Zacks Investment Research #1 Rank (strong buy) stocks have consistently outperformed the S&P 500 since 1988. Here are some their recommended Momentum stock picks with a #1 ranking. This list is updated daily.
Universal Forest Products, Inc. - Momentum
Fri, 18 May 2012
Shares of Universal Forest Products, Inc. (UFPI) moved higher after the company released strong first quarter 2012 results, which included a 600% earnings surprise, and announced the acquisition of an Alabama-based manufactured housing supplier.
This Zacks #1 Rank (Strong Buy) wood-based construction materials provider is trading around its 52-week high and showing strong momentum.
Upbeat Results and Lucrative Acquisition
On April 19, Universal Forest Products reported an upbeat first-quarter 2012 with earnings per share at 21 cents, a remarkable improvement from a loss of 19 cents in the year-ago quarter and break-even with the previous quarter. It also blew past the Zacks Consensus Estimate at only 3 cents.
An 18% jump in net sales and better cost control drove the results. Increased sales were aided by strong demand and favorable weather conditions.
Inspired by its first quarter results, the company looks forward to a sustained healthy demand growth in the second quarter as well. At the moment, the Zacks Consensus Estimate for the quarter is at 68 cents, which is up 17.2% in 30 days.
The acquisition of Alabama-based MSR Forest Products LLC will compliment Universal Forest’s existing manufactured housing business in the region and enhance capacity utilization and cost reduction.
Estimates Moving Higher
In the last 30 days, all three estimates for this year and next have moved higher, pushing the Zacks Consensus Estimate for 2012 up by 39% to $1.39 per share. For 2013, the Zacks Consensus Estimate moved up 22.4% to $2.02 per share, suggesting the potential for year-over-year profit growth of more than 45%.
Valuation & Technicals
Universal Forest Products is currently trading at a forward P/E multiple of 27.0x, up 7% from the peer group average of 25.2x. However, with respect to ROE, the valuation looks reasonable. Currently, the company has a ROE of 2.4% versus the peer group average of negative 5.2%.
The chart below shows the company’s impressive performance over the last 6 months with share price trading within $27-$38 per share range.
Headquartered in Grand Rapids, Michigan, Universal Forest Products Inc. was incorporated in 1955. The company primarily engineers, manufacturers, treats, distributes, and installs lumber, composite wood, plastic and other building products.
Major end-markets include Retail Building, Residential Construction, Commercial Construction and Concrete Forming, Industrial Packaging/Components and Manufactured Housing. As of December 2011, the company employed 4,800 people.
This Week's Momentum Zacks Rank Buy Stocks
Shares of Everest Re Group Ltd. (RE) hit its 52-week high on May 11, 2012 after reporting strong first quarter results, which included a 28% earnings surprise. Rebounding from sequential as well as year-ago losses, this Zacks #1 Rank (Strong Buy) property & casualty insurer has now reached the momentum radar. Read the full article.
Vitamin Shoppe, Inc. (VSI) shares have rocketed 41% in the past 6 months as this retailer of vitamin and feel good healthcare products gained from improved consumer confidence. On May 8, the company reported first-quarter earnings per share that beat the Zacks Consensus Estimate while climbing 30% from last year. Read the full article.
Texas Capital BancShares Inc. (TCBI) has been on a roll for the last several months, hitting a number of new all-time highs and jumping more than 70% since October 2011. With first-quarter EPS growth of 126% year-over-year and a long-term growth projection of about 10%, this regional banking stock has plenty of momentum. Read the full article.
Saia Inc. (SAIA) shares have soared nearly 78% in the last 6 months, as this trucking company hitches up to the economic recovery. Late April saw a strong first-quarter report for this Zacks #1 Rank (Strong Buy) that included a positive EPS surprise of 100% and double digit revenue growth, leading to upward earnings estimate revisions in the past week. Read the full article.
