, we're re-opening the Whisper Trader strategy that’s based on these principles. When introduced in September, it quickly became so popular that we had to close the door to new investors. Today, there are spots available, but your access will close again on January 11, and very possibly sooner.
Would you like to take advantage of earnings surprises, and see some of our most sensitive and profitable whisper information?
Wishing You a Very Profitable Earnings Season,
Mike Vodicka
Mike focuses on finding the best momentum and earnings surprise stocks for Zacks.com members. He is also the Editor in charge of the new Zacks Whisper Trader.
Zacks Investment Research
Vanguard Health Systems Completes Acquisition of Detroit Medical Center
NASHVILLE, TN--(Marketwire - December 31, 2010) - Vanguard Health Systems, Inc. announced today that, as expected, its acquisition of the Detroit Medical Center has been completed with the execution of final documents. Terms of the transaction were disclosed in a separate press release issued yesterday. The final acquisition price based on a formula included in the purchase documents was $368.1 million, including $4.8 million of direct transaction costs paid at closing.
AdCare Health Systems Completes Acquisition of Mountain Trace Nursing Center
AdCare Closes 2010 With Expected Annualized Run Rate Exceeding $140 Million, up 424% Over 2009
1ST Constitution Bank to Acquire Local Retail Branch Banking Offices
CRANBURY, NJ--(Marketwire - December 31, 2010) - 1ST Constitution Bancorp (
Top 5 Balanced Mutual Funds – Best of Funds
Investors looking at both long term capital growth and regular income would do well to consider balanced funds. Balanced funds ensure that gains from rising markets are accompanied by relatively lower levels of risk since they can utilize the strengths of equity as well as fixed income securities. The composition of their portfolios also ensures that the capital invested is protected during a market downturn. Moreover, many funds in this category keep the relative shares of equity, debt and money market instruments fluid to enable them to respond to changing market conditions.
Below we will share with you 5 top rated balanced mutual funds. Each has earned a Zacks #1 Rank (Strong Buy) as we expect the fund to outperform its peers in the future. To view the Zacks Rank and past performance of all balanced funds, then click here.
Wells Fargo Advantage Growth Balanced (NVGBX) seeks total return, both current income and capital appreciation. It invests in both equity master and fixed-income portfolios, concentrating on equity portfolios. It utilizes 65% of its assets to purchase equity and 35% to purchase assets in debt securities. The balanced mutual fund returned 10.56% in the last one year period.
The balanced mutual fund has an expense ratio of 0.95% compared to a category average of 1.01%.
J Hancock Balanced A (SVBAX) invests in a well diversified portfolio of equity and debt securities. At least 25% of its assets are invested in equity securities and not more than 25% is used to purchase senior debt securities. The balanced mutual fund has a five year annualized return of 7.37%.
The balanced mutual fund manager is Roger C. Hamilton and he has managed this balanced fund since 2003.
Thrivent Balanced A (AABFX) seeks to provide both long term capital appreciation and a steady income flow. Up to 35-75% of its stocks are invested in common stocks, 25-50% in fixed-income securities and up to 40% in money market instruments. This balanced mutual fund returned 12.54% over the last one year period.
As of September 2010, this balanced mutual fund held 268 issues, with 4.99% of its total assets invested in FHLBA.
State Farm Balanced (STFBX) invests 60% to 75% of its assets in common stocks. At least 25% of its assets are used to purchase fixed income securities. This includes preferred stock and debt securities with longer maturity periods; rated investment grade. The balanced mutual fund has a ten year annualized return of 3.79%. The balanced mutual fund has a minimum initial investment of $250 and an expense ratio of 0.14% compared to a category average of 1.01%.
Alpine Dynamic Balance (ADBYX) seeks capital growth. The fund invests in a mix of large cap domestic stocks and fixed income securities of superior quality. It may utilize up to 75% of its assets to purchase fixed-income securities. The balanced mutual fund returned 11.98% over the last one year period.
The balanced mutual fund manager is Samuel A. Lieber and he has managed this balanced fund since 2001.
To view the Zacks Rank and past performance of all balanced mutual funds, then click here.
About Zacks Mutual Fund Rank
By applying the Zacks Rank to mutual funds, investors can find funds that not only outpaced the market in the past but are also expected to outperform going forward. Learn more about the Zacks Mutual Fund Rank at http://www.zacks.com/funds/mutualfund/
View All Zacks #1 Ranked Mutual Funds
Zacks Investment Research
Korn Ferry International – Momentum
Korn/Ferry International (KFY) looks like a serious momentum player. Its share price just jumped to a 2-year high as companies begin to hire out of the recession. With another good quarter in the bag and a bullish growth projection, this Zacks #1 rank stock clears the momentum interview.What Do They Do?
