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Zacks Bull and Bear of the Day Highlights: Berkshire Hathaway-B, Arch Coal, Yahoo, Costco and Limited Brands - Press Releases

For Immediate Release

Chicago, IL - December 2, 2011 - Zacks Equity Research highlights Berkshire Hathaway-B ( BRK.B ) as the Bull of the Day and Arch Coal, Inc.'s ( ACI ) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Yahoo ( YHOO ), Costco ( COST ) and Limited Brands ( LTD ).

Full analysis of all these stocks is available at http://at.zacks.com/?id=2678 .

Here is a synopsis of all five stocks:

Bull of the Day :

BerkshireHathaway-B ( BRK.B ) reported its third quarter 2011 operating earnings of $1.54 per share up 36% year-over-year, led by higher operating income across all the business segments except Finance & Financial Products. Insurance, Railroad, Utilities and Energy, Manufacturing, Service and Retailing have performed well.

Berkshire's property and casualty insurance business has been the engine behind its growth. The company's insurance business (which accounted for approximately 40% of its 2010 operating income) maintains capital strength at exceptionally high levels.

Our six-month target price of $91.00 per share equates to about 13.2X our earnings estimate for 2011. This target price implies an expected total return of 17.0% over that period. This is consistent with our Outperform recommendation on the stock.

Bear of the Day :

Arch Coal, Inc.'s ( ACI ) third quarter missed on account of the Midwestern flooding and the geological challenges in Appalachia. This was offset in part by improved metallurgical coal shipments and robust met coal pricing. Going forward, increased regulation and alternate energy sources, specifically natural gas, continue to be major risks for coal miners like Arch Coal.

Though we believe the company is well-capitalized, low-cost operations provide a competitive edge over smaller players in the industry, we move to an Underperform recommendation on Arch Coal due to the recent difficulties faced at the company's PRB operations as well as the longwall outage at Mountain Laurel (Appalachia).

Presently, the stock is trading at a premium to the peer group, based on 2012 earnings estimates. The trailing 12-month EV/EBITDA multiple is above the industry average. Our target price is $13, valued at 10.9x 2011 EPS.

Latest Posts on the Zacks Analyst Blog :

Expect Enthusiasm to Wane

A day after indicating a shift in its monetary policy stance for the first time since late 2008, China is again in the news today, but this time with reports of slowing manufacturing activities. The China report, coupled with the weak Initial Jobless Claims data on the home front, will likely dampen the market's enthusiasm so vividly on display in Wednesday's monster rally. But some introspection would be called for anyway following such sharp gains.

The Chinese Purchasing Managers Index ( PMI ) for November came in weaker than expected this morning, putting the widely watched measure of manufacturing activities into contractionary territory for the first time in three years. We also have PMI readings from other Asian countries as well that overall paint a relatively soft picture of manufacturing activities throughout the region. We have the U.S. manufacturing ISM reading on the docket for a little later, but given Wednesday's Chicago PMI reading and the overall tone of recent economic news, the expectation is for favorable ISM report.

The soft Chinese manufacturing reading brings into sharp focus the growth outlook for the Chinese economy, thus far an engine for the global economy. The debate lines would be around whether Wednesday's action by the People's Bank of China reflected its victory over persistent inflationary pressures or was indicative of its efforts to get ahead of hard landing for the economy. I subscribe to the former view, but have to concede that the evolving European dislocation may have consequences for the Chinese economy that many of us are unable to appreciate at present.

On the U.S. front, the initial Jobless Claims data this morning was clearly disappointing, particularly given the recent improving trend in this key series. Wednesday's monster ADP report had started showing up in raised expectations for Friday's non-farm payroll report. It will be interesting to see if today's claims data will dampen some of that positive momentum.

Overall, though, I wouldn't read too much into today's claims numbers. This series is extremely 'jumpy' on a week-to-week basis and the broad trend on the labor market front remains in the positive direction.

In corporate news, Yahoo ( YHOO ) shares will likely be in the spotlight following media reports of a number of suitors getting ready to acquire the firm. We also have strong same-store sales numbers for November from a host of retailers this morning, further evidence of a positive start to the holiday shopping season. The numbers are particularly impressive from Costco ( COST ) and Limited Brands ( LTD ).

Get the full analysis of all these stocks by going to http://at.zacks.com/?id=2649 .

About the Bull and Bear of the Day

Every day, the analysts at Zacks Equity Research select two stocks that are likely to outperform (Bull) or underperform (Bear) the markets over the next 3-6 months.

About the Analyst Blog

Updated throughout every trading day, the Analyst Blog provides analysis from Zacks Equity Research about the latest news and events impacting stocks and the financial markets.

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Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.

Continuous analyst coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.

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ARCH COAL INC ( ACI ): Free Stock Analysis Report

BERKSHIRE HTH-B (BRK.B): Free Stock Analysis Report

COSTCO WHOLE CP ( COST ): Free Stock Analysis Report

LIMITED BRANDS ( LTD ): Free Stock Analysis Report

YAHOO! INC ( YHOO ): Free Stock Analysis Report

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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