UNIVL FST PRODS (UFPI): Free Stock Analysis Report
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Everest Re Group Ltd. - Momentum
Thu, 17 May 2012
Shares of Everest Re Group Ltd. (RE) hit its 52-week high on May 11, 2012 after reporting strong first quarter results, which included a 28% earnings surprise. Rebounding from sequential as well as year-ago losses, this Zacks #1 Rank (Strong Buy) property & casualty insurer has now reached the momentum radar.
Upbeat Earnings and Positive Revisions
On April 25, Everest Re reported first quarter 2012 operating earnings per share of $4.48, topping the Zacks Consensus Estimate of $3.51 and reversing the year-ago loss of $5.95. Earnings primarily benefited from lower claims expenses and a modest revenue increase.
The top line of $1.25 billion improved 3.3% year over year, primarily attributable to higher net realized capital gains, partly offset by lower premiums earned and lower investment income.
Total claims and expenses were down 42% year over year to $906.3 million, which was primarily due to lower losses. The loss ratio in the quarter narrowed down to 60.4% from 123.6% in the prior-year quarter.
Everest Re spent $125 million to buyback shares and shelled out $26 million as a dividend payment, and still managed to increase surplus by $260 million.
For 2012, nine of 11 estimates were raised in the last 30 days, pushing the Zacks Consensus Estimate higher by 13% to $13.57, compared to the loss of $1.73 in 2011.
The Zacks Consensus Estimate for 2013 rose 4% to $13.02 as 8 of 12 estimates moved higher.
Valuation Looks Attractive
Shares of Everest Re currently trade at a forward P/E of 7.6x, a 61% discount to the peer group average of 13.8x. On a price-to-book basis, shares currently trade at 0.8x, a 55% discount to the peer group average of 1.8x. This looks attractive given that the trailing 12-month ROE is 7.6% versus 5.5% for the peer group average.
Market Performance & Technicals
Everest Re traded in a band of $84 to $95 from January 3 through April 25. After the company reported strong first quarter results on April 25, it broke the range to trade above its 50-day moving average as well as the 200-day moving average.
Volume is fairly strong, averaging roughly 393,000 daily. The year-to-date return for the stock came in at 20.5%, much above the S&P 500’s return of 5.8%.
Incorporated in 1999 and headquartered in Hamilton, Bermuda, Everest Re writes property and casualty insurance and reinsurance. With about 1,000 employees worldwide, Everest Re has branches in Canada, the United States, Singapore, the United Kingdom and Ireland.
With a market capitalization of $5.34 billion, Everest Re competes with White Mountains Insurance Group Ltd. (WTM).
EVEREST RE LTD (RE): Free Stock Analysis Report
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Vitamin Shoppe, Inc. - Momentum
Wed, 16 May 2012
Vitamin Shoppe, Inc. (VSI) shares have rocketed 41% in the past 6 months as this retailer of vitamin and feel good healthcare products gained from improved consumer confidence. On May 8, the company reported first-quarter earnings per share that beat the Zacks Consensus Estimate while climbing 30% from last year.
The stock was elevated to a Zacks #1 Rank (Strong Buy) on May 4 and has moved up 18.4% since.
Vitamin Shoppe Routinely Beats Quarterly Expectations
VSI has an excellent history of topping quarterly Zacks Consensus Estimates. The past four quarters have averaged a surprise of more than 13%. Revenues have also beaten the Zacks Consensus Estimate in the last four quarters with positive surprises in a range between 0.3% and 3.49%.
In the first quarter, earnings per share of 61 cents beat the Zacks Consensus Estimate by 7%. Revenues increased 14.4% to $248.1 million, topping the Zacks Consensus Estimate by 3.49%.
Vitamin Shoppe benefited from same-store sales growth of 9.6%, new store openings and 15% growth in Internet sales. The company was able to leverage space and supply chain costs, whereby relatively modest gains on the top line were magnified on the bottom line.
