Zacks Analyst Blog Highlights: Potash Corp., California Pizza Kitchen, Inc., Kraft Foods Inc., DTS Inc. and Snap-on, Inc.
CHICAGO, Sep 03, 2008 (BUSINESS WIRE) -- Zacks.com announces the list of stocks featured in the Analyst Blog.
Every day the Zacks Equity Research analysts discuss the latest news and
events impacting stocks and the financial markets. Stocks recently
featured in the blog include: Potash Corp. (NYSE: POT), California
Pizza Kitchen, Inc. (Nasdaq: CPKI), Kraft Foods Inc. (NYSE:
KFT), DTS Inc. (Nasdaq: DTSI) and Snap-on, Inc. (NYSE:
SNA).
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Here are highlights from Tuesday's Analyst
Blog:
Potash Still Considered Buyable
Potash Corp. (NYSE: POT) has leverage in higher fertilizer
application rates, higher crop plantings, increasing demand for biofuels
and rising crop prices. The company is located in low cost areas and its
financials are solid. Hence, we rate the stock a Buy with a target price
of $250. This is 18.9x our 2008 estimate.
Potash Corporation enjoys significant cost advantage with regard to raw
materials. All potash produced by the company in Saskatchewan is in the
area, where extensive potash deposits are found. Moreover, the company
has lower cost nitrogen operations in Trinidad due to the long-term,
lower-cost gas contracts with Natural Gas Company of Trinidad and Tobago
Limited as well as a proximity to the U.S. market.
Calif Pizza Kitchen Still a Hold
We expect California Pizza Kitchen, Inc. (Nasdaq: CPKI) to
continue suffering declining traffic, deleveraging of its rent expense,
and shrinking return on equity throughout 2008. Traffic should stabilize
in 2009, but we don't expect a rebound unless
the economy improves substantially and there is little visibility to an
improvement in gas prices and real estate values.
Nevertheless, coming off a weak 2008, we think the company can likely
reinvigorate earnings primarily through unit growth. We expect it to
grow earnings at a mid-teens average rate over the next five years by
adding full service restaurants in existing and new markets, increasing
comps and restaurant margins through its new prototype restaurant
design, further penetrating the fast casual market with the new ASAP
concept, repurchasing shares, and building its lucrative Kraft
(NYSE: KFT) frozen pizza licensing business.
DTS Premium Up Too High
Increasing demand for DTS, Inc.'s
(Nasdaq: DTSI) technologies in emerging applications such as cars and
PCs augur well for the company's earnings
growth. The company is also diversifying its business in the virtual
audio technology and broadcast market, and is enhancing the use of DTS
technology in standard definition applications, which we believe will
drive revenue growth in 2009 and beyond.
Moreover, with the completion of the sale of its Digital Cinema
business, DTS should be able to concentrate on the Consumer business and
benefit from the anticipated acceleration of the high definition cycle.
Nevertheless, we think valuation multiple expansion is unjustified,
given the risks posed by a worse-than-expected consumer-led economic
slowdown, and rate the stock a Sell.
Snap-on at a Very Nice Price
Snap-on, Inc. (NYSE: SNA) has reported upside earnings surprises
for ten consecutive quarters, which has caught the attention of earnings
momentum investors. The management has successfully delivered more
predictable and consistent financial performance through the
implementation of the Driven to Deliver and Rapid Continuous Improvement
programs. With the stock's pull-back to the
low-$50s, its valuation compels us to recommend a Buy rating.
Through a structured approach of supply chain and franchise improvement
initiatives, order-fill rates are improving and profitability is
increasing across all operating segments except the Tools Group. The
acquisition of ProQuest Business Solutions has added value for global
original equipment manufacturers (OEM) and enhanced the productivity and
profitability of their dealerships.
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SOURCE: Zacks.com
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