U.S. Steel (X) recently announced its plans to partner with Surface Enhancement Technologies, a part of the Lambda Technologies Group, to improve the quality of its tubular steel products. The improved tubular products would see a wider range of applications and has the potential to add significant value to U.S. Steel by increasing the shipment figures for the company in the years to come. The company competes with international steel giants like ArcelorMittal (MT), BaoSteel, Posco, Nippon Steel (NISTY) and ThyssenKrupp.

Our price estimate for U.S. Steel stands at $60.17, roughly 7% ahead of its current market price.

The crisis in Japan will require all sorts of construction materials for rebuilding destroyed buildings and factories. Steel is used in most construction projects. Here in the United States, U.S. Steel (X) is a dominant player.

Let's look at the company profile and earnings reports. "Based in Pittsburgh, the company operates mills throughout the Midwest, in Ontario, Canada, Serbia and Slovakia. The company makes semi finished steel, tubular and plate steel and tin products. Its annual production capacity is about 32 million tons of raw steel. The company's customers are from autos, chemical and steel service center industries."

Our price estimate for U.S. Steel (X) stands at $60.17, roughly 15% ahead of market price. The company competes with international steel giants like ArcelorMittal (MT), BaoSteel, Posco, Nippon Steel and ThyssenKrupp. Below we recap U.S. Steel's full year 2010 results and examine how these numbers affect the road ahead for the company.

Understanding U.S. Steel's Performance in 2010

U.S. Steel reported revenues of $17.4 billion for 2010, an almost 60% increase from the $11 billion recorded in 2009. These figures are still below the peak of $23.8 billion in 2008 – before the steel industry felt the brunt of the global economic recession. The operations for the year, however, failed to generate a profit with $111 million in operating loss reported. But the fact that losses were in excess of $1.6 billion in 2009 shows that the company is recovering from the after-effects of the downturn.

Analyst Upgrades

• U.S. Steel (X) to buy from neutral and Barnes & Noble (BKS) to neutral from sell at Goldman.
• Salesforce.com (CRM) to buy from hold at Jefferies.
• Dollar Tree (DLTR) to overweight from equal weight at Barclays.
• Edison International (EIX) to hold from sell at Citigroup.
• Analog Devices (ADI) to overweight from neutral at JPMorgan.

Analyst Upgrades

• Large Cap Pharmaceuticals sector upgraded to Overweight at Wells Fargo.
• Archer Daniels (ADM) upgraded to Outperform from Neutral at Credit Suisse.
• Cypress Semi (CY) upgraded to Buy from Neutral at UBS.
• MFA Financial (MFA) upgraded to Buy from Hold at Jefferies.
• Blackstone (BX) upgraded to Buy from Hold at Jefferies.
• Comerica (CMA) upgraded to Hold from Sell at Citigroup.
• Dollar Tree (DLTR) upgraded to Overweight from Equal Weight at Morgan Stanley.
• NuVasive (NUVA) upgraded to Outperform from Market Perform at Leerink.
• Cogdell Spencer (CSA) upgraded to Buy from Hold at Jefferies.
• Hersha Hospitality (HT) upgraded to Hold from Underperform at Jefferies.
• G&K Services (GKSR) upgraded to Outperform from Neutral at RW Baird.
• Graham Packaging (GRM) upgraded to Buy from Neutral at Goldman.
• Shaw (SJR) upgraded to Neutral from Underperform at BofA/Merrill.

To continue to grow, many companies have little choice but to spend large amounts on acquisitions. But at a certain point, the operations get too complicated and bloated. The solution? Yes, it's to unwind the deals. Often, Wall Street will be enthusiastic. Just look at Wednesday's announcement from conglomerate ITT (ITT). On news of its plan to split into three publicly traded companies, the shares spiked 16%.

In fact, this may actually be the start of a key trend for 2011. After all, early Thursday Marathon Oil (MRO) announced that it will spin-off its refining and sales operations as a public company (the deal should be closed on June 30). In early trading, the company's shares were up about 10%.

US Steel (X - option chain) stock is trading lower today after the World Steel Association said global steel demand growth will slow in 2011 as China's real estate market softens. The World Steel Association cut its 2011 growth forecast to 5.3% from 13.1%. If you think this stock won't be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on X.

This morning, X opened at $43.11. So far today the stock has hit a high of $43.11 and a low of $42.01. As of 12:10, X is trading at $42.06, down $1.57 (-3.6%). The chart for X looks bullish and S&P gives X a positive 4 STARS (out of 5) buy ranking.

