Thursday, March 4th, 2010
Top 3 Downtrend Breakouts for Potential Turnaround
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AECOM Technology Corporation (NYSE:ACM), Books-A-Million, Inc. (NASDAQ:BAMM), and Netezza Corporation (NYSE:NZ) are three downtrend breakouts that present potential turnaround situations for investors.
AECOM Manages a Sharp Move Higher
AECOM Technology Corporation (ACM, Free Analysis), a provider of professional technical and management support services, moved higher this week after Morgan Stanley named the stock as a long Research Tactical Idea. Meanwhile, the company also reported first quarter earnings that beat expectations, but revenues that slightly missed analyst estimates.
The company is well-positioned to benefit from stimulus spending on infrastructure as well as from the overall economic recovery. As a result, it affirmed its fiscal year 2010 earnings outlook of $1.90 to $2.00 per share, which implies a price-earnings ratio of approximately 15.5x. However, many investors are hoping that stimulus demand will lead to beaten expectations.
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Is Books-A-Million Worth $111 Million?
Books-A-Million, Inc. (BAMM, Free Analysis), a book retailer in the southeastern U.S., is definitely facing secular decline as a result of competition from companies like Amazon.com and the advent of the e-book reader. However, some investors believe that the stock’s move from $15.00 to $2.35 over the past 52 weeks is overdone, and the valuation could be cheap.
The bookseller now trades for just 8.4x its trailing 12-month earnings, which appears cheap compared to Barnes & Noble’s 15.6x price-earnings ratio. However, a quick look at historical financial statements shows a company in secular decline, which means that it may have to shift its strategy or sell-out to a larger store in order to reverse its trend and unlock value.
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Netezza is Worth Storing in Your Portfolio
Netezza Corporation (NZ, Free Analysis), a provider of data warehouse appliances, has moved up more than 25% this week after it announced higher-than-expected earnings of 8 cents versus an analyst consensus of just 3 cents. Meanwhile, its revenues came in at $53.6 million versus analyst expectations of only $52.11 million.
The data storage company expects to achieve 20% revenue growth in fiscal 2011 over fiscal 2010, as it continues to invest in its business, and expects operating margin improvement to accelerate in the second half of the year. DataLogix also signed as a customer earlier this week to enhance its industry-leading platform for marketing data.
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-- Written by Simon Monger
