Zacks.com Analyst Blog features: The Coca-Cola Company (NYSE: KO), DuPont Fabros Technology Inc. (NYSE: DFT), United Parcel Service Inc. (NYSE: UPS), Caterpillar Inc. (NYSE: CAT) and Theravance Inc. (Nasdaq: THRX).

Get the most recent insight from Zacks Equity Research with the free Profit from the Pros newsletter: http://at.zacks.com/?id=4579

Here are highlights from Wednesday’s Analyst Blog:

The Case of the Missing U.S. Jobs

While businesses are gaining ground and the stock market is picking up, job growth in the U.S. remains stagnant. What are the reasons behind this sluggish job growth?

In keeping with the economic cycle, the recovery is definitely powering job creation with a surge in demand for goods and services. However, the U.S. companies are hiring employees out of the domestic periphery to stay competitive. For most of the U.S. companies, international demand for goods and services is growing much faster than the domestic requirement.

According to The Economic Policy Institute, in 2010, U.S. companies have created 1.4 million jobs abroad, while less than 1 million jobs were created within the country. The senior international economist of the institute, Robert Scott believes that the U.S. unemployment rate would have reduced to 8.9% from 9.8% (the current rate of unemployment) had 1.4 million additional jobs been created domestically.

The Coca-Cola Company (NYSE: KO), DuPont Fabros Technology Inc. (NYSE: DFT), United Parcel Service Inc. (NYSE: UPS) and Caterpillar Inc. (NYSE: CAT) are among the U.S. companies that have created significant jobs out of the country in recent years.

Outsourcing: The Main Culprit

Since 2000, U.S. jobs have been moving overseas. Outsourcing and insourcing have eaten millions of U.S. jobs since then. As part of outsourcing, high-paying jobs have been creeping out to low-wage foreign countries. On the other hand, as part of insourcing, the nation has been importing lower educated foreigners who don’t mind working at lower-than-average U.S. wages.

Of late, outsourcing jobs have become more sophisticated than before. Higher-end jobs are now moving abroad as a result of promising growth in emerging countries like India, China and Brazil.

There is definitely a comparative advantage, but at the cost of domestic job improvement. Hence, though the economy is recovering, consumer demand has stayed restrained. Also, as the demand for goods and services in emerging and high population countries has grown radically, many of the products are not coming back to the U.S. As a result, U.S. economy is lacking a thrust.

Winners and Losers

The corporate executives and stockholders of U.S. companies are the primary gainers of this practice, as cheap and efficient labor help their companies stay competitive. The emerging countries also benefit from this as their rising unemployment issues can be addressed by additional U.S. jobs, to some extent.

However, the losers are the U.S. middle class families who are the job seekers. And even if they manage jobs from the few remaining ones; they are hired at effectively lower real wages.

This could be viewed as one of the major drawbacks of free trade. According to Nobel prize-winning economist Paul Samuelson, "There is nothing in the theory that says trade is always a win-win for every group." Unfortunately, the U.S. is currently one of the affected countries.

Theravance Evenly Poised

We are maintaining our Neutral recommendation on Theravance Inc. (Nasdaq: THRX) with a target price of $27.

Theravance founded in 1996 and headquartered in South San Francisco, California focuses on the discovery, development and commercialization of small molecule medicines. The company develops medicines for respiratory diseases, bacterial infections and gastrointestinal motility dysfunction.

Theravance’s lead drug Vibativ (telavancin), is an injectable antibiotic which has been approved by the US Food and Drug Administration (FDA) for the treatment of complicated skin and skin structure infections (cSSSI) caused by gram-positive bacteria. Vibativ is marketed and sold by Astellas, while Theravance receives royalty percentages ranging from high teens to upper twenties, depending on sales volume.

In October this year, Theravance reported its third quarter 2010 results. The loss per share of 29 cents was wider than the Zacks Consensus Estimate by 2 cents, but narrower than the year-ago quarter loss by 6 cents. Revenue at Theravance decreased 3.9% to $5.3 million and missed the Zacks Consensus Estimate of $7 million.

Want more from Zacks Equity Research? Subscribe to the free Profit from the Pros newsletter: http://at.zacks.com/?id=5514.

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 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: http://at.zacks.com/?id=5516

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=4580.

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.