Zacks Bull and Bear of the Day Highlights: Burger King, Georgia Gulf, CarMax, Applied Micro Circuits and Cabot Oil & Gas

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: Burger King (NYSE: BKC)

We are maintaining our Buy rating on shares of Burger King. The company has resumed unit growth after four years of negative or no growth, during which time it repurchased and/or closed more than 1,000 underperforming franchises while reinvigorating its brand.

In our opinion, BKC is poised to grow earnings at a high-teens CAGR [compound annual growth rate] over the next five years by accelerating unit growth, improving average unit volumes through restaurant remodels and new product launches, and by expanding restaurant margins closer to those of McDonald's, the category leader.

Moreover, we think BKC shares offer investors an excellent opportunity to participate in the fast-growing economies of Asia and South America, which are central to the company's expansion plans.

Bear of the Day: Georgia Gulf Corp. (NYSE: GGC)

Georgia Gulf is a leading North American manufacturer and marketer of two integrated chemical product lines, chlorovinyls and aromatics. Its key products are chlorine, caustic soda, vinyl chloride monomer (VCM), polyvinyl chloride (PVC), cumene, phenol and acetone. Under the Royal Group brand, Georgia Gulf manufactures a complete line of custom and other vinyl-based building and home improvement products.

GGC overpaid for Royal Plastics, a supplier of housing products. The acquisition was entirely financed with debt, and the company is now in danger of violating debt covenants. The remaining product lines of the company are suffering from overcapacity. The company is expected to report losses in the near term on the back of rising feedstock and energy costs.

Demand for the company's products is also expected to remain weak due to the downturn in the US housing and auto markets. Moreover, the company may need to sell its assets to comply with the debt covenants. As a result, we have a Sell rating with a target of $2.50.

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CarMax (NYSE: KMX)

CarMax is the nation's largest retailer of used vehicles. Headquartered in Richmond, Virginia, CarMax, Inc. operates as a specialty retailer of used vehicles (96% of sales) such as cars and light trucks as well as new vehicles (4% of sales).

The company continues to face a difficult used vehicle environment, largely due to aggressive incentives being offered by new vehicle manufacturers. However, CarMax is aggressively cutting prices on trucks and SUVs to reduce inventory and shifting its focus to passenger cars.

Applied Micro Circuits Corp. (Nasdaq: AMCC)

Applied Micro Circuits, headquartered in San Diego, California, is a leading provider of high-bandwidth integrated circuits (ICs) for optical telecom networks. The company primarily focuses on designing chips for controlling voice and data transmission in high-speed local area networks (LANs) and wide area networks (WANs). It also caters to automated test equipment (ATE), computing and military applications.

Going forward, management remains concerned about the current macroeconomic conditions. The company is seeing softness in the order patterns from some large telecom customers. Although there was strong demand for transport products in the past few quarters, management indicated that carrier deployments could be lumpy.

Cabot Oil & Gas (NYSE: COG)

Cabot Oil & Gas, based in Houston, Texas, is an independent oil and gas exploration company with producing properties in the U.S. and Canada. The company was founded over 100 years ago.

Cabot's recent results have benefited from high commodity prices and increased volumes. While commodity prices have eased, the company should continue to benefit from acquisitions-related volume gains in the coming quarters.

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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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