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House and Home
Fri, October 8, 2010
Thu, October 7, 2010
Superior Industries International, Regis, Wal-Mart, Big Lots and Kroger
CHICAGO--([ BUSINESS WIRE ])--[ Zacks Equity Research ] highlights: Superior Industries International (NYSE: [ SUP ]) as the Bull of the Day and Regis Corp. (NYSE: [ RGS ]) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Wal-Mart (NYSE: [ WMT ]), Big Lots (NYSE: [ BIG ]) and Kroger (NYSE: [ KR ]).
Full analysis of all these stocks is available at [ http://at.zacks.com/?id=2678 ].
Here is a synopsis of all five stocks:
[ Bull of the Day ]:
Superior Industries International (NYSE: [ SUP ]) has a wide customer base. Moreover, its long-term business agreements with clients helped the company maintain its financial stability.
At the same time, with its strategic acquisition, divestment and relocation, the company is well positioned to take full advantage of the globally expanding automotive industry. In addition, SUP has no long-term debt obligations.
Its second-quarter results were strong with earnings outperforming the Zacks Consensus Estimate by $0.32 per share. Given these conditions, we have recommended shares of the company as Outperform and set a target price of $21.
[ Bear of the Day ]:
Regis Corp.a™s (NYSE: [ RGS ]) fourth quarter 2010 earnings fell short of the Zacks Consensus Estimate, due to a decline in revenues. Slower traffic and limited new product introduction due to economic concerns remain a drag on same-store sales.
Moreover, same-store sales are unlikely to be positive before second half of 2011, as consumer behavior has changed in this difficult economic scenario. Consumers across the globe are cutting back on expenditure, resulting in a slowdown in spending and longer recesses between salon visits. The company also faces lingering risks from fashion changes.
Strategic alternatives are currently being evaluated; however, with no further update, we see limited near-term growth catalysts. Hence, we downgraded our rating from Neutral to Underperform.
Latest Posts on the Zacks [ Analyst Blog ]:
Initial Jobless Claims Fall Again
Initial Claims for Unemployment Insurance fell by 11,000 last week to 445,000. That is the second week in a row, and the sixth in the last seven weeks that initial claims have declined.
Since claims can be volatile from week to week, it is better to track the four-week moving average to get a better sense of the trend. It declined by 3,000 to 45,750. After declining sharply in the second half of 2009, the four-week moving average has been stuck in a tight "trading range." In mid-August, the weekly number hit 500,000 and threatened to break out to the upside from the range. The decline over the last month and a half month brought us down to 445,000, and raises hopes that we might be breaking out to the downside, but leta™s not count our chickens before they are hatched.
Pseudo-Recovery?
We seem to be stuck in a pseudo-recovery. The economy is growing, but not at the sort of rate needed to add a significant number of jobs and take a chunk out of the huge army of the unemployed. In hindsight, the run-up to 500,000 seems to be mostly a function of the Census workers being laid off (they are almost all gone now, and the Census was completed quicker, and at less cost than anyone had expected). As that effect waned, we returned to the previous baseline. Relative to a year ago, the four-week moving average is down by 84,750 or 15.7%.
Unemployment Benefits a Necessity Now
The vast majority of economists agree that extended unemployment benefits are among the most effective forms of economic stimulus. The people who get them tend to spend the money quickly on basic needs. This in turn keeps customers coming in the door at Wal-Mart (NYSE: [ WMT ]) and Big Lots (NYSE: [ BIG ]).
It means that, at the margin, some people are able to continue to pay their mortgages and thus helps keep the foreclosure crisis from getting even worse than it already is. People can buy food at a Krogera™s(NYSE: [ KR ]) rather than having to rely on overstretched food banks. However, by the time they are well into extended benefits, they might also be spending food stamps as well as the unemployment check at Krogera™s.
These customers keep the people at Wal-Mart, Big Lots and Krogera™s, and of course their competitors, employed. It also keeps the people who make and transport those goods employed as well, although in that case much of the stimulus is lost overseas if the goods are imported.
However, it is not clear if the marginal propensity to import is higher for poor (or temporarily poor because they are unemployed) or for the rich. Lots of the stuff on the shelves of Wal-Mart comes from China. On the other hand, the poor are not likely to be buying Swiss watches or German autos.
Get the full analysis of all these stocks by going to [ http://at.zacks.com/?id=2649 ].
About the Bull and Bear of the Day
Every day, the analysts at Zacks Equity Research select two stocks that are likely to outperform (Bull) or underperform (Bear) the markets over the next 3-6 months.
About the Analyst Blog
Updated throughout every trading day, the [ Analyst Blog ] provides analysis from Zacks Equity Research about the latest news and events impacting stocks and the financial markets.
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