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 Continental Resources, Inc. (NYSE: CLR), Encore Acquisition Company (NYSE: EAC), Perry Ellis International, Inc. (NASDAQ: PERY), Olympic Steel, Inc. (NASDAQ: ZEUS) and Alpha Natural Resources, Inc. (NYSE: ANR). 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.
Continental Resources, Inc. (NYSE: CLR) announced last week that a North Dakota well, dubbed Bice 1-29H, flowed at an average rate of 693 barrels of crude oil equivalent per day in its initial seven days of production. The better-than-expected production helped shares of this oil & gas company rise by 16.8% for the week ended May 23. This well marked the company’s first to be completed in the Three Forks/Sanish formation, which may be a separate oil-producing reservoir that hasn’t been drained by competition from the nearby Middle Bakken zone.
Continental Resources is in one of the hottest sectors of the marketplace, as oil continues to reach new highs. Earnings estimates for this year are up 25.7% over the past two months, including a gain of 6.5% in the past 30 days. Earlier this month, the company announced strong first-quarter results, which included earnings per share of 53 cents versus 34 cents a year earlier. The result eclipsed the consensus by more than 10.4%. Total revenues jumped 88% to $227.7 million from $121.1 million. CLR expects to finish the year with an increase in its daily production rate of approximately 42%.
Encore Acquisition Company (NYSE: EAC) gained 13.2% last week as the independent oil and natural gas producer announced that it would explore a broad range of strategic alternatives, including the possibility of putting itself up for sale. EAC stated that its current share price does not reflect its record operating results and its ability to efficiently fund projects through Encore Energy Partners, its upstream MLP. The company hired Lehman Brothers as its financial advisor in this process.
Even before last week’s announcement, Encore Acquisition was gaining a good deal of attention in one of the market’s most vibrant industries. The company’s shares have almost doubled since the beginning of the year, and it has obtained a Zacks #1 Rank. It was also featured as a Top Performer for the week ended May 9 after a strong first-quarter report, which included an EPS surprise of 27.7%. Over the past four quarters, the company has put together an average surprise of 29%. Earnings estimates for this year moved higher by 38.6% over the past three months, including a gain of 18.9% in the past 30 days.
Perry Ellis International, Inc. (NASDAQ: PERY) managed to beat back a very difficult retail environment and become one of the Top Performers for the week ended May 23. Giving credit to its business model, the apparel retailer announced fiscal first-quarter earnings per share of 60 cents, which topped the consensus by more than 7.1%. In addition, total revenues advanced 6.5% to $243.5 million from $228.8 million a year earlier.
For fiscal 2009, PERY confirmed its guidance of revenues between $910 million and $925 million and earnings per share between $1.95 and $2. The company is confident for the full fiscal year, and believes that strength across its platforms is providing for its near-term growth, while investments in new initiatives should start delivering results in the second half. Earnings estimates for the year ending January 2009 are up 5.3% from three months ago.
Olympic Steel, Inc. (NASDAQ: ZEUS) was a Top Performing Zacks #1 Rank last week as shares gained by 9.9%. Earnings estimates for this year have advanced 32.5% over the past month. ZEUS was recently added to the S&P SmallCap 600.
Global steel demand continues to be strong, and Olympic Steel was able to capitalize in its first quarter. Announced in late April, the company reported earnings per share of $1.21 on net sales of $274.9 million. That earnings result advanced easily from last year’s 49 cents, while also beating the consensus by almost 25%. Net sales increased 6% from $259.4 million. ZEUS has a favorable outlook moving forward, and believes it is in a good position to perform well through the higher-priced and seasonally strong second quarter.
Alpha Natural Resources, Inc. (NYSE: ANR) is now a Top Performing Zacks #1 Rank for a second consecutive week, thanks to rising prices for coal. The company gained 7.1% last week after advancing 17% in the subsequent week. Earnings estimates for this year have surged 44% over the past month. Given the high prices for energy across the board, analysts expect next year’s earnings per share to significantly surpass this year’s by almost 200%.
For its first quarter, Alpha Natural Resources announced earnings per share of 39 cents on coal sales of $445.7 million, compared to 13 cents and $380.2 million, respectively, last year. The above-mentioned results account for an earnings surprise of approximately 129% and year-over-year coal sales growth of 17%. ANR stated that it achieved the highest quarterly price realization in its history, thanks to rising metallurgical coal exports and price levels.
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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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.
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