Zacks Bull and Bear of the Day Highlights: Raven Industries, ReneSola, Orchard Supply Hardware Stores, Sears Holdings and Joy Global

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Jan 05, 2012, 09:30 ET

CHICAGO, Jan. 5, 2012 /PRNewswire/ -- Zacks Equity Research highlights: Raven Industries (Nasdaq: RAVN) as the Bull of the Day and ReneSola Ltd. (NYSE: SOL) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Orchard Supply Hardware Stores Corporation (Nasdaq: OSH), Sears Holdings Corporation (Nasdaq: SHLD) and Joy Global Inc. (NYSE: JOY).

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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:

Raven Industries' (Nasdaq: RAVN) two largest divisions -- Applied Technology and Engineered Films -- are experiencing strong sales momentum, driven by Raven's aggressive investment programs related to new products and capacity expansion. The company continues to make significant investments to build international sales and boost its overall revenues.

Further, Raven's debt-free balance sheet and solid cash flows provide the scope to fund future growth and increase dividends. Thus, we issue a recommendation of Outperform with a target price of $73.00.

The stock is trading at a premium of 61% over the peer group average based on 2012 earnings estimates. However, our long-term Outperform recommendation on the stock indicates that it will perform better than the market. Our target price, based on a multiple of 27.5 and our 2012 EPS estimate, reflects this view.

Bear of the Day:

ReneSola Ltd. (NYSE: SOL) significant presence in the solar module original equipment manufacturing (OEM) market is currently slated to underperform, owing to Europe's challenging financing environment. The near-term valuation of the company will be adversely impacted by tepid solar products demand in Europe (especially Germany).

Rising competition, credit risk from its customers, oversupply glut of solar wafer and modules in the market, and the company's high R&D expenses are our reasons behind this view. Given the industry-wide high inventory level, we believe performance is only going to be downhill going forward.

We advise investors to exit from the stock for now and look for a favorable entry point in the future. We are apprehensive over any near-term margin recovery for the company given the industry trend of cascading average selling prices.

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Orchard Supply Goes Public

Specialty retailer Orchard Supply Hardware Stores Corporation (Nasdaq: OSH), which was recently spun off from Sears Holdings Corporation (Nasdaq: SHLD) began trading on the NASDAQ Capital Market effective yesterday, January 3. Orchard closed its first trading day at a price of $23.53 per share, dropping nearly 5.9% from its opening price of $25 per share.

Orchard's Series A Preferred Stock will also be quoted on the OTCQB under the symbol "OSHSP".

Sears Holdings Corporation, a leading home appliance retailer in the United States and Canada, divested its interest in Orchard Supply Hardware Stores Corporation on December 30, 2011. However, Sears continues to be listed on the NASDAQ Global Select Market under the symbol "SHLD".

Orchard, which will now operate as an independent publicly traded company, is mainly focused on homeowners with repair, maintenance and improvement needs. Currently, Orchard operates 87 full-service hardware stores in California.

The Orchard stores generally comprise an enclosed retail area and an outdoor nursery and garden space, housing a large variety of products categorized mainly under three heads: repair and maintenance, lawn and garden and in-home products.

Orchard's management is now in the process of implementing customer service initiatives and merchandising strategies along with transforming its stores to an updated and customer-friendly format, aimed at driving long-term growth as well as building value for shareholders.

Joy Global Seals the Deal

Joy Global Inc. (NYSE: JOY) completed the purchase of about 41.1% of the outstanding common stock of International Mining Machinery Holdings Limited (IMM). Joy Global's stake in IMM with the latest acquisition aggregates to 51.6% of the shares outstanding.

International Mining Machinery Holdings Limited is a leading designer and manufacturer of underground longwall coal mining equipment in China. It has strong domestic market positions in roadheaders and longwall shearing machines.

The transaction was initially announced in July 2011 whereby Joy Global entered into an agreement with TJCC Holdings Limited (TJCC) to purchase 534.8 million shares of IMM for a price of HKD 8.50 per share, representing 41.1% of the shares outstanding. In December 2011, Joy Global received nod from the Anti-monopoly Bureau of the Ministry of Commerce of the People's Republic of China to carry out the transaction.

We retain our Neutral recommendation on Joy Global. The quantitative Zacks #3 Rank (short-term Hold rating) for the company indicates no clear directional pressure on the shares over the near term.

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.

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