Zacks.com releases the latest Zacks Industry Rank. Stocks featured in this week's analysis include Cameron (NYSE: CAM), Home Depot (NYSE: HD), Lowe's (NYSE: LOW), McDermott (NYSE: MDR) and National Oilwell (NYSE: NOV). To see the Zacks Industry Rank and the trend in earnings estimates revisions for all 208 industry groups, visit http://at.zacks.com/?id=3154.
Zacks Industry Rank Analysis is written by Charles Rotblut, CFA, Senior Market Analyst for Zacks.com.
As many of you are already aware, Home Depot (NYSE: HD) reported
disappointing first-quarter results on Tuesday. The home improvement
retailer earned
Changing weather conditions in February and March played a role, though there are company-specific issues at HD that are not helping profits either. Plus, there is the competitive pressure being placed on the Home Depot by Lowe's.
At the macro level, the housing slump is major issue. A lower number of home sales mean fewer trips to the home improvement store for things. Flat-to-falling home prices make it less desirable to pursue home improvement projects. Tightening in credit standards are also likely playing a role to the extent that they make home equity credit loans more expensive and/or harder to get. Combined, these factors explain why Building Product-Retail/Wholesale has three Zacks #4 Rank ("sell") stocks, including HD and LOW, and one Zacks #5 Rank ("strong sell") stock.
Moving on...
Last week, McDermott (NYSE: MDR) exceeded profit forecasts by
McDermott's report follows several bullish earnings announcements from companies within Oil Field Machinery and Equipment. This group contains five Zacks #1 Rank stocks and four Zacks #2 Rank stocks. Oil's ability to stay at elevated prices is having a beneficial impact on this group as it boosts spending on both maintenance and exploration. Demand for offshore equipment was a particular source of strength with both National Oilwell (NYSE: NOV) and Cameron (NYSE: CAM) crediting strong demand for drilling products for boosting both their first-quarter profits and backlog. NOV and CAM are Zacks #1 Rank stocks.
The interactive Zacks Industry Rank List allows you to see all of the companies, and their Zacks Rank, within more than 200 industries. See the list at http://at.zacks.com/?id=3208.
About Zacks Industry Rank and the Zacks Rank
Zacks Industry Rank is calculated by averaging the Zacks Rank for all covered companies within a given industry. The Zacks Rank is assigned to approximately 4400 stocks and ranges from #1 ("Strong Buy") to #5 ("Strong Sell"). Both the Zacks Industry Rank and the Zacks Rank are quantitative indicators designed to cover periods of 1-3 months.
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 +31.9%. 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 132% annually (+5.1% vs. +11.9%). Thus, the Zacks Rank system allows investors to truly manage portfolio trading effectively.
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(a) Zacks Rank performance is the total return (price changes +
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with the indicated Zacks Rank, assuming zero transaction costs. These
returns are not the result of a backtest; these are actual returns
since 1988. The stocks in the Zacks Rank portfolios were available to
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rebalancing). Performance results from 1988 through
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Source: Zacks.com