The Zacks Analyst Blog Highlights: Mobile Telesys, Mechel Steel Group, Smart Technologies, Famous Dave's of America and Clayton Williams Energy

Zacks

For Immediate Release
 
Chicago, IL – March 04, 2014 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include the Mobile Telesys (MBT-Free Report), Mechel Steel Group (MTL-Free Report), Smart Technologies Inc. (SMT-Free Report), Famous Dave's of America Inc. (DAVE-Free Report) and Clayton Williams Energy, Inc. (CWEI-Free Report).
 
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Here are highlights from Monday’s Analyst Blog:

Don’t Rush-In to These Russian ADRs

The situation developing between Russia and the Ukraine is quickly becoming a hot topic in international geopolitical debates. I have already been asked by a handful of individuals what I think the impact will be on our market. My basic reaction is if Yellen doesn’t care about it right now then neither do I. I admit it, I’m a Fed watcher.

Although the situation may not create a headwind for our market, it certainly is having an impact on Russian ADRs traded here in the US. Remember, ADRs traded in the US represent a specified number of shares in a foreign stock. This is different from a stock that does business in Russia but is traded here like YNDX and CTCM. Initially I was hoping to find some gems. I wanted to see Russian ADRs with Zacks Rank #1 (Strong Buy) or #2 (Buy). My thought process was find solid earnings stories that are technically being beat down due to the news overseas, keep them on the radar, jump in when the technical picture strengthens.

What I found is two Zacks Rank #3 (Hold) and one #4 (Sell) stocks. Two of these had ugly charts before anyone learned how to pronounce Crimea. One of them looks like a momentum stock that pulled back from its highs and found support at a key level.

Six months ago Mobile Telesys (MBT-Free Report) looked like a darling. The stock was trading near $24, up from $17 in late June 2013. Since then, deteriorating fundamentals and earnings revisions to the downside have weighed the stock down and placed it firmly into a Zacks Rank #4 (Sell). The chart doesn’t give much hope for a long term turnaround either. After a dead cat bounce in December, the stock has traded below the 25 day moving average shifted by 5 (25x5 SMA) and continues to sell off. Today the stock is down big on heavy volume. This negative move could be a washout level and give short term support but the longer term fundamental picture will likely overshadow any positive momentum for the stock.

The first Zacks Rank #3 (Hold) stocks is Mechel Steel Group (MTL-Free Report). Usually I screen stocks under $5 but since there are only a few Russian ADRs I decided to take a look under the hood. The price and consensus chart pretty much sums up reasons for MTL’s demise. Over the last several years the company has gone from making $4 a share to losing money. As a result, we’ve seen the stock sell off considerably. In early 2011 Mechel Steel traded in the low $30s, a far cry from today’s $1.76 print. Down again today on news of the conflict I think we need to look for other stocks to profit from.

3 Best-Performing Stocks of February

Benchmarks posted good performances last week to cap off what has been a buoyant month for stocks. This is in sharp contrast to investors’ diffidence in January, primarily due to growing uncertainty in emerging markets.

February’s Performance

Last week, the S&P 500, Dow and NASDAQ gained 1.3%, 1.4% and 1.6%, respectively. Gains for the entire month of February were even more impressive. The S&P 500 gained 4.3% and the Dow moved up 4% in February, its highest monthly percentage gain since January 2013. The NASDAQ jumped 5% for the month, its largest monthly increase since September 2013.

Despite several good earnings reports, mixed economic data has continued to be a major drag on indices. For instance, pending home sales data released on Friday was under par, at 0.1% compared to an estimated 0.8% increase. Investors chose to focus on the positives -- an increase in Chicago PMI and an uptick in University of Michigan’s consumer sentiment reading.

GDP Data and Yellen’s Comments

Disappointing GDP data also seemed to have been factored in. The “second estimate” for GDP growth in the fourth quarter came in at 2.4%, lower than the expected 2.6%. This follows a 4.1% increase in the third quarter.

However, concerns over confusing economic signals were dispelled following Thursday’s comments by Fed Chair Janet Yellen’s on GDP numbers. The Fed Chair blamed the harsh winter climate for mixed economic data. She added that tapering of monetary stimulus would continue. This was because the Fed does not believe that the U.S. recovery is running out of steam.

The Fed Chair’s comments and good performance from the index indicate that this is a conducive environment for investment. Below are the top performers for last month, taking into account some key performance parameters.

3 Star Performers for February 

I ran a screen on Research Wizard for companies with the following parameters:

(Click here to sign up for a free trial to the Research Wizard today):
  1. Percentage price change over the last 4 weeks greater than or equal to 20
  2. Forward price-to-earnings Ratios (P/E) for the current financial year (F1) less than or equal to 25%. This picks out stocks that are good value choices
  3. Expected earnings growth for the current financial year greater than or equal to 20
  4. Zacks Rank less than or equal to 2: This ascertains stocks that have shown above-average returns over the last 26 years.
(See the performance of Zacks’ portfolios and strategies here: About Zacks Performance).

Here are the top 3 stocks among the 18 that made it through this screen:

Smart Technologies Inc.

Smart Technologies Inc. (SMT-Free Report) is a designer and developer of interactive products and solutions that improve the learning experience. Its principal technology solution offering is an interactive whiteboard product. By March 31, 2011, it had shipped 1.9 million of these products across the world.

Percentage price gain over the last 4 weeks = 75.4%

Expected earnings growth for FY13-14 = 611.1%

Smart Technologies Inc. holds a Zacks Rank #1 (Strong Buy). The stock’s forward price-to-earnings ratios (P/E) for the current financial year (F1) is 18.05.

Famous Dave's of America Inc.

Famous Dave's of America Inc. (DAVE-Free Report) operates full-service restaurants which serve hickory smoked off the grill-entrees. Only six of its 54 company owned restaurants had counter service formats as of January 2012. Famous Dave’s also had 133 franchisee operations at that time.

Percentage price change over the last 4 weeks = 44.2%

Expected earnings growth for FY13-14 = 35.14%

Currently the company holds a Zacks Rank #1 (Strong Buy) and has a P/E (F1) of 24.5.

Clayton Williams Energy, Inc.         
                      

Our third choice is Clayton Williams Energy, Inc. (CWEI-Free Report). The company is involved in exploring and producing oil and natural gas. It major operations are located in New Mexico, Louisiana and Texas. As per data available on December 31, 2012, its reserves were weighted in favor of oil rather than natural gas.

Percentage price change over the last 4 weeks = 40.05%

Expected earnings growth for FY13-14 = 24.62%

Besides a Zacks Rank #2 (Buy), Clayton Williams Energy, Inc. has a P/E (F1) of 23.59.

The Momentum for These Stocks Remain

Strong expected earnings growth for the current financial year mean that these stocks will continue to register significant price gains. Taken together with reasonably low price to earnings ratios and strong Zacks Rank, these would make good additions to your portfolio.

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.

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