Zacks Bull and Bear of the Day Highlights: International Game Technology, Aeropostale, Quicksilver Resources, WPX Energy and Forest Oil
Zacks Equity Research
For Immediate Release
Chicago, IL – February 26, 2013 – Zacks Equity Research highlights International Game Technology (IGT) as the Bull of the Day and Aeropostale (ARO) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Quicksilver Resources Inc. (KWK), WPX Energy Inc. (WPX) and Forest Oil Corp. (FST).
This stock might not be as much of a gamble as you think. International Game Technology (IGT) is a Zacks Rank #2 and trades at just over 12 times forward earnings. The company has beaten the Zacks Consensus Estimates two earnings reports in a row (5 of the last 6), exceeding analysts’ expectations by an average of 17.4%.
IGT can trace its roots all the way back to the 1950s, but since going public in 1981 the company has reinvented itself, expanded and is now one of the largest manufacturers of computerized casino gaming products and operators of proprietary gaming systems in the world. It was the first to develop computerized video gaming machines and has made a recent foray into online gaming.
IGT is also a member of the S&P 500 and is headquartered in Nevada with offices in Reno and Las Vegas.
IGT is in the midst of a proxy battle for board seats as the company looks to broaden its horizon and maybe alter its trajectory.
Even though Aeropostale (ARO) shares are down over 50% from where they were just 10 months ago, they still may be too expensive, especially trading at 17 times forward earnings with just a 1.60% increase in quarterly revenue compared to the same quarter a year ago (the industry average p/e is closer to 13 times forward).
ARO is also a Zacks Rank #5 (strong sell), which puts it in the “stocks you don’t want to be long in an unsure market” category. Let me explain why...
Aeropostale, Inc. is a mall-based, specialty retailer of casual apparel and accessories, principally targeting fourteen to seventeen year-old young women and men (talk about a small target).
The Company provides customers with a focused selection of high-quality, active-oriented, fashion and fashion basic merchandise at compelling values. Aeropostale maintains control over its proprietary brands by designing, sourcing, marketing and selling all of its own merchandise. Aeropostale products are currently purchased only in its stores, on-line through its e-commerce website or at organized sales events at college campuses.
The U.S. Energy Department's weekly inventory release showed a larger-than-expected decrease in natural gas supplies. Despite this drawdown, gas stocks continue to remain bloated, reflecting low demand amid robust onshore output.
About the Weekly Natural Gas Storage Report
The Weekly Natural Gas Storage Report – brought out by the Energy Information Administration (EIA) every Thursday since 2002 – includes updates on natural gas market prices, the latest storage level estimates, recent weather data and other market activities or events.
The report provides an overview of the level of reserves and their movements, thereby helping investors understand the demand/supply dynamics of natural gas. It is an indicator of current gas prices and volatility that affect businesses of natural gas-weighted companies and related support plays.
Analysis of the Data
Stockpiles held in underground storage in the lower 48 states fell by 127 billion cubic feet (Bcf) for the week ended Feb 15, 2013, higher than the guided range (of 117–121 Bcf drawdown) as per the analysts surveyed by Platts.
The decrease represents the thirteenth withdrawal of the 2012-2013 winter heating season after stocks hit an all-time high in early November last year. However, the draw was lower than both the last year’s withdrawal of 155 Bcf and the five-year (2008–2012) average reduction of 140 Bcf for the reported week.
Following the past week’s reduction, the current storage level – at 2.400 trillion cubic feet (Tcf) – is down 242 Bcf (9.2%) from the last year but is still 361 Bcf (17.7%) above the five-year average.
In fact, natural gas inventories in underground storage have persistently exceeded the five-year average since late September 2011 and ended the usual summer stock-building season of April through October at a record 3.923 Tcf (as of Oct 31, 2012).
A supply glut kept the natural gas prices under pressure during the couple of years or so, as production from dense rock formations (shale) – through novel techniques of horizontal drilling and hydraulic fracturing – remain robust, thereby overwhelming demand.
However, with the U.S. winter set to be colder than the unusually warm last one, we might expect some balancing of the commodity’s supply/demand disparity on the back of its more normalized use for space heating by residential/commercial consumers.
This, in turn, could improve the prices and buoy natural gas producers, particularly smaller players like Quicksilver Resources Inc. (KWK), WPX Energy Inc. (WPX) and Forest Oil Corp. (FST). With an improvement in the companies’ ability to generate positive earnings surprises, they can then move higher from their current Zacks Rank #3 (Hold).
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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