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Zacks.Com Featured Expert Kevin Matras Highlights: Air Methods, GrafTech Int'L and Kinetic Concepts

Posted on: Wednesday, 31 October 2007, 09:00 CDT

Kevin Matras shows how you can beat the market with his 'Upgrades and Revisions' strategy. Stocks in this week's article are Air Methods Corporation (NASDAQ: AIRM), GrafTech, International (NYSE: GTI) and Kinetic Concepts (NYSE: KCI). Click here for the full story exclusively on Zacks.com: http://at.zacks.com/?id=109

Screen of the Week written by Kevin Matras of Zacks Investment Research:

This week, I'm going to highlight a screening strategy that primarily focuses on stocks with Increasing Earnings Estimates and Rating Upgrades. Studies have shown that "earnings estimate revisions are the most powerful force driving stock prices." And stocks receiving upward EPS revisions will generally see brokers upgrade their ratings as well.

This screen generates on average only 8-10 stocks per month, has an excellent win ratio and has shown consistently impressive returns, year after year.

The Parameters to this Strategy are:

Zacks Rank equal to 1 (The Zacks Rank is probably one of the best, if not the best rating system out there.)

% Change Q1 Estimates over the last 4 weeks greater than or equal to 0 (earnings with fresh upward revisions)

% Rating Change over 4 weeks greater than or equal to 0 (since analysts have such a huge upside bias, I'm excluding anything that's been even slightly downgraded)

P/E using 12 mo. Forward EPS Estimates less than or equal to 65 (that's right, 65)

% Change Actual EPS Q0/Q-1 greater than or equal to 0 (positive EPS growth this quarter over last) and % Change Actual EPS Q-1/Q-2 greater than or equal to 0 (positive EPS growth last quarter over the one before that) (In other words, two quarters of positive EPS growth.)

% Change Actual EPS F0/F-1 greater than or equal to 0 (positive EPS growth this year over last)

5 Year Historical EPS Growth greater than or equal to 17 (yes, 17)

Last EPS Surprise greater than or equal to 0 (no negative surprises allowed)

Price/Sales ratio greater than or equal to 4 (actually, I had great success with the Price/Sales ratio being between 2, 3 and 4, but I went with 4 because it didn't narrow down the stock selection so much, ... but if you want to narrow it down, tighten the ratio up a bit)

And finally, the stocks all had to be trading at a minimum of $3 or higher.

The Results:

This strategy has beaten the market every year for the last six years and it's doing it again so far this year.

So far in 2007 (YTD through October 2007), this strategy has shown and average gross total compounded return of 31.1%.

This strategy comes loaded with the Research Wizard program and is called Upgrades and Revisions2.

Here are three stocks from this week's list (10/30/07):

AIRM Air Methods Corp.

GTI GrafTech, Intl.

KCI Kinetic Concepts

Get the rest of the stocks on this list and start using this winning strategy in your own portfolio. You can do it. Sign up now for your free trial to the Research Wizard and start making better decisions today: http://at.zacks.com/?id=111

Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.

About Screen of the Week

Zacks.com created the first and best screening system on the web earning the distinction as the "#1 site for screening stocks" by Money Magazine. But powerful screening tools is just the start. That is why Zacks created the Screen of the Week to highlight profitable stock picking strategies that investors can actively use. Each week, Zacks Profit from the Pros free email newsletter shares a new screening strategy. Learn more about it here http://at.zacks.com/?id=112

About Zacks

Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978 by Leonard Zacks. As a PhD in mathematics Len knew he could find patterns in stock market data that would lead to superior investment results. Amongst his many accomplishments was the formation of his proprietary stock picking system; the Zacks Rank, which continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros http://at.zacks.com/?id=113

Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.

Disclaimer: Past performance does not guarantee future results. Investors should always research companies and securities before making any investments. Nothing herein should be construed as an offer or solicitation to buy or sell any security.

Source: Business Wire

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