Zacks Bull and Bear of the Day Highlights: j2 Global Communications, American Superconductor Corporation, McDonald, Abercrombie & Fitch and Ford Motor

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Jan 10, 2011, 11:12 ET

CHICAGO, Jan. 10, 2011 /PRNewswire/ -- Zacks Equity Research highlights: j2 Global Communications (Nasdaq: JCOM) as the Bull of the Day and American Superconductor Corporation (Nasdaq: AMSC) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on McDonald (NYSE: MCD), Abercrombie & Fitch (NYSE: ANF) and Ford Motor (NYSE: F).

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Full analysis of all these stocks is available at http://at.zacks.com/?id=2678.

Here is a synopsis of all five stocks:

Bull of the Day:

We upgrade our recommendation for j2 Global Communications (Nasdaq: JCOM) to Outperform. According to our view, the company's strong financial position and diversified product pipeline, in synergy with the long-term growth prospects for outsourced value-added messaging services, will drive valuation levels higher in the near future.

Subscriber usage revenue continues to beat market expectations. This is an important parameter as credit-sensitive customers constitute a majority of j2 Global's sales. Exploration of new opportunities for both digital fax and voice services, through continuous acquisitions, facilitated the company to solidify its market position within the industry.

The company achieved huge reduction in cancel rate in the last quarter. Acquisition of Protus IP Solutions has significantly boosted j2 Global's paid Dial-in-Demand numbers. Recently, the company has raised its future financial outlook.

Bear of the Day:

American Superconductor Corporation (Nasdaq: AMSC) is a technology company operating in the two primary markets of wind energy and smart grid infrastructure technology. American Semiconductor's growth potential is based on its solid backlog of $956 million, its strong Chinese exposure, and growing international operations.

However, we believe the above positives are already factored in the current valuation of the company. Also the company's excessive dependence on Sinovel, headwinds in its Superconductor segment, and intense competition in the power system business looms large over the valuation of the company.

Consequently, we downgrade our recommendation to Underperform until the bulge in valuation of the company corrects itself. Our target price of $26.00 represents 23.4X 2011 EPS.

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Details on Employment Report

Teens, regardless of gender have had a very hard time of it in this recession. Just go to a McDonald's (NYSE: MCD) and you will see this for yourself. Normally the blemishes you see on the cashier's face are from acne, not age spots, as is the case now. In December, the teen unemployment rate rose to 25.4% from 24.5% in November, but it is down from 26.8% a year ago.

The deterioration from last month is worse than it appears, and the improvement from last year is an illusion due to a falling participation rate, which dropped to 34.3% from 34.6% in November, and 35.8% a year ago. The percentage of teens that actually have a job was just 25.6%, down from 26.2% in November and a year ago.

While for the most part the earnings from teen jobs tend to go towards clothes from Abercrombie & Fitch (NYSE: ANF) and other teen clothing stores, for many it is a significant part of paying for college. Also, when teens work they learn important job skills, such as the importance of actually showing up, and doing so on time. The extremely low levels of teens working is not a good sign for the future.

Ford's China Arm Raises Funds

Chongqing Changan Automobile, a joint venture partner of Ford Motor (NYSE: F) in China, has revealed that it will raise up to 4 billion yuan ($600 million) by selling shares at 9.74 yuan each. The Chinese automaker will use the net proceeds from sale to expand production capacity.

Presently, Ford owns a 35% stake in Changan Ford Mazda, with Changan holding 50% and Mazda the remaining 15%. It is reported that Ford and Mazda will each form a separate 50:50 JV with Chongqing Changan Automobile Co. However, representatives of the three companies denied of having any plans of dissolving the JV.

Ford's sales in China grew 40% in 2010 with higher sales of Focus compact and Fiesta subcompacts. Changan Ford sold 403,283 vehicles, an increase of 34% from the last year. Meanwhile, Ford's commercial vehicle venture in China, Jiangling Motors Corp., reported an impressive 56% rise in sales to 178,999 units.

The Chinese auto industry being the apple of Beijing's eye was further boosted by government incentives (which may not be continued this year) that coaxed car owners to shift to more environment-friendly and fuel-efficient cars and minivans. J.D. Power and Associates has predicted sales in China to grow by 10.5% for 2011.

Get the full analysis of all these stocks by going to http://at.zacks.com/?id=2649.

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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.

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