Business Services Industry

Zacks Bull and Bear of the Day Highlights: Baker Hughes, CEMEX, General Motors, Kinder Morgan and Waddell & Reed

Business Wire, Sept 22, 2008

CHICAGO -- Zacks Equity Research highlights Baker Hughes, Inc. (NYSE: BHI) as the Bull of the Day and CEMEX S.A. (NYSE: CX) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on General Motors (NYSE: GM), Kinder Morgan Energy Partners (NYSE: KMP) and Waddell & Reed (NYSE: WDR).

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: Baker Hughes, Inc. (NYSE: BHI)

We are reiterating our Buy recommendation on Baker Hughes shares following the recent commodity price-induced weakness in the entire group. We believe that the company's outlook remains favorable, as we do not expect commodity prices to weaken enough to materially impact the outlook for oilfield activity levels, especially in the international markets.

The recent dividend hike and increased buyback authorization are other positives in the Baker Hughes story. The Houston-based company is one of the largest oilfield services companies in the world, providing a range of services to the global oil and gas industry.

On relative valuation grounds, Baker Hughes shares are attractive at current levels, compared to its large-cap peers. We believe that the new Baker Hughes deserves a relatively modest valuation discount to Schlumberger, if at all, compared to the current level. This is the primary reason for our continued positive outlook for the stock.

Bear of the Day: CEMEX S.A. (NYSE: CX)

We are keeping our Sell rating on CEMEX, S.A. de C.V. Second-quarter results were weak. The continued weak cement volumes in Spain, U.S. and Mexican markets are problematic. Higher-than-normal rain during the second quarter 2008 affected volumes during the quarter.

The short-term outlook for the company remains highly uncertain based on the downtrend in the residential, industrial/commercial and the infrastructure sectors as well as due to the real estate prices in Spain, U.K. and U.S. We believe that the recent takeover of the Venezuela subsidiary by the government is also troublesome.

In our opinion, the stock's valuation deserves a discount, due to the still above average leverage, the considerable exposure to some volatile Latin American economies, higher inflation and interest rates in Mexico and its huge exposure to the U.S. and Spanish markets, both highly affected by concerns over housing prices.