Zacks Buy List Highlights: Rockwell Automation, Valero Energy , Grant Prideco, Inc., and Smith International

Business Wire, Jan 4, 2005

CHICAGO -- Zacks.com releases another list of stocks that are currently members of the coveted Zacks #1 Ranked list. The #1 ranked stocks highlighted today include the following companies: Rockwell Automation (NYSE:ROK) and Valero Energy (NYSE:VLO). Further they announced #2 Rankings (Buy) on two other widely held stocks: Grant Prideco, Inc. (NYSE:GRP) and Smith International, Inc. (NYSE:SII). To see the full Zacks #1 Ranked list or the rank for any other stock then visit. http://at.zacks.com/?id=88

Stocks ranked #1 (Strong Buys) by Zacks have produced an average annual return of 32.9% since inception in 1988. During the recent Bear market from 2000 through 2002, the Zacks #1 Ranked stocks gained 43.8% while the S&P 500 tumbled -37.6%.

Here is a synopsis of why these stocks have a Zacks Rank of 1 (Strong Buy). Note that a #1 Strong Buy rating is applied to 5% of all the stocks Zacks ranks:

Rockwell Automation (NYSE:ROK) posted fiscal fourth quarter earnings of 56 cents per share, excluding items, which topped the consensus by approximately 14%. The company said that their strengthened global market presence allowed them to take advantage of the stronger demand in their end markets. Rockwell Automation expects 2005 diluted earnings per share to be in the range of $2.15 to $2.25, and fiscal first quarter earnings of about 48 cents per share; both of which were above Wall Street expectations.

Valero Energy (NYSE:VLO) reported third quarter earnings per share of $1.57, surpassing last year's 75 cents and beating the consensus by almost 1%. Earnings estimates for the year ended December 2004 are up 6 cents, or about 1%, from one month ago. The company said that refined product margins, particularly distillate margins, were outstanding in the quarter but the real story was the significant move in sour crude discounts. Valero believes that the same supply and demand fundamentals that contributed to record earnings in 2004 will continue into 2005.

Here is a synopsis of why these stocks have a Zacks Rank of 2 (Buy). Note that a #2 Buy rating is applied to 15% of all the stocks ranked by Zacks:

Grant Prideco, Inc. (NYSE:GRP) stated that they are pleased with their continued earnings growth, which is largely driven by successful cost cutting and manufacturing rationalization initiatives as well as market improvement for their products. Excluding special items, the company posted third quarter earnings of 16 cents per share in October, beating the consensus by about 14% and eclipsing last year's earnings of 6 cents. Earnings estimates for the year ended December 2004 and the year ending December 2005 are above levels from three months ago by approximately 6% and 7% respectively.

Smith International, Inc. (NYSE:SII) earnings estimates for the year ended December 2004 are up 1 cent, or almost 1%, from 90 days ago, while expectations for the year ending December 2005 advanced 12 cents, or about 5% in that time. The company reported third quarter earnings per diluted share of 51 cents, matching the consensus and surpassing last year's 35 cents. Revenues reached $1.1 billion, up 21% on a year-over-year basis and 5% sequentially. Smith International expects a long line of continued, future year-over-year and sequential earnings improvements.

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About the Zacks Rank

For over 15 years, the Zacks Rank has proven that "Earnings estimate revisions are the most powerful force impacting stock prices." Since inception in 1988 the #1 Ranked stocks have generated an average annual return of 32.9%. During the recent Bear market from 2000 through 2002, the Zacks #1 Ranked stocks gained 43.8% while the S&P 500 tumbled -37.6%. Also note that the Zacks Rank system has just as many Strong Sell recommendations (Rank #5) as Strong Buy recommendations (Rank #1). And since 1988 the S&P 500 has outperformed the Zacks #5 Ranked Strong Sells by 168.2% annually (11.8% vs. 4.4% respectively). Thus, the Zacks Rank system can truly be used to effectively manage the portfolio trading.

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