Analyst Upgrades

• Credit Suisse upgraded AT&T (T) to outperform from neutral and has a $35 target on the stock. Credit Suisse believes the impact from AT&T's loss of iPhone exclusivity will be less than expected and that the stock should benefit from its earnings growth and dividend yield.
• Goldman upgraded Freeport McMoRan (FCX) to buy from neutral and raised its price target to $94 from $79 based on improving copper fundamentals.
• Benchmark Co. upgraded Valueclick (VCLK) to vuy from hold on expectations Google Instant (GOOG) could drive marketing traffic. The firm raised its target price for Valueclick shares to $15 from $11.
• Best Buy (BBY) was upgraded to outperform from perform at Oppenheimer.
• Research In Motion (RIMM) was upgraded to buy from sell at Societe Generale.
• CarMax (KMX) was upgraded to outperform from market perform at Wells Fargo.

U.S. Steel (X) closed up $2.27 to $49.59 Wednesday. X September put option implied volatility is at 56, October is at 54, January is at 53, versus its six-month average of 52. X call option volume of 201K contracts compares to put volume of 61K contracts, according to Track Data.

Hewlett-Packard (HPQ) is expected to report Q3 EPS on August 19. HPQ August 41 straddle is at $1.21, November is at $5.19. September put option implied volatility is at 31, November is at 33; above its 26-week average of 28 according to Track Data, suggesting larger price movement.

Options Update is by Stock Specialist Paul Foster of theflyonthewall.com.

Today was soft on solid economic data, and a conflicting oil report this morning versus last night only added more confusion. A rally came on in the afternoon and the markets appeared to all manage to hold on to very small gains at the closing bell.

Here were the unofficial closing bell levels:

Dow Jones 10,415.54 +9.69 (0.09%)
S&P 500 1,094.16 +1.62 (0.15%)
Nasdaq 2,215.70 +6.26 (0.28%)

Top Analyst Calls

This was another day where the real closing verdict of red or black was unknown right up until the closing bell. The day looked very mixed from index to index and sector to sector. Consumer confidence came in weak again, and there is still mixed data on housing prices.

Here were today's closing bell levels:

Dow Jones 10,537.69 +12.26 (0.12%)
S&P 500 1,113.84 -1.17 (-0.10%)
Nasdaq 2,288.25 -8.18 (-0.36%)

US Steel (X - option chain) stock is trading lower today after the company reported Q2 2010 earnings this morning, posting a loss of $25 million, or 17 cents per share. Excluding one-time items, X earned 45 cents per share on revenue of $4.68 billion. Analysts had forecast a profit of 63 cents per share on revenue of $4.63 billion. The company said it expects to return to profitability in the third quarter. If you think this stock won't be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on X.

This morning, X opened at $47.70. So far today the stock has hit a high of $70.95 and a low of $33.25. As of 12:05, X is trading at $45.98, down $2.91 (-5.9%). The chart for X looks bullish and S&P gives X a positive 4 STARS (out of 5) buy ranking.

Calls are unusually popular on United States Steel Corporation (X), with volume rising to more than double the norm by midday. Roughly 20,000 calls changed hands on X during the first half of the session, outpacing the stock's predicted call volume of about 7,700 contracts.

Analyst Upgrades

• Barclays upgraded GlaxoSmithKline (GSK) to overweight from equal weight and said investor concerns regarding Advair and Avandia are overdone.
• Leerink upgraded Bristol-Myers (BMY) to outperform from market perform, citing management's pipeline execution. Shares were also upgraded at Citigroup this morning to buy from hold.
• Goldman upgraded Medco Health (MHS) to buy from neutral and raised its price target on shares to $76 from $67. The firm cites valuation and expectations that earnings will accelerate in 2H10 driven by a stronger generic outlook.
• U.S. Steel (X) was upgraded to neutral from sell at UBS.
• Blyth (BTH) was upgraded to hold from underperform at Jefferies.
• IPC The Hospitalist Co. (IPCM) was upgraded to buy from hold at Deutsche Bank.

Analyst Upgrades

• Weeden upgraded Nabors Industries (NBR) to buy from hold on expectations that U.S. land drillers will likely benefit from a more restrictive deepwater Gulf of Mexico drilling environment.
• Macquarie upgraded Cinemark (CNK) to outperform from neutral and has a $20 price target on the stock. The firm cites valuation, market share stabilization and Latin American pricing power.
• RBC Capital upgraded Edison International (EIX) to outperform from sector perform with a $43 target. The firm cited valuation and its belief that the company's unregulated businesses are well-positioned to accelerate as reasons for the upgrade.
• Canadian Pacific (CP) was upgraded to buy from hold at Stifel Nicolaus.
• FirstEnergy (FE) was upgraded to buy from hold at Citigroup.
• Joy Global (JOYG) was upgraded to buy from neutral at Longbow.