Zacks.com announces the latest list of top performing Zacks #1 Rank (“strong buy”) stocks. The stocks on the prestigious list with the highest returns last week were Hanger Orthopedic Group, Inc. (NYSE: HGR), The9 Limited (NASDAQ: NCTY), Big Lots, Inc. (NYSE: BIG), Knoll, Inc. (NYSE: KNL) and Urban Outfitters, Inc. (NASDAQ: URBN). Each of these stocks easily outperformed the S&P 500.
Stocks ranked #1 (Strong Buy) by Zacks have produced an average annual return of +30% since inception in 1988. During the 2000-2002 bear market, Zacks #1 Rank stocks gained 43.8% while the S&P 500 tumbled 37.6%. To learn more about the Zacks Rank, go to http://at.zacks.com/?id=3172.
Here is a synopsis of the last week’s best performing Zacks #1 Rank stocks.
Hanger Orthopedic Group, Inc. (NYSE: HGR) was a Zacks #1 Rank Top Performer for the week ended Sep 5 as shares gained 6.3%. Earnings estimates for this year and next are up 6.5% and 6.8%, respectively, over the past 2 months. Furthermore, analysts currently expect next year’s earnings to improve approximately 14.6% from this year, which is an encouraging sign for the future.
HGR, which provides orthotic and prosthetic patient care services, has a habit of meeting or beating Wall Street’s quarterly earnings expectations. Over the past 4 quarters, the company has put together an average surprise of 15%. Most recently, HGR reported an earnings surprise of 25% in its second quarter, as EPS of 25 cents topped the consensus by a nickel. The result also eclipsed the year-ago result of 17 cents. Net sales increased 13% year over year to $181.2 million from $160.4 million.
Shares of The9 Limited (NASDAQ: NCTY), an online game operator and developer in China, gained 5.9% last week. Earnings estimates for this top-performing Zacks #1 Rank company have been trending higher for a while, gaining 10.9% in 2 months and 4.3% in 30 days for this year. Next year’s expectations are also on the rise and have increased 2.6% and 7% for this year and next, respectively.
NCTY has now beaten Wall Street’s quarterly earnings estimates for 3 consecutive quarters. In early August, the company announced that it surprised by more than 27% in the second quarter as EPS reached 61 cents. Meanwhile, net revenues soared 69% year over year to US$66.3 million. Its revenues and net income were both records. NCTY attributed its results to the continuing growth of Blizzard Entertainment®’s World of Warcraft® and Soul of The Ultimate Nation.
Big Lots, Inc. (NYSE: BIG) reported solid fiscal second-quarter numbers in late August. The closeout retailer also raised its EPS guidance for the full year. Earnings per share from continuing operations reached 32 cents, exceeding the consensus by a little more than 18.5%. BIG has now amassed an average surprise of 17.5% over the past 4 quarters. Net sales advanced 1.9% to approximately $1.1 billion.
Thanks to its solid fiscal second-quarter numbers, BIG raised its 2008 earnings guidance to between $1.90 and $2. Over the past month, earnings estimates are up 5.3% for this fiscal year and 6.5% for next fiscal year. Analysts also expect an EPS improvement of about 8.1% next year over this year. Shares improved by 4.5% last week, which was enough to make the Zacks #1 Rank Top Performers List.
Earnings estimates for Knoll, Inc. (NYSE: KNL) remain above levels from 2 months ago by 10.5% for this year and 5.6% for next year. The furniture maker made the Zacks #1 Rank Top Performers List last week as shares improved 3.7%. The company has a good record of meeting or beating analysts’ earnings expectations, and has marked a surprise of 11.2% over the past 4 quarters.
The company’s second-quarter report from July included adjusted earnings per share of 49 cents on net sales of $292.5 million. The earnings result topped the consensus by 22.5% while easily improving upon the year-earlier result of 37 cents. Net sales moved higher by 7.5%. KNL attributed results to its diversification strategy that focused on high design content businesses and away from dependence on North American systems sales.
Urban Outfitters, Inc. (NASDAQ: URBN) is a Zacks #1 Rank Top Performer as shares gained 2.6% last week. Over the past month, earnings estimates for the fiscal years ending January 2009 and January 2010 are up 8% and 5.9%, respectively. In addition, analysts currently expect next fiscal year’s profit to advance by more than 20% over this fiscal year.
URBN is performing better than most retailers, and enjoyed a boost last week after an analyst offered a favorable view of the fiscal third quarter. The company has put together a solid streak of better-than-expected earnings, and enjoys an average surprise of 12.6% over the past 4 quarters. In its second quarter, URBN reported earnings of 33 cents per share, which topped the consensus by almost 14%. It also marked a solid year-over-year advance from 19 cents. Sales advanced approximately 30% to $454.3 million. Same-store sales were up 13%.
About the Zacks Rank
Since 1988, the Zacks Rank has proven that "Earnings estimate revisions are the most powerful force impacting stock prices." Since inception in 1988, #1 Rank stocks have generated an average annual return of +30%. During the 2000-2002 bear market, Zacks #1 Rank stocks gained +43.8%, while the S&P 500 tumbled -37.6%. Also note that the Zacks Rank system has just as many Strong Sell recommendations (Rank #5) as Strong Buy recommendations (Rank #1). Since 1988, Zacks Rank #5 stocks have underperformed the S&P 500 by 81% annually (+2 % vs. +11%). Thus, the Zacks Rank system allows investors to truly manage portfolio trading effectively.
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Disclaimer: Past performance does not guarantee future results. Investors should always research companies and securities before making any investments. Nothing herein should be construed as an offer or solicitation to buy or sell any security.
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