Korn/Ferry is sort of a hybrid company, half talent agency and half executive recruiting services. The company has been around since 1969 and has a market cap of just over $1 billion.
Korn/Ferry is looking like an early benefactor of the job growth that many analysts are looking for in 2011. The company's share price just jumped to a new multi-year high after its Q2 results came in well ahead of expectations.
Second-Quarter Results
Fee revenue, comprising 95% of the company's total revenue, was up 32% from last year to $185 million. This was the groups sixth consecutive quarter of growth.
Earnings came in at 33 cents, 37% ahead of the Zacks Consensus Estimate, lifting the company's average earnings surprise to 35% over the last three quarters.
That increase in sales hit the bottom line hard, with operating income spiking to $20 million from $2 million last year..
Domestic vs International
Providing some texture to the results, CEO Gary Burnison said that the company is seeing a very two-tiered recovery, with emerging market companies hiring and adding jobs while the more developed, western economy countries maintain a cautious outlook.
Finanacial Profile
With cash and short-term investments of $131 million and no long-term debt, Korn/Ferry also looks strong on the balance sheet.
Estimates
We saw some pretty solid movement in estimates off the good quarter, with the current year up 19 cents to $1.17. The next-year estimate is pegged at $1.37, a bullish 17% growth projection.
Valuation
But in spite of recent gains, the valuation picture still looks reasonable, with a forward PEG (PE/growth) ratio of 1.17.
2-Year Chart
On the chart, shares jumped higher in early December after the company reported another great quarter, hitting a new multi-year high on the news. Although shares could be a little over extended in the short-run, the longer term trend is bullish too. Take a look below.
Last Week's Momentum Zacks Rank Buy Stocks
AGCO Corp. (AGCO) recently hit a new all-time high of $51.51 after rallying for most of the last 5 months on higher agriculture prices. With a compelling valuation and bullish growth projection, this Zacks #1 rank stock has harvested plenty of momentum for itself. Read Full Article.
Clayton Williams Energy, Inc. (CWEI) has been surging since early September, recently hitting a new multi-year high at $84.76 as crude crosses the $90 mark. With a bullish next-year estimate calling for 65% earnings growth and a compelling valuation, this Zacks #1 stock is providing plenty of fuel for its upward momentum. Read Full Article.
Precision Drilling Corp. (PDS) recently hit a new multi-year high at $9.85 after reporting an impressive Q3 earnings surprise of 122% in late October. Estimates have since jumped higher, with the next-year estimate now projecting 71% earnings growth, providing plenty of momentum for this Zacks #1 rank stock. Read Full Article.
Michael Vodicka is the Momentum Stock Strategist for Zacks.com. He is also the Editor in charge of the market-beating Zacks Momentum Trader Service.
KORN/FERRY INTL (KFY): Free Stock Analysis Report
Zacks Investment Research
SunOpta Secures Amended Credit – Analyst Blog
Brampton, Canada-based SunOpta Inc. (STKL) formerly known as Stake Technology Ltd., recently announced that under an amended credit facility, it has secured a two-year, new $135 million loan. The new loan includes a $105 million revolving credit and $30 million non revolving debt.
The company also has an option to raise an additional $30 million under the new credit facility if required. The new loan is held by a syndicate of lenders.
SunOpta, a leading global company focusing on natural, organic and specialty foods and natural health products said that it plans to use the fund to refinance its long-term debt of $33.2 million, in which the company had $30 million outstanding under a non-revolving term debt. Apart from reducing its financial obligation, SunOpta also expects to use the new credit to supports its North American natural and organic food operations.
As of October 2, 2010, long-term debt, excluding current liability, of the company was $17.2 million, down from $34.7 billion as of December 31, 2009. At the end of third quarter 2010, cash and cash equivalents of the company stood at $21.1 million versus $1.8 million at the end of fiscal year 2009.
Apart from paying down the company’s high-cost debt, the increased offering will extend the maturity period of debt. The new credit facility also provides the company with additional financial flexibility and offer future investment opportunities. However, the indebtedness increases SunOpta’s vulnerability and interest risk exposure.
We have a Zacks #3 Rank (short-term Hold recommendation) on SunOpta shares. We reiterate our long-term Neutral rating on the stock.
We have a Zacks #2 Rank (short-term Buy recommendation) on the company’s prime competitors such as Del Monte Food Co. (DLM) and Diamond Foods Inc. (DMND).
DEL MONTE FOODS (DLM): Free Stock Analysis Report
DIAMOND FOODS (DMND): Free Stock Analysis Report
SUNOPTA INC (STKL): Free Stock Analysis Report
Zacks Investment Research
Scientific Games Wins Ontario Deal – Analyst Blog
Scientific Games Corporation (SGMS) announced that it has been awarded a five-year contract in competitive procurement process by the Ontario Lottery and Gaming Corporation to supply instant lottery tickets and printing services.
