Jefferies Loving the Retail Sector

A retail analyst over at Jefferies & Co. has raised his ratings on several large retailing stocks this morning.

The analyst is upgrading shares of Costco ( COST), Home Depot ( HD) and Lowes ( LOW), believing the names are likely near the trough of the cycle. Best Buy ( BBY), Kohl's ( KSS) and Target ( TGT) were also raised to a buy rating, from what was previously a hold rating.

The call is a bit of a contrary one, but actually quite timely, it appears. All the names have been beaten up pretty badly and may make sense for a short-term play. We are still concerned about the credit that is contracting as far as credit card companies and banks are concerned. At the end of the day, that can be a factor that will be hard for retailers to overcome.

None of the stocks mentioned above are currently on our "Recommended" list.

FactSet Research Shares Rally on Second-Quarter Results

Shares of Factset Research Systems ( FDS) are up more than 4% in early trading today, after the company reported second-quarter profit jumped 20% to $34.6 million, or 71 cents a share, compared to $29 million, or 59 cents in the year-ago period.

The company said sales gained 12% to $157 million. For the next quarter, revenue is expected to range between $153 million and $157 million. EPS is expected to be between 72 cents and 74 cents. This guidance represents a double-digit percentage increase in EPS at all points in the range and includes 3 cents dilution from FactSet Fundamentals.

We removed shares of FactSet back on June 27, when the stock was trading at $57.61. The company has a dividend yield of 1.85%, based on last night's closing stock price of $38.97. The company has technical support in the $32 to $34 price area. If the shares can continue today's momentum, we see overhead resistance around the $45 to $46 price range. We would remain on the sidelines for now.

Factset Research Systems is not recommended at this time, holding a Rating of 3.1 out of 5 stars.

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