House & Home
House and Home
House and Home
Fri, December 10, 2010
Thu, December 9, 2010
TRW Automotive, Accuray, Krogera?s, Wal-Mart and Big Lots
CHICAGO--([ BUSINESS WIRE ])--[ Zacks Equity Research ] highlights: TRW Automotive (NYSE: [ TRW ]) as the Bull of the Day and Accuray Inc. (Nasdaq: [ ARAY ]) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Krogera™s (NYSE: [ KR ]), Wal-Mart (NYSE: [ WMT ]) and Big Lots (NYSE: [ BIG ]).
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 ]:
TRW Automotive (NYSE: [ TRW ]) is a well-known supplier of auto safety products. Its innovative product portfolio is capable of generating top- and bottom-line growth.
In addition, the U.S. government's policy to mandate the use of safety devices in all passenger vehicles will boost the company's sales. Further, its strong exposure to international markets, especially in emerging countries, will fuel its earnings growth.
In the most recent quarter, TRW outpaced the Zacks Consensus Estimate by a significant margin of $0.69 per share. Considering all these factors, we continue with our Outperform rating on shares of TRW and set a target price of $59.
[ Bear of the Day ]:
We downgrade our recommendation on Accuray Inc. (Nasdaq: [ ARAY ]) to Underperform following its lackluster first-quarter fiscal 2011 results. Its reported loss per share for the quarter exceeded the Zacks Consensus Estimate.
Net loss swelled on account of lower revenues. Sales dipped year-over-year due to lower products and services revenues. Accuray is exposed to stiff competition in the radiation oncology market and remains susceptible to reimbursement uncertainties surrounding its products.
Our assessment is also supported by management's tepid guidance for fiscal 2011, which indicates depressed revenues. We therefore lower our target price to $5.50 per share, based on a P/E of 275x our fiscal 2011 EPS estimate.
Latest Posts on the Zacks [ Analyst Blog ]:
Why Extended Benefits Are So Important
Why do I say that the elimination of extended benefits will cause initial benefits to rise? Because extended unemployment benefits is dollar of dollar one of the most effective forms of economic stimulus there is. It is a pretty good bet that the people losing their extended benefits have depleted their savings and run up all the debt they can in trying to make ends meet.
The maximum unemployment benefit works out to be just $20,800 per year, or less than the poverty line for a family of four. You think any of those people have been able to sock any of that away? Of course not! Without the unemployment benefit, people will have to either go on food stamps, although it is highly likely that the incoming Congress will try to reduce those, or will have to go to food banks, rather than Krogera™s (NYSE: [ KR ]) to get their food.
Talk about a lump of coal in your stocking for Christmas! For millions of Americans, Christmas this year will resemble the one at Bob Cratcheta™s house. I just wouldna™t count on a spiritually renewed Scrooge showing up after a fitful sleep with a big goose. Nor can we count on the Ghost of Christmas future haunting the dreams of John Boehner or Mitch McConnell this Christmas Eve.
The people who get extended benefits 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, which thus helps keep the foreclosure crisis from getting even worse than it already is.
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.
Extended benefits receivers will not be buying absolutely frivolous things like water imported from Fiji. What is clear is that they will spend their checks quicker, increasing the velocity of money, than will the rich who will tend to save more of it. The rich are much more likely, in other words, to fit Milton Friedmana™s aPermanent Income Hypothesisa than are the unemployed, since the rich do not face liquidity constraints.
Also if you remember your Friedman, velocity of money counts, and it counts a great deal. P * Q = M * V -- price times quantity in the aggregate is nominal GDP, and it is equal to the amount of money in circulation times how quickly it changes hands. Money in the hands of the unemployed has a much higher velocity than money in the hands of a multi-millionaire.
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.
About Zacks Equity Research
Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.
Continuous analyst coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.
Zacks [ "Profit from the Pros" ] e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Subscribe to this free newsletter today by visiting [ http://at.zacks.com/?id=7158 ].
About Zacks
Zacks.com is a property of [ Zacks Investment Research ], Inc., which was formed in 1978 by Leonard Zacks. As a PhD in mathematics Len knew he could find patterns in stock market data that would lead to superior investment results. Amongst his many accomplishments was the formation of his proprietary stock picking system; the [ Zacks Rank ], which continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros at [ http://at.zacks.com/?id=4582 ].
Visit [ http://www.zacks.com/performance ] for information about the performance numbers displayed in this press release.
Follow us on Twitter: [ http://twitter.com/ZacksResearch ]
Join us on Facebook: [ http://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts ]
Disclaimer: Past performance does not guarantee future results. Investors should always research companies and securities before making any investments. Nothing herein should be construed as an offer or solicitation to buy or sell any security.
