Buy List Highlights: Power-One, Taiwan Semiconductor, Avaya, and Microchip Technology.

Business Editors

CHICAGO--(BUSINESS WIRE)--Oct. 7, 2003

Zacks.com releases another list of stocks that are currently members of the coveted Zacks #1 Ranked list which has produced an average annual return of +33.6% since 1988 and has gained +13.3% annually since 2000 as the markets have been tumbling down. Among the #1 ranked stocks today we highlight the following companies: Power-One (NASDAQ:PWER) and Taiwan Semiconductor Manufacturing Company (NYSE:TSM). Further they announced #2 Rankings (Buy) on two other widely held stocks: Avaya, Inc. (NYSE:AV) and Microchip Technology Incorporated (NASDAQ:MCHP). To see the full Zacks #1 Ranked list or the rank for any other stock then visit. http://www.zacksrank1bw.zacks.com

Here is a synopsis of why these stocks have a Zacks Rank of 1 (Strong Buy). Note that a #1 Strong Buy rating is applied to 5% of all the stocks we rank:

Power-One (NASDAQ:PWER) is one of the ten largest power conversion equipment manufacturers in the world. Power-One, who was named a Los Angeles region Fast 50 Technology Company for the fifth straight year by Deloitte and Touche in early September, has watched its earnings estimates improve over the past three months after a solid quarterly report in late July. For the second quarter 2003, Power-One posted a net loss of 1-cent per share, which narrowed the year-ago loss. It was also 6 cents narrower than the consensus, marking a more than +85% earnings surprise. Furthermore, net sales advanced by +23.4% to $69.3 million. The company stated that its sales results exceeded forecasts because of increased demand, growth from new products and pull-in requests from its customers. Over the past three months, analysts have narrowed this year's loss estimate by 4 cents, while turning next year's expectation from a loss to a profit. Power-One acknowledges that its industry remains in a shaky state, but said that its expects to gain market share with its new technologically innovative products, regardless of industry conditions. Power-One appears to be bucking weakness in its industry and moving in the right direction with good momentum, which could help improve the energy in your portfolio.

Taiwan Semiconductor Manufacturing Company (NYSE:TSM) is the world's largest dedicated integrated circuit foundry. Analysts have kept Taiwan Semiconductor's earnings estimates at heightened levels from several months ago, as the company reported its highest net income since the industry's recession in 2001 for its second quarter in late July. The company also said that for two straight quarters Taiwan Semiconductor gained solid improvements in its operating results, and expects the current quarter's performance to be at least in line with the second quarter. Analysts appear to like what the company is saying, and has kept earnings estimates for this year and next approximately +19% and +20% respectively above levels from three months ago. Furthermore, they expect next year's earnings result to be about +74% better than this year's. As conditions for the semiconductor industry continues to improve, Taiwan Semiconductor should be at the forefront. In the meantime, the company appears to have good momentum heading forward, and may open a new circuit for profit in your portfolio.

Here is a synopsis of why these stocks have a Zacks Rank of 2 (Buy). Note that a #2 Buy rating is applied to 15% of all the stocks we rank:

Avaya, Inc. (NYSE:AV) is a provider of communications systems and software for enterprises, including businesses, government agencies and other organizations. In its most recent quarterly report from late July, Avaya posted earnings of 2 cents per diluted share for its third fiscal quarter. That result surpassed a year-ago loss, while also exceeding the consensus by a penny, or +100%. The company stated that operations improvements instituted across the company helped to achieve the positive earnings results. Although the quarter's revenue of $1.072 billion fell shy of the year-ago result, Avaya stated that it saw positive signs that IT spending is strengthening. Avaya believes its combination of services and solutions makes it well-positioned to meet the needs of today's customers. A number of analysts seem to agree, as the company has enjoyed several upward revisions over the past several weeks. Ditech Communications (NASDAQ:DITC) is another company involved with telecommunications equipment that has experienced higher earnings expectations, with estimates for this year rising by more than +100% over the past two months. With signs that IT spending is moving in the right direction, Avaya could find itself with even higher earnings estimates as it uses the improved environment to enhance its results. Investors seeking a better link to profit may want to give Avaya a call.

Microchip Technology Incorporated (NASDAQ:MCHP) develops and manufactures specialized semiconductor products used by its customers for a wide variety of embedded control applications. Although Microchip Technology experienced business challenges, especially in Asia, during its first quarter of fiscal 2004, the company still matched the consensus and posted pro forma net income of 16 cents per diluted share. That result also improved upon the year-earlier result. In addition, net sales in the quarter improved year-over-year by +2% to $161.3 million. Microchip Technology said it expects improvement of its business model in the September quarter. More recently, mid way through last month, Microchip forecasted earnings of 17 cents per share in its second quarter ended September 30th, which was in-line with expectations. Analysts seem to like how this company is combating difficult circumstances, and its earnings estimates for this year and next are slightly higher than levels from three months ago. Furthermore, analysts expect next year's earnings result to be about +27% better than this year's, which bodes well for the future.

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About the Zacks Rank

For over 15 years the Zacks Rank has proven that "Earnings estimate revisions are the most powerful force impacting stock prices." Since 1988 the #1 Ranked stocks have generated an average annual return of +33.6% compared to the (a)S&P 500 return of only +11.3%. Plus this exclusive stock list has generated average gains of +13.3% during the last 3 years; a substantial return compared to the large losses suffered by most investors during that time frame. Also note that the Zacks Rank system has just as many Strong Sell recommendations (Rank #5) as Strong Buy recommendations (Rank #1). And since 1988 the S&P 500 has outperformed the Zacks #5 Ranked stocks by 166.7% annually (11.3% vs. 4.2% respectively). Thus, the Zacks Rank system can truly be used to effectively manage the trading in your portfolio.

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