Zacks.com announces the latest list of top performing Zacks #1 Rank (“strong buy”) stocks. The stocks on the prestigious list with the highest returns last week were Buckeye Technologies Inc. (NYSE: BKI), Cree, Inc. (NASDAQ: CREE), AK Steel (NYSE: AKS), The Mosaic Company (NYSE: MOS) and Guess?, Inc. (NYSE: GES). Each of these stocks easily outperformed the S&P 500.
Stocks ranked #1 (Strong Buy) by Zacks have produced an average annual return of +32% since inception in 1988. During the 2000-2002 bear market, Zacks #1 Rank stocks gained 43.8% while the S&P 500 tumbled 37.6%. To learn more about the Zacks Rank, go to http://at.zacks.com/?id=3172.
Here is a synopsis of the last week’s best performing Zacks #1 Rank stocks.
Buckeye Technologies Inc. (NYSE: BKI) announced on Jan 22 that it expects fiscal second-quarter earnings per share between 34 cents and 36 cents. Not only would that mark a solid year-over-year improvement from 10 cents, but it was also above the consensus of 30 cents at the time. As a result, earnings estimates for the quarter advanced by more than 16%. The specialty fibers and nonwoven materials company also became the top performing Zacks #1 Rank with a gain of more than 24%. The company will report fiscal second-quarter results this morning.
Earnings estimates for the years ending June 2008 and June 2009 have both moved forward in the past seven sessions. At the same time of its guidance, Buckeye Technologies also announced that it would cut 20-25 employees at its Delta airlaid facility near Vancouver, British Columbia.
Cree, Inc. (NASDAQ: CREE) expects non-GAAP earnings per share between 14 cents and 16 cents for its fiscal third quarter. This was above the consensus estimate at the time of approximately 10 cents. As a result, analysts boosted their estimates for the quarter by 30% in the past seven trading days. This encouraging outlook helped the semiconductor company make the Top Performers list last week with a gain of 16.9%.
Cree offered its fiscal third quarter guidance during its fiscal second-quarter report on Jan 22. Higher LED sales led to revenue of $119 million in the quarter, marking gains of 34% and 5% on a year-over-year and sequential basis, respectively. Furthermore, earnings per share matched the consensus. In just the past seven trading days, earnings estimates for the year ending June 2008 are up 7.7%, while expectations for the year ending June 2009 moved upward 14.5%.
AK Steel (NYSE: AKS) gained 14.5% for the week ended Jan 25 on the back of a strong fourth-quarter performance. The company announced earnings per share of 95 cents, which beat the consensus of 59 cents by more than 61%. The result also advanced significantly from a year ago. Net sales enhanced 7% to $1.69 billion from $1.58 billion.
Earnings estimates for both this year and next year have been trending higher for months. Expectations for the year ending December 2008 are up 10.3% over the past two months, including a 1.4% advance in the past seven trading days. For the year ending December 2009, analysts pushed estimates higher 29% and 10.8%, respectively.
The Mosaic Company (NYSE: MOS) has made the top-performing Zacks #1 Rank list on several occasions, as the fertilizer company continues to capitalize on robust industry fundamentals. Demand for the company’s products has been strong, which led to solid fiscal second-quarter results. On Jan 9, the company reported earnings per share that beat the consensus by almost 11%. EPS also beat the year-ago performance many times over. Meanwhile, net sales jumped 44% to $2.2 billion.
Earnings estimates for the year ending May 2008 are up 15% over the past two months, including 1% in the past seven trading days. Expectations for the following year have soared 59% in the past two months and 5.5% in the past seven sessions. Mosaic was a top performing Zacks #1 Rank for the entire month of December with a gain of 36%.
Guess?, Inc. (NYSE: GES) made the top-performing Zacks #1 Rank list last week with a gain of almost 14.2%. Earlier this month, the clothing and accessories retailer raised its fiscal 2008 earnings per share guidance to between $1.94 and $1.97, compared to its previous estimate of $1.93 to $1.96. GES also increased its revenue guidance for its retail segment in the current fiscal year. The company attributed these moves to a better-than-expected performance at its North American retail business in December 2007. That included a double-digit same-store sales increase for the five weeks ended Jan 5.
Over the past two months, earnings estimates for the years ending this month and Jan 2009 have advanced 3.1% and 6.5%, respectively. Guess was featured as a Growth & Income stock of the day at Zacks.com on Jan 28. The company’s ROE and its dividend yield are both above the industry average, and its earnings per share are expected to grow by 25% over the next 3-5 years. It will release its fiscal fourth-quarter and full year results on Mar 19.
About the Zacks Rank
Since 1988, the Zacks Rank has proven that "Earnings estimate revisions are the most powerful force impacting stock prices." Since inception in 1988, #1 Rank stocks have generated an average annual return of +32%. During the 2000-2002 bear market, Zacks #1 Rank stocks gained +43.8%, while the S&P 500 tumbled -37.6%. Also note that the Zacks Rank system has just as many Strong Sell recommendations (Rank #5) as Strong Buy recommendations (Rank #1). Since 1988, Zacks Rank #5 stocks have underperformed the S&P 500 by 129% annually (+5 % vs. +12%). Thus, the Zacks Rank system allows investors to truly manage portfolio trading effectively.
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The performance of the Zacks Rank portfolios for annual and year-to-date periods are the linked monthly total returns (price changes + dividends) of equal weighted hypothetical portfolios, consisting of those stocks with the indicated Zacks Rank, assuming monthly rebalancing and zero transaction costs. These are not the returns of actual portfolios. The hypothetical portfolios were created at the beginning of each month from January 1988 forward based on the values of the Zacks Rank available to Zacks' clients before the beginning of each month. The portfolios created monthly from 1988 through September 2006 exclude ADRs and are comprised of stocks that have the indicated Zacks Rank and were covered by at least two analysts at the time of the stocks inclusion in the portfolio. Starting in October 2006 and going forward, the portfolios are comprised of all stocks with the indicated Zacks Rank and do not exclude ADRs, which is more reflective of the list of stocks that customers will find on the Zacks web sites. These performance numbers have been audited from 1995 through 2003 by Virchow, Krause & Company, LLP.
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