Zacks Bull and Bear of the Day Highlights: SunPower, Cost Plus, Verizon, AMERCO and General Motors

CHICAGO--(BUSINESS WIRE)--Zacks Equity Research highlights SunPower Corporation (Nasdaq: SPWR) as the Bull of the Day and Cost Plus World Market (Nasdaq: CPWM) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Verizon Communications (NYSE: VZ), AMERCO, Inc. (Nasdaq: UHAL) and General Motors (NYSE: GM).

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: SunPower Corporation (Nasdaq: SPWR)

The fortunes of SPWR appear greener given the very high growth potential in the alternative energy industry, and specifically solar power energy, with apparently greater certainty of polysilicon supply through SunPower’s new 5-year supply agreement with Jiawei SolarChina. In addition, a new solar cell manufacturing facility in the Philippines and the company’s expansion into the Italian market with the acquisition of Solar Solutions adds visibility to the story.

New cheaper polysilicon supply contracts and thinner wafers are improving the solar cell and panel production overheads. Thus we maintain our BUY recommendation on SPWR common stock with a six-month target price of $106.75. Price appreciation to our near-term target price represents 34.6% upside potential.

Bear of the Day: Cost Plus World Market (Nasdaq: CPWM)

On June 9, Pier 1 Imports announced that it offered to acquire Cost Plus in an all-stock deal valued at $88 million, or $4 per share. This is a 31% premium to the stock’s closing price on June 6. In our view, this deal is the best that Cost Plus shareholders could have hoped for because Cost Plus is not worth $4 per share.

Despite the company’s turnaround efforts (which include store closings and headcount reductions), Cost Plus fundamentals continue to deteriorate. We see no signs that the company will be able to right its ship in the near term, due to macro headwinds that include the housing bust, tighter credit markets, and rising food and energy prices. We would use the spike in CPWM shares to exit any remaining positions. We reiterate our Sell rating and $2.00 target price on Cost Plus shares.

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Verizon Communications (NYSE: VZ)

Verizon Communications, Inc. is the second largest provider of telecom services in North America and the largest U.S. cellular carrier in terms of revenue. However, the company faces intense competition from cable companies and VOIP providers. The stock remains attractive for income-oriented investors, but large capital expenditures and possible acquisitions, including Alltel, warrant a higher than usual risk level that needs to be assessed and this may limit higher valuation levels. Hence, we maintain our Hold rating.

While Verizon’s substantial investment in next generation fiber-to-the-premises technology (FiOS) is expected to improve the company’s triple play bundle offering it is unclear if and when a reasonable return on investment can be achieved from associated infrastructure expenditures.

AMERCO, Inc. (Nasdaq: UHAL)

AMERCO is the parent company of U-HAUL International, the largest consumer truck rental company in the world. It is also the second largest self-storage company in N. America. The company reported fourth-quarter results that were close to expectations. EPS was above our forecast due to the application of an accounting change. Discounting is declining due to the peak travel period reducing the excess capacity. We are not changing our estimates at this time. Hence, we rate the stock a Buy.

General Motors (NYSE: GM)

GM management's increased focus on the Asia-Pacific region, enhancement of the product portfolio and aggressive cost-cutting are some of the positives of the GM story. The recent negotiation reached with the UAW is a major milestone. However, weak North American sales, falling production volumes and rising raw material costs increase our concerns. These compel us to rate the shares a Hold with a six-month target price of $17.50. This is 7.7x our 2009 earnings estimate.

The company has entered into a tentative agreement with United Auto Workers (UAW) for 74,000 autoworkers to pay $35 billion and transform their retiree health care benefits into an independent health care. The agreement is expected to remove more than $50 billion in long-term obligations from GM's books.

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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.

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