Zacks Bull and Bear of the Day Highlights: Joy Global, Quanta Services, Vale S.A., Rio Tinto and BHP Billiton

News provided by

Jan 04, 2011, 10:27 ET

CHICAGO, Jan. 4, 2011 /PRNewswire/ -- Zacks Equity Research highlights: Joy Global (Nasdaq: JOYG) as the Bull of the Day and Quanta Services (NYSE: PWR) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Vale S.A. (Nasdaq: VALE), Rio Tinto plc. (NYSE: RIO) and BHP Billiton Ltd. (NYSE: BHP).

(Logo: http://photos.prnewswire.com/prnh/20101027/ZIRLOGO)

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 are encouraged by the long-term fundamentals of the mining industry, which provides Joy Global (Nasdaq: JOYG) with substantial growth potential as conditions improve in the U.S., China and India.

The company ended fiscal 2010 with a positive earnings surprise on strong overseas sales growth. Along with a robust 2011 outlook and improving mining industry fundamentals, this outperformance has pulled up the company's forward estimates.

Additionally, management's impressive cost-structuring initiatives, together with expectations of increased spending plans on part of the mining industry, should help the company stay ahead of the curve, in our view. We see Joy Global shares performing ahead of the broader market going forward and upgrade our recommendation to Outperform.

Bear of the Day:

We are downgrading our Neutral recommendation on Quanta Services (NYSE: PWR) to Underperform with a $18 target price. The company's customers and demand for its services continue to be negatively impacted by the generally slow economy.

The company has pursued its strategy of avoiding low-margin work. The company experienced slow growth in the first nine months of 2010 and provided a weaker revenue and EPS guidance for the remainder of the year.

Our long-term Underperform recommendation on the stock indicates that it will lag behind the broader market. Our target price is $18.00 or 17.3 X 2011 EPS, which is well within the historical range.

Latest Posts on the Zacks Analyst Blog:

Vale's Extraordinary Dividend

Brazilian miner Vale S.A. (Nasdaq: VALE) proposed to pay an extraordinary dividend of $1.0 billion or $0.19 per share with the record date of January 14, 2011. The holders of ADRs and Hong Kong Depositary Receipts (HDRs) will have the record dates as of January 19, 2011. However, the decision is pending for approval on January 14, 2011.

In the fourth quarter of fiscal 2010, Vale authorized the buy-back of 64.8 million common shares and 98.4 million preferred shares for a total amount of $2 billion until March 2011. The company also proposed a total dividend of $2.75 billion with $1.25 billion as minimum payment, and $500 million as additional dividend. Through these initiatives, Vale is trying to raise shareholders' wealth and confidence toward the stock.

Currently, Vale is on a spending binge with a capital investment budget of $24 billion for fiscal 2011, more than double of $10.7 billion invested in the year ended September 30, 2010.

The increased investment is expected to support 15 new approved projects, projects in queue and existing operations. Vale will focus more on organic growth, and therefore, 81.3% of the total budget will be spent on Research & Development (R&D) as well as Greenfield and Brownfield projects. Vale is also going to emphasize on rail and port expansion, coupled with an increase in coal production.

The increase in production will be supported by the recent improvement in market demand. During the third quarter of fiscal 2010, net earnings increased to $6,038 million from $1,677 million in the corresponding quarter of fiscal 2009 and $3,705 million during the previous quarter, due to the increase in demand for minerals and metals based on the global economic recovery.

Demand for iron ore is usually related to the worldwide demand for steel, which is also expected to surge by 5.3% in 2011. China, the biggest iron ore importer in the world, is expected to increase its steel consumption by 3.5% in 2011 and is anticipated to remain the largest consumer of metals in the coming years.

Hence, the medium-term outlook for metal commodities remains encouraging and is anticipated to have a positive impact on iron-ore companies like Vale S.A., Rio Tinto plc. (NYSE: RIO) and BHP Billiton Ltd. (NYSE: BHP).

We believe that Vale's risk/reward profile is balanced and we see limited upside from the current level. We remain Neutral on the ADS. In the shorter term, Vale currently retains its "Hold" rating, which equates to a Zacks #3 Rank.

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 analyst 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=7158.

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 at http://at.zacks.com/?id=4582.

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

Join us on Facebook: http://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts

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.