Zacks Bull and Bear of the Day Highlights: El Paso Corporation, Palm, Inc., PS Business Parks, The Andersons and Resource Capital

Business Wire, July 8, 2008

CHICAGO -- Zacks Equity Research highlights El Paso Corporation (NYSE: EP) as the Bull of the Day and Palm, Inc. (Nasdaq: PALM) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on PS Business Parks (NYSE: PSB), The Andersons, Inc. (Nasdaq: ANDE) and Resource Capital Corporation (NYSE: RSO).

Full analysis of all these stocks is available at http://at.zacks.com/?id=2676.

Here is a synopsis of all five stocks:

Bull of the Day: El Paso Corporation (NYSE: EP)

We are upgrading El Paso Corp. from a Hold to a Buy based on the quality and growth potential of its two core business segments. EP is a premier pipeline operator boasting an industry leading project backlog with exposure to major consuming markets and an impressive growth profile relative to its peers. Its E&P business has made large steps to solidify its position as a low risk, high growth operator onshore the U.S.

Since 2007, its strategic acquisitions have allowed the company to focus on developing acreage congruent with its core competencies while improving its unit operating costs. We are raising our price target from $16.00 per share to $27.00 per share.

Bear of the Day: Palm, Inc. (Nasdaq: PALM)

Although Palm has significant traction with its Centro smartphone, the low selling price has resulted in an ongoing decline in revenue and margins. Moreover, the coming 3G iPhone priced at $199 is aimed at the same market as the Centro and will likely take much of Centro's share on networks where the two compete.

Palm has new high-end products slated for launch in FY 2009, however at this point we believe it will have a hard time regaining lost share as RIM has aggressively rolled out new devices. We therefore reiterate our Sell rating and set a new six-month price target of $4.00.

Latest Posts on the Zacks Analyst Blog:

PS Business Parks (NYSE: PSB)

PS Business Parks' portfolio continues to perform relatively well. Many of the company's markets reported year-over-year rental rate increases -- a good sign in a weakening economy. PSB has a strong balance sheet with low debt levels. The dividend, while low compared to peers is adequately covered by operating cash.

National office and industrial markets are holding up for now, although fundamentals are noticeable worsening. Due to its suburban asset base, PSB does not have the growth potential compared to urban office and gateway industrial competitors. We would stick with more defensive REITs in this type of environment, although the company's current valuation and healthy balance sheet with little near term refinancing exposure warrants a Hold rating.

The Andersons, Inc. (Nasdaq: ANDE)

The Andersons reported first quarter EPS of $0.42, below our estimate of $0.53 and down 17.6% y-o-y, due to higher interest expense and combination of a $3.0 million gain realized in the prior-year quarter on the donation of the company's available-for-sale securities, as well as current period losses of $0.4 million on the company's Deferred Compensation Plan assets.

However, revenue was up a strong 75.4% y-o-y, primarily led by the Grain & Ethanol and the Plant Nutrient Groups. Over the long-term, the company plans to capitalize on the ethanol boom, marketing and risk management services. Nonetheless, the Retail Group is facing tough competition and in the Rail Group, utilization rate of the fleet and high maintenance costs in the lease business remain a concern. We recommend investors to Hold shares of ANDE in their portfolio.

Resource Capital Corporation (NYSE: RSO)

Resource Capital reported REIT [real estate investment trust] taxable income of $12.1 million or $0.48 per share compared to $9.7 million or $0.39 per share in 1Q07, representing a 25% increase. The company maintained its quarterly dividend payout of $0.41 per share in 1Q08, $0.02 per share higher than the year ago period. Operationally, the company continues to perform well and almost all of their commercial loans are performing.

We expect commercial real estate loan volumes to decrease in the coming quarters as real estate fundamentals worsen. The credit squeeze should continue at least through the end of the year, and spreads could decrease as investors' appetite for mortgage bonds is low. We think that the company has adequate liquidity to withstand the current downturn, although with key financing sources shut off, RSO will have more difficulty borrowing money.

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