The company foresees same store revenue growth of about 5% or so, supported by the opening of 52 new retail outlets in the current year.
Earnings Estimates on the Upswing
The Zacks Consensus Estimate for 2012 has moved up 4.8% to $1.95 over the past week as all 14 estimates were revised upward. This represents an estimated growth of about 17.5%.
The Zacks Consensus Estimate for 2013 shifted higher about 5% in that timeframe to $2.31, which suggests the potential for year-over-year EPS growth of 18.2%.
Stretched Valuation
The forward PE multiple of 27.6x is more than twice the peer group average of 12x. Similarly, on a price-to-book basis, Vitamin Shoppe currently trades at 4.16x, compared with just 1.14x for its peer group average. However, the company has a 1-year ROE of 15.1% versus the peer group average of 9.7%, implying efficient usage of capital.
Chart: Solid Technicals
The burgeoning momentum for Vitamin Shoppe is well encapsulated in its chart. While the stock has somewhat aimlessly hovered close to its 50-day and 200-day moving averages for the most part of 2011-12, it managed to break free in late April. Expectations for strong earnings have catalyzed the somewhat early bullish trend.
With respect to performance, Vitamin Shoppe is trading just 3% short of its 52-week high. It has outperformed the S&P 500 over the past year and has generated a year-to-date return of 34.85% versus 8.44% for the benchmark.
About the Company
North Bergen, New Jersey-based Vitamin Shoppe, Inc sells vitamins, herbs, homeopathic drugs, minerals, supplements and other products. The company uses retail, Internet and mail order catalogues as its sales channels. As of January 28, 2012, Vitamin Shoppe had 533 stores across 40 states. The company doubled its sales between 2005 and 2011 to about $856.6 million. With a market capitalization of $1.57 billion, the company competes in niches with GNC Holdings Inc. (GNC) and a host of other retailers.
VITAMIN SHOPPE (VSI): Free Stock Analysis Report
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Texas Capital BancShares Inc. - Momentum
Tue, 15 May 2012
Texas Capital BancShares Inc. (TCBI) has been on a roll for the last several months, hitting a number of new all-time highs and jumping more than 70% since October 2011. With first-quarter EPS growth of 126% year-over-year and a long-term growth projection of about 10%, this regional banking stock has plenty of momentum.
The company became a Zacks #1 Rank (Strong Buy) stock on March 27, riding on the enthusiasm over its strong credit quality, steady capital position and consecutive earnings surprises.
First Quarter EPS Soars
Texas Capital reported first quarter 2012 earnings per share of 70 cents on April 25, beating the Zacks Consensus Estimate by 13% and improving upon last year's 31 cents. An increased top line and a reduced provision for credit losses led to the solid year-over-year growth. However, higher non-interest expense was a problem.
Net interest income was $88.2 million, up 37% from the year-ago quarter on the back of a 46% jump in total loans. Non-interest income increased 20% to $9.2 billion. Non-interest expense grew 13% to $52.3 million. Provision for credit losses was down 60% from the year-ago quarter to $3 billion.
Earnings Estimates Flying High
Currently, the Zacks Consensus Estimate for 2012 is $2.75 per share, an expected year-over-year growth of about 38%. For 2013, the Zacks Consensus Estimate is pegged at $2.85 per share.
For each year, all 13 estimates have been revised upward in the past 30 days, pushing the Zacks Consensus Estimate higher by 15% for 2012 and 11% for 2013.
Valuation Not So Cheap
Texas Capital currently trades at forward P/E of 14.1x, a 5% premium to the peer group average of 13.4x. Also, on a price-to-book basis, shares currently trade at 2.3x, a 63% premium to the peer group average of 1.4x.
However, Texas Capital has a trailing 12-month return on equity (ROE) of 15.1%, well above the 10.6% of its peers. This implies that the company reinvests its earnings more efficiently than its peer group.
