Zacks Equity Research highlights Chesapeake Energy (NYSE: CHK) as the Bull of the Day and Rackable Systems (Nasdaq: RACK) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Crocs, Inc. (Nasdaq: CROX) and Intevac, Inc. (Nasdaq: IVAC). Full analysis of all four stocks is available at http://at.zacks.com/?id=2676.
Here is a synopsis of all four stocks:
Bull of the Day:
Our Bull of the Day recommendation is for Chesapeake Energy (NYSE: CHK). Our continued positive view of Chesapeake shares reflects the company’s pacesetting production growth, access to an in-house fleet of drilling rigs, and a dominant position in the U.S. Mid-Continent, now augmented by an Appalachian leadership position as a result of the acquisition of Columbia Natural Resources. Chesapeake is expected to maintain its impressive growth momentum of the last few years, with growth rates expected to average in the low to mid teens this year and next.
Bear of the Day:
Our Bear of the Day recommendation is for Rackable Systems (Nasdaq: RACK). After having the market for high-density, low-power servers to itself, larger competitors have entered the market where Rackable Systems competes. Industry leaders have much greater resources than Rackable, and have competed aggressively on price. As a result, Rackable has had to cut prices to its largest customers, which accounts for 52% of revenue. Until Rackable can get a meaningful contribution from higher margin storage products, we believe the company will struggle.
Crocs' (Nasdaq: CROX) business momentum remains stellar both domestically and internationally. This has led to eye-popping gains for CROX shares, which are up about 280% in the last twelve months. Even so, we believe the stock has further upside ahead because investor expectations are still too low for the company. Specifically, we expect Crocs to earn higher profit margins on its sales, and we are increasing our 2007 and 2008 EPS [earnings per share] estimates by $0.04. What's more, the stock trades at a very reasonable P/E/G [price-to-earnings growth] ratio of 1.1 times our 2007 EPS estimate.
With a slowing cycle for sputtering equipment, Intevac, Inc. (Nasdaq: IVAC) has been forced to slash its 2007 outlook. With price erosion in the HDD [hard disk drives] market and an easing of media supply constraints over the past year, customers are curtailing spending on capital equipment. Over the longer-term, Intevac's imaging & semiconductor businesses have the potential to offset and even eclipse the sputtering equipment business, but will likely take years to do so. We maintain a Hold rating on IVAC shares.
Get the full analysis of all four 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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