MOST NOTEWORTHY: S1 Corp, CME Group and Elizabeth Arden were today's noteworthy upgrades:
Stephens upgraded shares of S1 Corp (NASDAQ: SONE) to Overweight from Equal Weight after meeting with management to reflect their increased confidence in the company's ability to execute. The firm maintains a $9 target on the stock.
Citigroup upgraded shares of CME Group (NYSE: CME) to Buy from Hold as they find the risk/reward attractive with volumes picking up and consensus estimates at more rational levels. The firm maintains a $485 target.
Oppenheimer raised Elizabeth Arden (NASDAQ: RDEN) to Outperform from Perform on valuation, as they believe the current share price does not adequately reflect potential earnings accretion from the company's licensing agreement with Liz Claiborne (NYSE: LIZ) or restructuring savings.
After hitting a one-year high of $714.48 in December, the stock hit a one-year low of $399.01 in March. This morning, CME opened at $487.00. So far today the stock has hit a low of $476.27 and a high of $487.65. As of 12:40, CME is trading at $481.03, down $8.32 (-1.7%). The chart for CME looks neutral but improving, while S&P gives the stock a positive 4 STARS (out of 5) buy rating.
For a bearish hedged play on this stock, I would consider a June bear-call credit spread above the $550 range. A bear-call credit spread is an options position that combines the purchase and sale of call options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 9.9% return in six and a half weeks as long as CME is below $550 at June expiration. CME would have to rise by more than 14% before we would start to lose money. Learn more about this type of trade here.
Well, there seems to be one healthy part of the financial system – that is, the exchanges. Actually, this week, we got another mega deal: CME Group (NYSE: CME) has agreed to pay $9.3 billion for NYMEX Holdings (NASDAQ: NMX).
Yes, the CME is already the world's largest futures marketplace. But with the Nymex, there will be some extra heft with oil, natural gas and gold futures (all of which, of course, have been torrid).
No doubt, the CME has shown a big appetite for deals. After all, in the middle of last year, the firm purchased the venerable CBOT for a cool $12 billion.
Interestingly enough, the NYMEX has a major footprint in the over-the-counter derivatives marketplace, which has been a money maker. Yet, as seen with the implosion at The Bear Stearns Companies, Inc. (NYSE: BSC) and a variety of major hedge funds, it seems that this market is undergoing some scrutiny.
However, integration of the deal should be a fairly smooth process since the NYMEX already uses the CME Globex platform. What's more, the merger is expected to result in annual cost savings of about $60 million.
But Wall Street definitely has concerns. On the news of the deal, the CME's stock fell 7.58% to $449.20.
They are loved and hated. MasterCard is constantly being sold because it is supposed to be a consumer-spending play. It is not a consumer-spending play; it is a play on the increasing use of plastic over cash worldwide and on the possibility of a fee increase next year, even as the company has been so conservative as to let you think fees are going down. The fact that it isn't down despite Capital One (NYSE: COF) (Cramer's Take) and American Express (NYSE: AXP) (Cramer's Take) shows me maybe some people are getting this distinction.
MOST NOTEWORTHY: NutriSystem, Under Armour, CME Group, Air France ADS and Kilroy Realty were today's noteworthy upgrades:
NutriSystem (NASDAQ: NTRI) was upgraded to Strong Buy from Buy at Broadpoint on valuation, as they believe all concerns are overdone.
Think Equities upgraded Under Armour (NYSE: UA) to Buy from Accumulate on valuation.
Wachovia upgraded CME Group (NYSE: CME) to Overweight from Market weight, as they expect fed income volumes to benefit from a more active Federal Reserve.
Goldman added Air France (NYSE: AKH) to its Pan-European Conviction Buy List citing valuation following the recent sell-off.
Citigroup upgraded shares of Kilroy Realty (NYSE: KRC) to Buy from Hold on valuation, as they believe concerns are overblown and the company's underleveraged balance sheet can drive growth.
Progenics Pharmaceuticals (NASDAQ: PGNX) was added to Friedman Billings' Top Picks list and its Outperform rating was maintained. The firm has a high degree of confidence in the success of the MNTX Ph III studies in post-operative ilieus, as well as the FDA approval of the subcutaneous injection in terminally ill patients with opiod-induced constipation around the 1/31/07 PDUFA date.