Chart: TCBI Continues to Show Strength
Texas Capital began trending higher with the market recovery in March 2009, but shares got an extra boost in October 2011 after the company reported strong third quarter 2011 results with a 12% earnings surprise.
The company continuously outperformed its 200-day moving average and the S&P 500's performance over the last six months. The year-to-date return for the stock came in at 26.5% compared with the S&P 500’s return of 7.6%.
About the Company
Headquartered in Dallas, Texas, this entity operates as the holding company for Texas Capital Bank, National Association that provides various banking products and services. Texas Capital focuses primarily on middle-market business customers and high-net-worth individuals in each of the five major metropolitan markets of Texas. The company was founded in 1996 and conducted business through thirteen full-service banking locations and one operations center as of December 31, 2011. With a market capital of about $1.46 billion, Texas Capital competes with BOK Financial Corporation (BOKF) and BancFirst Corporation (BANF).
TEXAS CAP BCSHS (TCBI): Free Stock Analysis Report
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Saia Inc. - Momentum
Mon, 14 May 2012
Saia Inc. (SAIA) shares have soared nearly 78% in the last 6 months, as this trucking company hitches up to the economic recovery. Late April saw a strong first-quarter report for this Zacks #1 Rank (Strong Buy) that included a positive EPS surprise of 100% and double digit revenue growth, leading to upward earnings estimate revisions in the past week.
Earnings per share of 34 cents in the first quarter easily beat last year’s 4 cents and doubled the Zacks Consensus Estimate of 17 cents. Revenue increased 10.6% to $268.7 million, and was almost in line with the Zacks Consensus Estimate. The outperformance came on the back of improved demand thanks to year-over-year increases of 2.6% in less-than-truckload (LTL) tonnage and 3.3% in average weight per shipment.
Higher prices and fuel surcharge increased LTL yield by 7.9% year over year. Quarterly operating ratio (operating expenses divided by revenue) improved to 95.9 from 98.3.
Earnings Estimates Are Climbing
The Zacks Consensus Estimate for 2012 has moved up by 5.4% in just the past seven days to $1.36. It is up more than 19% from 30 days ago as five out of seven estimates were revised upward.
The Zacks Consensus Estimate for 2013 has moved higher by nearly 3% in seven days and almost 15% in 30 days to $1.79. This suggests the potential for year-over-year profit growth of 31.97%.
Valuation Looks Attractive
Saia Inc. is currently trading at attractive multiples with respect to several valuation metrics. It has a forward P/E of 15.18x, whereas its peers trade at a forward P/E of 16.57x. Similarly, on a price-to-book basis, Saia Inc. currently trades at 1.46x compared with 2.05x of its peer group average. However, the company has a 1-year ROE of 7.4%, which is 36% below its peers.
Market Performance & Technical
Shares of Saia Inc. have soared nearly 78% in the last 6 months, and recently reached its 52-week high. The stock price of Saia Inc. is consistently beating the 200-day moving average from January 10, 2012. Also, it has remained above the 50-day moving average since the middle of December 2011. Volume is fairly strong, averaging roughly 265,000 daily.
The price chart remains significantly above the S&P 500 average from early January. The year-to-date return of the stock is over 57% compared with the S&P 500’s return of 6.34%. The difference between the return from Saia and S&P 500 has widened significantly ever since the company reported its first-quarter 2012 financial results. During the short-period between April 26, 2012 and May 10, 2012, the return for Saia was 23.2%, whereas the S&P 500’s return was a negative 3%.
Headquartered in Georgia, Saia Inc., is a trucking transportation company in the U.S. providing regional, interregional and national LTL service in 34 states. It was formerly known as SCS Transportation Inc. and was founded in 2000. The company has a network of 148 terminals servicing primarily retail, chemical, and manufacturing industries. Saia competes with other LTL operators, such as YRC Worldwide Inc. (YRCW) and Con-way Inc. (CNW).
SAIA INC (SAIA): Free Stock Analysis Report
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