Business & Finance
Business and Finance
Business and Finance 
Thu, January 15, 2009
Zacks Bull & Bear of the Day Highlights: Amerisafe, Telmex, Boeing, Caterpillar and Dryships
CHICAGO--([ BUSINESS WIRE ])--Zacks Equity Research picks Amerisafe, Inc. (Nasdaq: AMSF) as Bull of the Day and Telmex ADR (NYSE: TMX) as Bear of the Day. In addition, the analysts at Zacks Equity Research discuss the latest on The Boeing Company (NYSE: [ BA ]) and Caterpillar, Inc. (NYSE: [ CAT ]), nor is it good news for shipping companies like Dryships, Inc. (Nasdaq: [ DRYS ]).
Full analysis of all these stocks is available at: [ http://at.zacks.com/?id=2678 ]
Bull of the Day
Amerisafe, Inc. (Nasdaq: AMSF) is expected to release its 4Q08 financial results between February 23 and March 5, 2009. The company reported impressive 3Q08 results with a 12.5% increase in diluted earnings per share allocable to common shareholders.
During 3Q08, net loss ratio, combined ratio, and book value per share showed decent improvement over the prior as well as the prior-year quarters. Though the soft insurance market environment is expected to keep gross written premiums under pressure due to lower premium rates, we anticipate the results to benefit from AMSF's sound capital position, solid investment portfolio, and strong financial strength rating by A.M. Best.
Ahead of 4Q08 earnings release, we are maintaining our Buy rating on the shares with a six-month target price of $22.00 per share.
Bear of the Day
We are reiterating our Sell recommendation on Telmex ADR (NYSE: TMX). Third quarter 2008 results were disappointing. Net income was down 28% as revenue fell amid stiff competition. Mexican domestic growth has stalled creating a fiercely competitive environment, and the company is experiencing price erosion.
The global credit crunch and the recession in the U.S. are also sources of great concern, since Mexico and the U.S. have strong economic ties.
Lastly, Telmex's valuation seems excessive if compared to other Latin American operators.
Recent Analysis from the Analyst Blog
Problems Far from "Contained"
The decline in trade is not confined to the U.S. (when you think about it, how could it be?). Some of the numbers coming out of Asia are even worse. For example, consider the following graph (below) of Korean and Taiwanese exports (two traditional export powerhouses). The data is presented as rolling 3-month sums to take some of the seasonality out of the data. Even in China trade is down 9% -- although they, like us, are seeing their imports (mostly raw materials) fall faster than their exports. As a result the Chinese trade surplus might even grow this year.
The decline in world trade is not good news for big U.S. exporters like Boeing (NYSE: [ BA ]) and Caterpillar (NYSE: [ CAT ]), nor is it good news for shipping companies like Dryships (Nasdaq: [ DRYS ]). It is better to hunker down in steady demand areas like Consumer Staples, Health Care and Electric Utilities.
It seems that hopes for a second half economic recovery this year are extraordinarily optimistic. Take a look at the people calling for it, and see what they were looking for a year ago. Most of them thought that all the problems were "contained" back then.
Get the most recent insight from Zacks Equity Research with the free Profit from the Pros newsletter: [ 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.
About the Analyst Blog
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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