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Full analysis of all these stocks is available at http://at.zacks.com/?id=2676.
Here is a synopsis of all five stocks:
Bull of the Day: Edison International (NYSE: EIX)
Consistent projected core earnings growth throughout 2008-09, driven by improved performance in unregulated power generation and energy trading, a solid base of stable utility operations, higher price realizations, ongoing alternative energy projects, balance sheet strength and a relatively cheap earnings-based valuation collectively support our bullish outlook for Edison International.
Accordingly, we maintain our Buy recommendation on EIX common stock with a six-month target price of $53.50. Price appreciation to our near-term valuation, coupled with the stock's recently increased $0.305 per share quarterly dividend, which we view as very sustainable and secure given low projected payouts, represents annualized total return potential of 25.4%.
Bear of the Day: Ness Technologies (Nasdaq: NSTC)
Ness has a high level of exposure to the politically unstable Israel market, where it generated close to half of its revenue in 2007, including a significant portion from Israeli government agencies. A deterioration of the political situation in the Mideast would have negative repercussions for the firm.
Ness has a history of weak cash flow generation. With increasing working capital requirements, cash flow from operations has been steadily falling for the past few years. Although the company generated $16.1 million in cash from operations during 2007, this came on the heel of a drop in operating income and was due to an increase in accrued expenses.
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Amicus Therapeutics (Nasdaq: FOLD)
The company, which began operation in 2002 and went public in June 2007, has only limited operational experiences. Amicus has generated significant losses to date and we believe it will continue to incur losses in the next few years when the company advances its programs into late development stages. As a result, Amicus may need to obtain additional funds to further fund its research and development programs and product candidates.
National Oilwell Varco, Inc. (NYSE: NOV)
National-Oilwell Varco reported strong second-quarter 2008 results, driven by continued robust demand for its drilling equipment. Revenue for the quarter was up 24% sequentially and over 39% year-over-year to $3.32 billion. New orders of $2.2 billion during the quarter brought the total backlog to a record $10.8 billion, highlighting a very high level of earnings visibility going forward.
Approximately 91% of the total backlog pertains to international markets, while about 87% of the total relates to offshore equipment. The improving outlook for the domestic onshore market further adds to the company's favorable prospects. The merger with Grant Prideco has transformed the company into an oilfield machinery powerhouse enjoying a very strong cyclical leverage.
VeraSun Energy (NYSE: VSE)
VeraSun Energy Corporation is on the fast track of growth with its recent merger with fellow biofuel company U.S. BioEnergy (USBE). Earnings rose in the first quarter due to higher ethanol volumes and prices, partially offset by surging corn prices. Post-merger, the company is expected to become the largest bio-fuel company in the world.
However, the cyclicality of the ethanol industry and rising prices of corn and natural gas, remain a concern. Nevertheless, recent bullishness on the energy bill for ethanol production, rising crude oil prices, ongoing capacity expansion plans and value unlocking through synergies from the recent merger with USBE should maintain growth momentum over the near term. Accordingly, we maintain a Buy recommendation on VSE with a six-month target price of $7.00, representing 16.3% upside potential.
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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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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.
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