Zacks Bull and Bear of the Day Highlights: Petrobras, Liberty Interactive, D.R. Horton, Whirlpool and Fortune Brands

Zacks Equity Research highlights Petrobras (NYSE: PBR) as the Bull of the Day and Liberty Interactive (Nasdaq: LINTA) the Bear of the Day. In addition, Zacks Equity Research provides analysis on D.R. Horton (NYSE: DHI), Whirlpool (NYSE: WHR) and Fortune Brands (NYSE: FO).

Full analysis of all these stocks is available at http://at.zacks.com/?id=2676.

Here is a synopsis of all five stocks:

Bull of the Day:

We are changing our recommendation on Petrobras (NYSE: PBR) ADRs from Hold to Buy. We like Petrobras for its positive production-growth profile, and the improving outlook for its downstream business.

Moreover, the discovery of the giant Tupi field opens up a new range of possibilities for the company in the long run. The continued growth in production is a trend that should prevail in the short-to medium-term.

First quarter 2009 results were positive due to increased production, improved operating margins and sound cash-flow generation. Finally, oil prices have been recovering in the last several weeks.

Bear of the Day:

We maintain our under-performer rating on Liberty Interactive (Nasdaq: LINTA). We now think the consumer-led economic slowdown will continue to stifle the company's earnings growth well into 2009, with little visibility to improvement other than easing comps.

When the economy turns, we expect Liberty Interactive to accelerate EPS growth to a mid-teens rate and maintain it for several years, driven by QVC. Indeed, despite QVC's challenging retail environment, Liberty Interactive posted 2% revenue growth, albeit with declining margins. Also driving the growth is Liberty's e-commerce business, which currently is doubling its revenue and OIBDA year over year.

Neverthess, at 14.0x our 2010 EPS estimates, we think the stock is richly valued, presenting a poor risk/reward proposition in a climate of murky earnings visibility with potential earnings estimate cuts more likely than increases.

Latest Posts on the Zacks Analyst Blog:

How Big Was the Housing ATM?

If we didn't have growth due to the housing bubble, we would have hardly had any growth at all.

This data does seem to correspond to the data showing no increase in median income over the period. It also explains why it is not just people who bought their houses near the top who are in trouble right now.

Historically, Residential Investment (RI) has been the primary driver to lead the economy out of a recession. A housing recovery obviously helps homebuilders like D.R. Horton (NYSE: DHI) and those that supply it like Whirlpool (NYSE: WHR) and Fortune Brands (NYSE: FO).

The equity extraction helped support just about every part of the consumer based economy. With foreclosures still on the rise and a huge inventory of houses (both new and used) still out there, it is hard to see RI lifting the economy this time around. RI has already shrunk to its smallest percentage of GDP on record (after being at near record highs just a few years ago), so it might not fall that much further.

Get the full analysis of all these stocks by going to 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.

About Zacks Equity Research

Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.

Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.

Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Subscribe to this free newsletter today by visiting http://at.zacks.com/?id=2677.

About Zacks

Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978 by Leonard Zacks. As a PhD in mathematics Len knew he could find patterns in stock market data that would lead to superior investment results. Amongst his many accomplishments was the formation of his proprietary stock picking system; the Zacks Rank, which continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment

Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros.

Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.

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.

SOURCE: Zacks.com

Mark Vickery 
312-265-9380 
Visit: www.zacks.com

Related terms: business, earnings, ecommerce, economy, email, e-mail, environment, eps, equity, gdp, housing, investment, investment opinion, market, nasdaq, nyse, oil, prices, profit, property, recession, research, residential, retail, revenue, rhode island, securities, security