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Zacks Bull and Bear of the Day Highlights: Potlatch, Carpenter Technology, Texas Instruments, Applied Materials and STMicroelectronics

Zacks Equity Research

For Immediate Release

Chicago, IL – May 3, 2013 – Zacks Equity Research highlights Potlatch (PCH) as the Bull of the Day and Carpenter Technology (CRS) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Texas Instruments (TXN), Applied Materials (AMAT) and STMicroelectronics (STM).

Full analysis of all these stocks is available at http://at.zacks.com/?id=2678.

Here is a synopsis of all five stocks:

Bull of the Day:

With strong demand for its products and excellent cost management, Potlatch (PCH) seems to be in a position to deliver solid earnings growth.

Further, with a solid outlook for the industry, this Zacks Rank #1 (Strong Buy) stock looks very attractive as of now.

Structured as a REIT, Potlatch owns approximately1.42 million acres of forestland in Arkansas, Idaho, and Minnesota. The company also operates six manufacturing facilities that produce lumber and panel products. Additionally, the company also conducts a real estate sales and development business.

On April 23, 2013, Potlatch reported its first quarter earnings.Total revenues for the quarter were $139.3 million, and the net income for the quarter was $15.5 million, or $0.38 per diluted share. The results beat both on the revenue and the earnings front.

Results benefitted from strong demand for lumber and significant recovery in lumber prices. Further, growing demand for rural and recreational properties resulted in solid results for the real estate segment.

Bear of the Day:

While Carpenter Technology (CRS) may get back on track in the longer-term, there are too many near-term challenges. In view of the cloudy outlook, investors should avoid this Zacks Rank # 5 (Strong Sell) stock as of now.

Carpenter Technology Corporation is a manufacturer and distributor of specialty alloys, including stainless steel and titanium, and various engineered products made from metallic and ceramic materials.

These products are used in planes, cars and trucks, electronic equipment, medical devices, industrial fittings, sporting goods, and oil and gas exploration and processing.

On April 25, CRS reported its third quarter fiscal 2013 results. Net adjusted income for the quarter was $0.69 per share, down from $0.84 per share in the prior-year quarter. The results were below consensus estimate of $0.74 per share.

The company also missed on the revenue front. The management revised down their full fiscal year 2013 earnings outlook to low double-digit growth from 20-30% growth forecasted earlier.

Latest Posts on the Zacks Analyst Blog:

Texas Instruments Prices Senior Notes

Texas Instruments (TXN) or "TI," the largest manufacturer of analog semiconductor products, has recently announced the pricing of senior unsecured notes aggregating $1 billion. These bonds have been issued in two tranches of same amounts but with varying coupon rates and maturities. The offering is expected to close on May 8, 2013, subject to customary closing conditions.

The first and second tranches of $500 million each, carrying a coupon rate of 1.00% and 2.25%, are due to mature in 2018 and 2023, respectively.

J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC, Citigroup Global Markets Inc., and Mizuho Securities USA Inc. will be acting as joint book-running managers for the offering. Texas Instruments stated that the transaction proceeds would be used for the repayment of its outstanding debt.

TI remains one of the best-positioned analog companies, given its compelling product line, the increased differentiation in its business and lower-cost 300mm capacity. In the recently reported first quarter, the company spent $232 million on cash dividends and used $679 million to repurchase its common stock.

At quarter-end, TI had $4.2 billion in long-term debt and $1.5 billion in short-term debt on its balance sheet. During the quarter, the net debt position moved up slightly.The issuance of these notes will increase the company’s total debt to $6.7 billion from $5.7 billion, taking the debt-to-total capitalization ratio to 37.9%. 

We believe that Texas Instruments has a strong balance sheet, which will help the company to capitalize on investment opportunities and make strategic acquisitions, further improving its growth prospects. We believe the senior notes offering will bring down its cost of capital, thus strengthening the company’s balance sheet and supporting its future growth.

Currently, TI has a Zacks Rank #2 (Buy), while most of its peers have a Zacks Rank #3 (Hold). Other stocks in the sector that are performing well currently are Applied Materials (AMAT) and STMicroelectronics (STM). While Applied carries a Zacks Rank #1 (Strong Buy), STMicroelectronics carries a Zacks Rank #2 (Buy).

Get the full analysis of all these stocks by going to http://at.zacks.com/?id=2649.

About the Bull and Bear of the Day

Every day, the analysts at Zacks Equity Research select two stocks that are likely to outperform (Bull) or underperform (Bear) the markets over the next 3-6 months.

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Updated throughout every trading day, the Analyst Blog provides analysis from Zacks Equity Research about the latest news and events impacting stocks and the financial markets.

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