RBC believes margin expansion will drive long-term appreciation in Tyco Electronics Ltd (NYSE: TEL) and started shares with an Outperform rating and $41 target.
PharMerica Corporation (NYSE: PMC) was initiated with an Underperform rating at Bear Stearns. The firm believes PMC will be pressured by customer losses and generic reimbursement cuts and sees shares trading in $12-$13 range.
OTHER INITIATIONS:
Ryanair Holdings (NASDAQ: RYAAY) was initiated with a Market Outperform rating at Avondale.u
I usually tend to favor the study and analysis of value-oriented professional portfolios over growth-oriented one. After the past week's volatility, however, I've seen many growth stocks begin to offer buying opportunities. [Image source: InvestorPlace.com.]
Louis Navellier is a very well-known growth investor who writes the Blue Chip Growth newsletter and manages Navellier & Associates, a $4.5 billion fund focused on finding stocks that "should contribute significantly to overall portfolio outperformance against relative benchmarks."
Because the fund owns so many stocks, I'm only going to focus on Navellier's favorite industries, or themes, and the favorite ideas within each one. If you read through Navellier's 'position sheet,' it should become pretty apparent that the several themes he's currently riding in the market, are big tech, exchanges and oil service companies
On tonight's Mad Money on CNBC, Jim Cramer talked up his DJIA target of 14,582 at year-end and DJIA components (Cramer did this in batches before with individual targets: A-B group, then some middle names, and another group). He also said he's backing the Chicago Mercantile Exchange, or the CME Group, Inc. (NYSE:CME). He thinks this will benefit hugely from the increased volume and the increased volatility in futures. This is one he thinks that can raise fees because they are so large in market share now that the CME/CBOT merger went through. He even said this may be a secular growth story and even thinks the stock is cheap. The company now has accelerating revenue growth for growth managers, and he thinks estimates could be too low.
Let's hope THIS exchange pick from Cramer does better than his pick of the shares in the New York Stock Exchange, or the NYSE Euronext (NYSE: NYX), which was Cramer's #1 Growth Pick for 2007. This quarter did actually look OK for the NYSE, but at under $75.00 shares are still way off of yearly highs of $112.00. CME has a lot of integration work remaining for the CME/CBOT merger, but after having personally officed in the CBOT Building and spending a lot of time over at the CME Building (and maybe even a few happy hours at each, allegedly) these did create the monster exchange. The combined entity will also force other exchange mergers even if for no other reason than survival or relevance.
The markets made mild gains closing out the holiday week on lighter volume. The Dow gained 203 points this week to close at 13611.68 a 1.5% gain for the week.
The NYSE had volume of 2.3 billion shares with 1,971 shares advancing while 1,285 declined for a gain of 49.15 points to close at 1,0075.39. On the NASDAQ, 1.6 billion shares traded, 1,740 advanced and 1,259 declined for a gain of 9.86 to 2,666.51.
The Chicago Mercantile Exchange will now offer CBOT shareholders 0.375 shares of CME Holdings for each share of CBOT Holdings, compared to the previous offer of 0.350 shares. The newly valued $9.21 billion offer has been approved by the boards of both companies.
With the revised terms from CME, Caledonia Investments, which has a 7% stake in CBOT Holdings, agreed to support the deal.
The offer, however, is still lower than the $10.12 billion bid from Atlanta-based rival Intercontinental Exchange (NYSE: ICE). Intercontinental said it is willing to enter talks regarding potential increases to its proposal, including a higher value for exercise rights and an alternative integration plan.
Looks like third time may be the charm for the CME. The two Chicago exchanges expect to close the deal, pending a shareholder vote on Monday and regulatory approval, sometime this summer.
Chicago Mercantile Exchange Holdings Inc. (NYSE: CME) opened at $533.30. So far today the stock has hit a low of $533.30 and a high of $539.45. As of 10:55, CME is trading at $535.87, up $2.47 (0.5%).
For a bullish hedged play on this stock, I would consider a July bull-put credit spread below the $500 range.CME hasn't been below $500 for more than a day since November and has shown support around $508 recently. This trade could be risky if broader markets take a tumble, but CME is not scheduled to report earnings until the week after July expiration.
Brent Archer is an options analyst and writer at Investors Observer. DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in CME, BOT, or ICE.
