Alliance Fiber Optic Products, Rentech Nitrogen, Universal Technical Institute, Ford Motor and Harley Davidson highlighted as Zacks Bull and Bear of the Day

Dec 02, 2013, 09:30 ET from Zacks Investment Research, Inc.

CHICAGO, Dec. 2, 2013 /PRNewswire/ -- Zacks Equity Research highlights Alliance Fiber Optic Products (Nasdaq: AFOP-Free Report) as the Bull of the Day and Rentech Nitrogen (NYSE: RNF-Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis onthe Universal Technical Institute, Inc. (NYSE: UTI-Free Report), Ford Motor Co. (NYSE: F-Free Report) and Harley Davidson (NYSE: HOG-Free Report).


Here is a synopsis of all five stocks:

Bull of the Day:

Alliance Fiber Optic Products (Nasdaq: AFOP-Free Report) was profiled back on August 2, and since that time, the stock rose as much as 45%, but has fallen all the way back to the original price. The ride isn't over for this fiber optic play and it is again the Bull of the Day as a Zacks Rank #1 (Strong Buy).

Back in July I wrote about my "Best Tech Stocks For 2nd Half of 2013" and I discussed the idea of more devices coming soon and how they will create demand for more bandwidth. Since then, there have been several publications stating the same thing. What the others were missing is the idea that those devices will all drive the need for more bandwidth from the carriers.

AFOP designs and manufactures components, modules, and subsystems that empower dynamic optical network, and facilitates the migration of fiber optics from the long haul through the last mile. That is all industry jargon for they make a fiber optic connection to your business or home a reality.

The most recent quarter was viewed by Wall Street as a beat of two cents. Zacks has the quarter and the two before it as a meet.

Bear of the Day:

Rentech Nitrogen (NYSE: RNF-Free Report) was profiled back on April 2, and since that time, the stock dropped nearly 42%. It is again the Bear of the Day as a Zacks Rank #5 (Strong Sell).

A key input in the process of making nitrogen is natural gas. As the cost of that input rises, the bottom line can be impacted. Since April, the price of natural gas moved from $4.40 to $3.30 in August and has recently moved back towards $4.00. The recent increase in price could be influencing analyst estimates.

Rentech Nitrogen Partners makes nitrogen fertilizer products. Its products include ammonia, urea ammonium nitrate, liquid and granular urea, nitric acid, carbon dioxide, ammonium sulfate, sulfuric acid, and ammonium thiosulfate. The company is based in Los Angeles, California. Rentech Nitrogen Partners is a subsidiary of Rentech Nitrogen Holdings

Over the last year, RNF has missed the Zacks Consensus Estimate in all four quarters. Most of the misses have been large, with the most recent quarter coming in three cents below expectations. The miss translated into a negative 13% earnings surprise, and that was the best quarter of the year. The other surprises were -33%, -29% and -17%.

Additional content:

Is Universal Technical Poised to Beat?

Universal Technical Institute, Inc. (NYSE: UTI-Free Report) is set to report fourth-quarter and fiscal 2013 results on Dec 3. Last quarter, the automotive training school beat the Zacks Consensus Estimate of breakeven earnings by a penny. Let's see how things are shaping up for this announcement.

Factors to Consider This Quarter

The company's enrollments have been trending down consistently over the past few quarters as a result of macroeconomic headwinds; sluggish demand due to prospective students' reluctance in taking loans and continued challenges in obtaining student financing; changing regulatory requirements; increased price sensitivity and affordability concerns; and increased competition. The company works closely with leading original equipment manufacturers in the automotive, diesel, motorcycle and marine industries such as such as, Ford Motor Co. (NYSE: F-Free Report), Harley Davidson (NYSE: HOG-Free Report) and many more.

However, new student starts improved sequentially in the third quarter due to improving demand. Though the macro challenges continue, the auto/transportation market is rebounding which combined with the aging workforce is increasing market demand for skilled auto technicians. Accordingly, the company witnessed improved student applications in the quarter.

New student starts are expected to grow in the mid-high single-digit range in the fourth quarter (as inquiries and applications improve) but remain flat in the first quarter of 2014.

Moreover, the company is pushing hard to manage costs and improve marketing and operating efficiency to counter the sluggish student enrollment environment. These efforts have led to sequentially improved profits in the second and third quarters and are expected to generate further improvement in the fourth quarter.

Earnings Whispers?

Our proven model does not conclusively show that Universal Technical is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank of #1, 2 or 3 for this to happen. That is not the case here, as you will see below.

Zacks ESP:  The Zacks ESP is 0.00%.

Zacks Rank: Universal Technical's Zacks Rank #3 (Hold), when combined with 0.00% ESP, makes surprise prediction difficult. We caution against stocks with Zacks Ranks #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

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