Zacks Analyst Blog Highlights: Green Mountain Coffee, McDonald's, Lowes Companies, Allegheny Energy and Doctor Reddy's

Zacks Analyst Blog Highlights: Green Mountain Coffee, McDonald's, Lowes Companies, Allegheny Energy and Doctor Reddy's

CHICAGO--(BUSINESS WIRE)--

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: Green Mountain Coffee Roasters, Inc. (Nasdaq: GMCR), McDonald's (NYSE: MCD), Lowes Companies (NYSE: LOW), Allegheny Energy, Inc. (NYSE: AYE) and Doctor Reddy's Laboratories (NYSE: RDY).

    See the latest posts to the Analyst Blog here:

    http://www.zacks.com/blog/post_info.html?g=6

    Here are highlights from Tuesday's Analyst Blog:

    Green Mountain Plateaus a Bit

Green Mountain Coffee Roasters, Inc. (Nasdaq: GMCR) is a growth company in the premium coffee and tea industry. Management is implementing a growth strategy based on a multi-channel geographic penetration business model. The company is expanding geographically and by adding new relationships, such as with McDonald's (NYSE: MCD) and Lowes Companies (NYSE: LOW).

Having generated 21 consecutive quarters of double-digit sales growth and nine consecutive quarters with growth in excess of 25%, the stock is fairly valued at a premium P/E. The stock is rated a Hold, primarily because margins are under pressure due to rising input costs and an unfavorable product mix shift.

Green Mountain Coffee Roasters is currently selling at 48.6 times trailing 12-month EPS, reflecting the company's higher-than-average growth profile, given the company's exposure to the attractive premium coffee industry and successful business model. On March 5, 2008, Green Mountain Coffee Roasters announced an 8% to 12% price increase for coffee products. The pricing changes will be effective on orders placed on or after May 5, 2008.

A Buy on Allegheny Energy

Going forward, Allegheny Energy, Inc.'s (NYSE: AYE) positive investment factors include growing earnings, favorable market prices, higher generation rates, increased retail sales long-term supply agreements and a reinstated dividend. These positive factors are partially offset by higher fuel expenses on account of higher coal prices as well as higher operation and maintenance expenses.

We expect that the company's regulated delivery utility business will provide steady earnings growth, while the generation business will provide an additional boost to earnings. However, higher environmental-related capital expenditures remain a concern. Reinstatement of the company's quarterly dividend is certainly a positive, although it currently yields a relatively unattractive 1.12% -- lower than the electric power utility industry average yield.

However, we believe the sustainability of the dividend is supported by higher operating cash flows as well as reasonable projected earnings payout ratios. As of the date of this report, AYE trades at 19.2x and 13.8x, respectively, our 2008 and 2009 earnings per share estimates, or at a moderate premium to the electric power utility industry average multiple and comparable diversified energy utilities. Likewise, AYE trades at the upper-end of the ranges of its industry peers based upon relative multiples of sales and book value, yet roughly in-line with respect to multiples of cash flow.

Dr. Reddy's Now Rated Hold

Doctor Reddy's Laboratories (NYSE: RDY) is a global pharmaceutical company located in Hyderabad, India. RDY produces active pharmaceutical ingredients (API), finished dosage forms, and branded and generic pharmaceutical products for the global market. Fiscal 2007 was a very strong year with the company witnessing both top- and bottom-line growth.

Unfortunately, the lack of significant generic product launches, intense pricing pressure in the generics market, and declining revenues from the Mexico CPS and betapharm businesses have taken a toll on the company's performance in fiscal 2008. We believe these issues, along with the lack of significant near-term catalysts, will hamper the company's performance in the coming quarters.

The stock had an impressive run over the past couple of years and we had a Buy rating on Dr. Reddy's during this period. However, fiscal 2008 is proving to be a tough year for the company with results for the first nine months of the year coming in well below expectations.

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=2677

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.

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.

Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.

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.

Source: Zacks.com