For Immediate Release
Chicago, IL – September 14, 2009 – Zacks Equity Research highlights Tyco International (TYC) as the Bull of the Day and Valero (VLO) the Bear of the Day. In addition, Zacks Equity Research provides analysis on Textron (TXT), Outboard Marine (OM) and Walmart (WMT).
Full analysis of all these stocks is available at http://at.zacks.com/?id=2676
Here is a synopsis of all five stocks:
We are initiating coverage on Tyco International (TYC) shares with an Outperform rating and $36 target price.
The company’s third-quarter results benefited from the improvement in key metrics like account growth, average revenue per user and the disconnect rate, which helped sustain recurring revenues.
Tyco is increasing capital expenditure on Research & Development at its two new centers in Shanghai and Bangalore, which are focused on developing products tailored to respective local markets. The company is aggressively pursuing its restructuring program and expects to realize tangible benefits in 2010.
We reiterate our Underperform rating for Valero (VLO) shares as a combination of weak demand, excess production capacity and narrowing crude quality spreads are expected to weigh on near-term margins.
In addition to the near-term margin issues, commissioning of new refineries and extension projects indicate future struggle as global demand for almost all fuel products (except gasoline) is trending down.
The medium to long-term outlook also remains cloudy, with unfavorable regulatory changes (growing biofuel mandates) weighing on demand growth and limiting margin gains. Being the largest independent refiner, Valero remains particularly exposed to this unfavorable macro backdrop.
Latest Posts on the Zacks Analyst Blog:
Income, Poverty & Health Insurance
The long-term strength of the economy really is dependent on having a healthy and vibrant middle class. Median real household income is perhaps the best single measure of that. After all, what could be more middle than the point at which 50% of the households earn more than and 50% earn less than?
Yes the aggregate amount of income is important, but so is the distribution. If the economy grows by, say, $100 billion (a small increase in the context of a $14 trillion economy), but that is a result of 100 families each gaining a billion, and the other 99.999% of families seeing no increase, how much do you think demand will increase?
True, you would stimulate spending on yachts and private airplanes, but really — how many jobs does that translate to? It’s nice for those 100 families, but from the perspective of the overall society, what is the point? It might be good for Textron (TXT) and Outboard Marine (OM), but they make up a very small segment of the overall market and economy. Recently, Carlos Slim of Mexico joined the ranks of the richest people in the world, but does that mean that Mexico is getting substantially more wealthy?
If, instead of that $100 billion increase going to 100 families it was split up with 10 million families each seeing an increase of $100, the money will be far more likely to be spent and put into circulation, and more jobs will be created. It would also result in more overall happiness. At the margin, how much more happiness does an extra $100 bring to a billionaire? How much more does it bring to a pauper?
From the perspective of the overall market, that widely dispersed $100 billion would stimulate sales at Walmart (WMT) and countless small private businesses. I know that the market generally does not care about poor people. If you don’t have money you can’t consume or invest.
But that is sort of the point, though — if more and more people are in poverty, they will not be consuming or investing. The fact that the poverty rate has risen by 16.8% — from 11.3% in 2000 to 13.2% in 2008 — is hardly a sign of a robust economy.
Get the full analysis of all these stocks by going to http://at.zacks.com/?id=5507.
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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