CHICAGO, Feb. 22, 2012 /PRNewswire/ -- Zacks Equity Research highlights: Enterprise Products Partners (NYSE: EPD) as the Bull of the Day and Amazon.com (Nasdaq: AMZN) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Wal-Mart (NYSE: WMT), Home Depot (NYSE: HD) and Kraft (NYSE: KFT).
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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:
Enterprise Products Partners (NYSE: EPD), which remains a core holding in an MLP (master limited partnership) portfolio, focuses on projects that generate stable cash flow and contribute to its integrated value chain. We believe the Haynesville Acadian Expansion and Eagle Ford projects will allow Enterprise to take a lead role in the development of natural gas liquids and natural gas infrastructure.
While Enterprise increased its cash flow distribution by 5.1% in the fourth quarter, it also deployed cash in various fee-based development projects that will likely generate operating cash flow to support its future distribution growth. As such, we believe Enterprise is well positioned going forward and view it as an attractive investment.
Thus we maintain our recommendation on Enterprise Products Partners at Outperform. Our $63 target price, 26.0x 2012 earnings per unit, corroborates this view.
Amazon.com (Nasdaq: AMZN) is one of the largest online retailers in the world and despite its high market share continues to grow strongly. However, the company's decision to significantly increase the number of fulfillment centers to cater to demand across different markets will likely continue to negatively impact its earnings.
Stiff competition and the corresponding negative impact on prices are also expected to continue. We expect that current investments will drive the next growth phase, but it is not clear how long this investment phase will continue, which makes us incrementally cautious.
We are therefore downgrading the shares from Neutral to Underperform. Amazon.com's current trailing 12-month earnings multiple is 136.2X, compared to the 38.0X average for the peer group and 14.3X for the S&P 500. Our target price of $166 represents 126.7X our 2011 earnings estimate.
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Greece Gets a Deal…Now What?
Greece finally got a deal, which not only provides for a fresh €130 billion bailout, but also requires the country's private creditors to take greater losses on their Greek bond holdings. A lot of details still need to be worked out, but the bottom line is that the enhanced haircuts on private sector Greek bonds will bring down the country's debt load from the current 164% to around 120% in 2020.
The Greek government will be announcing details of the private-sector bond swap in the coming days that requires 100% participation from the bondholders. For every €100 in face value of bonds tendered, the bond holders will get newly issued long-term Greek government bonds with a face value of €31.5 and short-term bonds issued by the EFSF for a face value of €15.
In exchange for the fresh bailout, Greece has agreed to provide constitutional guarantees to prioritize paying back the new debt over its regular government spending programs. The country has also effectively bartered away its financial sovereignty by allowing for permanent and enhanced external oversight over its financial decision making.
The country is now required to implement a tough and deeply unpopular austerity program that will push the economy deeper into recession. This deal addresses the Greek problem for now, but to expect that the issue has been taken off the table for good may be too optimistic. Greece will remain shut out of the markets for years to come and will most likely need another bailout sooner rather later.
In corporate news, Wal-Mart (NYSE: WMT) came out with better-than-expected earnings, though it came short of revenue expectations and provides a less than robust outlook. Home Depot (NYSE: HD) handily beat expectations, while Kraft (NYSE: KFT) came in-line.
Get the full analysis of all these stocks by going to http://at.zacks.com/?id=2649.
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