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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: McDonald's Corp. (NYSE: MCD)
After doubling margins in its US operations, the company is turning its focus to Europe and APMEA, where company-operated restaurant margins lag the US (by 110 350 basis points in 2Q08). Re-franchising continues to be another engine of growth, bolstering ROA by an expected 100 basis points on a less capital-intensive business and a steady growth in royalties. We think this stock provides relative safety and moderate growth in a turbulent environment and exposure to faster-growing international markets.
Bear of the Day: Mack-Cali Realty (NYSE: CLI)
We are maintaining our Sell recommendation due to macroeconomic factors. Office occupancies in the company's core markets have increased at a rapid pace from last year. As such, CLI will have a difficult time holding occupancy and increasing rents. We think suburban office landlords will have a tough time over the next 12 months. National job growth numbers are negative and corporations are not expanding. Office landlords could see substantial cash flow declines as leases roll in 2008 and 2009.
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j2 Global Communications, Inc. (Nasdaq: JCOM)
j2 Global Communications, a global provider of outsourced, value-added messaging and communications services, declared second quarter 2008 financial results below our estimates.
However, the company significantly improved its subscriber usage revenue. This is particularly important since credit-sensitive customers constitute a vast majority of JCOM's sales. Exploration of new business opportunities for both digital facsimile and voice services through recent acquisitions facilitated the company to solidify its position within the industry.
Allied Irish Banks (NYSE: AIB)
We are reducing our recommendation to Hold from Buy on Allied Irish Banks. In its first half report, AIB posted net earnings before nonrecurring items of 922 million, down 3% year over year, but above our estimate largely due to a lower effective tax rate.
However, we are slashing our diluted EPADS estimates to reflect substantially higher loan impairment provisions to $5.70 from $6.20 for 2008, in line with revised AIB guidance calling for an 8%-10% decline in adjusted EPS (down from low single-digit growth in EPS previously), and to $4.60 from $6.50 for 2009.
Agnico-Eagle Mines, Ltd. (NYSE: AEM)
Agnico-Eagle Mines reported second quarter EPS of $0.09, well below our estimate of $0.20 and down 67.9% year-over-year, primarily due to lower realized price for zinc and decline in zinc sales.
However, gold prices remain high and being an unhedged gold producer, Agnico-Eagle is exposed to high year-over-year gold prices, which impacts it favorably. We expect gold prices to remain at elevated levels amid strong demand conditions. In addition, the company also has a healthy pipeline of long-term projects to boost gold production.
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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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