Analyst Upgrades

• Oppenheimer upgraded Genoptix (NASDAQ: GXDX) to Outperform from Perform and raised its target to $44 from $33 based on analysis of oncology testing reimbursement that indicates average revenue per case is within industry norms.
• Deutsche Bank upgraded Legg Mason (NYSE: LM) to Hold from Sell citing reports that an activist investor, Nelson Peltz, has increased its stake in the company. The firm said fundamentals remain weak but the news will likely push shares higher.
• Suntrust upgraded VCA Antech (NASDAQ: WOOF) to Buy from Neutral citing reduced headwinds and favorable risk/reward. The firm has a $30 target on shares.
• SLM Corp. (NYSE: SLM) was upgraded to Overweight from Neutral at JPMorgan.
• Diamond Offshore (NYSE: DO) and FMC Technologies (NYSE: FMC) were upgraded to Neutral from Sell at Goldman.

Imagine your broker parked your funds in an account that he said would be as safe as a money market fund but offer slightly higher yields. If you went for that line, you might now be among those who hold the $330 billion worth of Auction Rate Securities (ARS) whose weekly price-setting auctions stopped working in February. Now, Bloomberg News reports that those who are trying to get at their funds through arbitration will be lucky to receive 22 cents on the dollar.

I first began posting on the ARS market back in February. Since then 5,482 comments have appeared from people trying to unfreeze their funds from what their brokers told them were safe investments. Massachusetts and New York have sued one of the ARS hawkers -- UBS AG (NYSE: UBS) -- thanks to e-mails that indicated that when the ARS auctions failed, UBS decided to dump this toxic waste on individual investors rather than take the losses on its own books. New York's attorney general found that UBS executives sold $21 million worth of their ARS holdings before launching this campaign to dump them on the public.

Many are now trying to get their money back through a process called arbitration. If your claim is above $50,000 you will face a panel of three judges, two "public" and one of whom represents the ARS industry. Bloomberg reports that the process for choosing the panelists virtually assures that consumers will be judged by a representative of the industry that defrauded them. So it's no wonder that arbitration rulings have given investors enormous haircuts.

MOST NOTEWORTHY: Sunoco, Valero Energy, UBS AG, Lehman Brothers and Supertex were today's noteworthy upgrades:

• Citigroup upgraded both Sunoco (NYSE: SUN) and Valero (NYSE: VLO) to Buy from Hold, as they believe both companies will benefit from the collapse of ethanol prices since refiners are mainly supplied under term contracts struck above current levels.
  
• Merrill upgraded shares of UBS (NYSE: UBS) to Buy from Neutral to reflect the company's lack of exposure to fixed income.
  
• Credit Suisse upgraded shares of Lehman Brothers (NYSE: LEH) to Outperform from Neutral citing improved performance prospects.
  
• Supertex (NASDAQ: SUPX) was raised to Buy from Neutral at Oppenheimer. The firm expects a rebound in all business segments, Medical is entering a seasonally strong September quarter, and notes Motorola (NYSE: MOT) shipments are growing.

OTHER UPGRADES:

• CIBC upgraded Novatel Wireless (NASDAQ: NVTL) to Sector Outperformer from Sector Performer.
  
• Suntrust upgraded American Reprographics (NYSE: ARP) to Buy from Neutral.
  
• Taiwan Semiconductor (NYSE: TSM) was upgraded to Overweight from Neutral at JP Morgan.
  
• Jefferies upgraded Dover Downs (NYSE: DDE) to Buy from Hold.

Folks who work for architectural and engineering firms know that design is the fun part and subsequent document management is the price you must pay for your fun. Outfits that want to keep their design professionals designing rather than managing have the option of turning their paper work over to a Glendale, California firm.

American Reprographics Company (NYSE: ARP) provides large-format document reproduction and management services, primarily to the architectural, engineering and construction industries. The company helps clients on-site and through a network of more than two hundred U.S. service centers. It also sells reprographics equipment, supplies and document management software. The firm has more than 73,000 active customers.

Management pleased investors late last month, with Q4 results that were essentially in-line with average Street estimates. The company also offered solid upside guidance for FY07 numbers. Officers cited expansion in digital document management services for the favorable results and key customer wins for the positive outlook. The ARP price popped through moving average resistance on the news and has since been defining a bullish "flag" consolidation pattern. Stocks frequently exit flags moving in the same direction they were traveling when they entered them. In this case, that would be to the upside.

Brokers recommend the issue with four "strong buys," two "buys" and one "hold." Analysts see a 17% growth rate through the next year. The stock's Price to Sales ratio (2.45), Price to Free Cash Flow ratio (15.91), Sales Growth rate (17.88%), EPS Growth rate (47.37%), Return on Assets (10.38%) and Return on Equity (34.51%) compare favorably with industry, sector and S&P 500 averages.

Institutional investors hold about 66% of the outstanding shares. Over the past 52 weeks, ARP has traded between $28.38 and $39.00. A stop-loss of $28.65 looks good here.

Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com.