Although this is a five-year contract, it includes extension options for up to three years. Scientific Games will be the exclusive supplier of instant ticket printing services to Ontario Lottery, thereby helping the company to expand in Canada.
Based in New York City, Scientific Games is a global IT systems and services company that provides instant ticket and online lottery products, systems and services to lottery authorities and gaming markets worldwide.
Scientific Games continues to grow through international development activities with the new contract further validating its expansion initiative. We believe that Scientific Games benefits from its strong and growing presence in the worldwide instant ticket and online lottery markets, and has made significant in-roads into international markets that have traditionally been dominated by GTECH Holdings Corporation.
Management pointed out that it invested in a new printing press for its Montreal facility in 2009, to optimize service and support its Canadian customers. This has helped the company to more than doubled its capacity in Canada as well as enhance the security and quality of its instant games.
Despite continuous efforts, Scientific Games’ profit of 12 cents per share for the recently completed third quarter of 2010 was down 25.0% from 16 cents reported in the prior-year quarter. The decline was primarily driven by weak revenue growth in the quarter.
Revenues declined 7.5% year over year in the quarter adversely affected by foreign currency fluctuations and lower lottery sales. Lottery Systems Group revenues plunged 19.4% year over year to $52.8 million, reflecting lower hardware and software sales and online contract terminations.
Recently, Scientific Games lost contracts in New Hampshire, Vermont and South Dakota. Moreover, its US lottery systems customers’ retail sales decreased 7.8% in the third quarter.
Despite weak third quarter results, we maintain an Outperform rating on a long-term basis (6–12 months). We believe that with the completion of the sale of the racing business and large contract re-pricings, Scientific Games will focus on developing its core business.
We expect the company’s product offerings, recurring revenue business model and strong growth from the Internet based business to augur well over the long term.
Given significant competition from International Game Technology (IGT) and lack of movement in the Zacks Consensus Estimate in the last 30 days, Scientific Games has a Zacks #3 Rank, which implies Hold rating on a short-term basis.
INTL GAME TECH (IGT): Free Stock Analysis Report
SCIENTIFIC GAME (SGMS): Free Stock Analysis Report
Zacks Investment Research
OMAB Announces 5-Year Plan – Analyst Blog
Mexican airport operator Grupo Aeroportuario del Centro Norte, S.A.B. de C.V (OMAB) announced a Master Development Program (MDP) investments for the next five years for a total consideration of MXN$2,745.2 million. The five years include the period between fiscal 2011 to fiscal 2015. An additional MXN404.3 million will be invested in airport security improvements, of which 70% will be carried out in the first two years.
The intension for such investments is to expand the entire airport infrastructure for modernizing airport facilities and increase passenger traffic. Centro Norte is planning to spend an extra MXN$404.3 million for domestic and international operating, safety, and security standards.
Recently, Centro Norte declared an investment of MXN$500 million for better handling of baggage in its 13 airports. A part of the investment will be financed by UPS Capital Business Credit.
As the market is gradually picking up, Centro Norte is coming up with new investments as well as routes.
During the third quarter of fiscal 2010, passenger traffic rose 4.3% year over year with 2.7% and 14.9% increases in Domestic and International traffic, respectively. In this context, we note that the second quarter saw a turnaround in traffic after a long hiatus, since the beginning of fiscal 2009, with traffic rising 6.5%.
The rebound in traffic during the second quarter was not specific to the company. Both Grupo Aeroportuario del Pacífico S.A.B. de C.V. (PAC) and Grupo Aeroportuario del Sureste, S.A.B. de C.V. (ASR) have experienced an increase in passenger traffic since the second quarter of fiscal 2010 compared with the huge drop suffered during the comparable period in fiscal 2009.
The traffic decline from the second quarter of fiscal 2009 through March 2010 was mainly due to the outbreak of the H1N1 flu in April 2009, aggravated by a difficult business environment as fallout of economic instability since the second half of fiscal 2008.
With the revival of the markets, the airline industry is expected to show some decent results in the coming years. Fuel prices have also settled down to the mid-80s from the peak of nearly $150 per barrel. The International Air Transport Association (IATA) expects the airline industry to make a profit of $2.5 billion in 2010.
We maintain our long-term Neutral recommendation on Aeroportuario del Centro Norte. The ADS currently retains its Zacks #3 Rank, equivalent to a short-term Hold rating.
GRUPO AEROP-ADR (ASR): Free Stock Analysis Report
GRUPO AEROP-ADS (OMAB): Free Stock Analysis Report
GRUPO AEROP-PAC (PAC): Free Stock Analysis Report
Zacks Investment Research