Stock futures point to a higher open at the moment, after being flat earlier in the morning, as stocks may try to finish the week on a positive note, making it a third straight day of gains. Today, the much anticipated CPI will be released as well as several other economic readings.
Yesterday, stocks continued their climb, making it the best two-day advance since July for the Dow industrials. Stocks were buoyed by producer prices released before the start of the session. Core inflation at the wholesale level (excluding food and energy) rose at a moderate pace. In addition, bond yield seemed to have stabilized. Investors fears that the Fed may raise, rather than lower, rates were somewhat alleviated.
Today, investors will be following several economic readings:
Starting with the most anticipated one, the May Consumer Price Index, which will be released at 8:30 a.m. and could change the direction stocks will be moving according to its reading. Economists are expecting the CPI to gain 0.6% after a 0.4% rise in April. Core CPI, which excludes the volatile energy and food prices and which is the Fed's preferred measure, is forecast to rise the same as in April, 0.2%.
Also at 8:30 a.m., the June NY Empire State Index, or the regional manufacturing index, will be released.
At 9:00 a.m., the current account deficit, an indicator that shows trade and investment flows between countries, will be released.
At 9:15 a.m., May Industrial Production and Capacity Utilization will be released. Production is expected to rise 0.2% after a 0.7% gain in April, while capacity should remain unchanged at 81.6%.
Finally at 10:00 a.m., the preliminary June Reuters/University of Michigan reading on June consumer sentiment is also due. Economists forecast the index fell to 88.0 from 88.3 due to gas prices.
While treasury rates continued to rise this morning, overseas stocks marked another day of gains. Asian stocks finished with gains after the Bank of Japan held rates at 0.5% and European stocks are gaining for the third day in a row.
Corporate news:
A day after Intel Corp.(NASDAQ: INTC) shares gained 2.5% following its announcement it was expanding its high-end chip line [subscription], this morning Intel shares are gaining 2% in pre-market trading (7:31 a.m.). Intel was upgraded to Buy from Neutral at Goldman Sachs. The broker said that it is probably Advanced Micro Devices Inc.(NYSE: AMD) may move to an outsourced business model and that this will create significant benefits for Intel.
According to Bloomberg, the New York Mercantile Exchange (NYSE: NMX) is exploring a sale to NYSE Euronext (NYSE: NYX), Deutsche Boerse AG or Chicago Mercantile Exchange Holdings Inc. (NYSE: CME).
When I worked in Chicago's Loop, I used to see the traders everywhere, with their brightly colored jackets and their enormous badges. Whether in their smoking circles, crowded into the restaurants and bars, or simply scurrying from one place to another, there was a air of frenetic energy about them, and though sometimes looking weary, they always seemed to be having a good time.
Well, as it turns out, Chicago, home of the championship Bulls and Bears, is also the top trading city in the world, according to a survey of traders by Trader Monthly. London, New York, Dubai, and Miami rounded out the top five.
Trader Monthly rated cities on several factors, including trading infrastructure, taxes, access to capital, weather, nightlife, and time zone. Especially popular with traders was the real estate market; Chicago is infinitely more affordable than London or New York, the next two runners up.
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MOST NOTEWORTHY: S1 Corp, CME Group and Elizabeth Arden were today's noteworthy upgrades:
Well, there seems to be one healthy part of the financial system – that is, the exchanges. Actually, this week, we got another mega deal: 
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TheStreet.com's Jim Cramer says these loved and hated stocks aren't likely to fall until January.
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I usually tend to favor the study and analysis of value-oriented professional portfolios over growth-oriented one. After the past week's volatility, however, I've seen many growth stocks begin to offer buying opportunities. 
The markets made mild gains closing out the holiday week on lighter volume. The Dow gained 203 points this week to close at 13611.68 a 1.5% gain for the week. .gif){kind=logo}
Stock futures point to a higher open at the moment, after being flat earlier in the morning, as stocks may try to finish the week on a positive note, making it a third straight day of gains. Today, the much anticipated CPI will be released as well as several other economic readings.
When I worked in Chicago's Loop, I used to see the traders everywhere, with their brightly colored jackets and their enormous badges. Whether in their smoking circles, crowded into the restaurants and bars, or simply scurrying from one place to another, there was a air of frenetic energy about them, and though sometimes looking weary, they always seemed to be having a good time. 
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