Casual restaurant chain Buffalo Wild Wings (NASDAQ: BWLD) has been on fire this year, with the stock up more than 63% year-to-date. The company could see its positive price action accelerate after its upcoming turn in the earnings spotlight; BWLD is slated to unveil its first-quarter results on Tuesday, April 28, after the close of trading.

Analysts, on average, are expecting BWLD to report a profit of 46 cents per share, up from 36 cents per share in the first quarter of 2008. The company has a mixed history in the earnings confessional: in its previous four reports, the chain has exceeded analysts' estimates twice, met them once, and fallen short on one other occasion.

While customers may not realize how appropriate it is to be picking meat off the bones of chicken wings in hard times (I'll bet many a Depression-era cook made two chicken wings into a whole family's meal), investors are happily cashing in on the meaty prospects of Buffalo Wild Wings (NASDAQ: BWLD) this week. After reporting a shocker of a quarter -- up 28.7% over the year-earlier quarter with $7.7 million, or $0.43 per share, on revenue $121.2 million -- investors were heartened. It was just three months ago that BWLD missed expectations with net income of $4.6 million, or $0.25 per share, on revenues of $106.1 million. Same-store sales at company-owned stores were up 6.8% in the third quarter compared to a 4.5% growth in the fourth quarter.

Chipotle (NYSE: CMG) closed at $51.31. CMG is scheduled to report Q4 on February 11. CMG February call option implied volatility is at 82, puts are at 91; above its 26-week average of 57, according to Track Data, suggesting larger price movement. CMG puts are more expensive than puts because CMG is difficult to borrow.

Buffalo Wild Wings (NASDAQ: BWLD) closed at $22.67. BWLD, an operator and franchisor of 564 restaurants, is scheduled to report Q4 EPS on February 11. BWLD February 22 straddle is priced at $3.95, March 22 straddle is priced at $5.20. BWLD February option implied volatility is at 117, March is at 85; above its 26-week average of 80, according to Track Data, suggesting larger price movement.

Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com

Analyst upgrades:

• Jefferies upgraded Buffalo Wild Wings (NASDAQ: BWLD) to Buy from Hold on valuation with the stock down 65% in two months as they believe the company has a "best-in-class fundamental story." The firm lowered its target to $25 from $30.
• Morgan Stanley upgraded Sanofi-Aventis (NYSE: SNY) to Overweight from Equal Weight on valuation and believes near-term cost reductions could provide a positive catalyst.
• Citigroup upgraded New York Times (NYSE: NYT) to Hold from Sell and lowered its target to $5.50 from $7 on valuation and believes the dividend cut will boost the company's liquidity.
• Pantry (NASDAQL PTRY) was upgraded to Outperform from Market Perform at Friedman Billings.
• LECG Corp (NASDAQ: XPRT) was raised to Buy from Neutral at UBS.
• Thomson Reuters (NYSE: TRI) was upgraded at RBC Capital to Outperform from Sector Perform.

Analyst downgrades:

• Jefferies downgraded Suntech (NYSE: STP) to Hold from Buy and lowered its target to $6 from $25 as they believe concerns about a convert refinancing in February 2010 will continue to weigh on the stock.
• Credit Suisse cut Ericsson (NASDAQ: ERIC) to Underperform from Outperform due to expectations for a decline in wireless infrastructure spending.
• ING downgraded shares of Rio Tinto (NYSE: RTP) to Hold from Buy as they believe it will be challenging for the company to execute asset sales planned at reducing debt in the current environment.

Buffalo Wild Wings (NASDAQ:BWLD), an operator and franchisor of 510 restaurants, is expected to report Q2 EPS in late July. BWLD is recently down $2.32 to $27.41. BWLD call option volume of 955 contracts compares to put volume of 4,570 contracts. BWLD July option implied volatility is at 65, August is at 76; above its 26-week average of 56 according to Track Data, suggesting larger price movement into late July EPS.

Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com

Some investors shy away from small stocks, thinking they are too volatile and risky. But BusinessWeek takes a look at such stocks and finds some that could offer a lot of potential for growth.

It can be hard to find small companies that have great growth potential. Since most Wall Street analysts ignore smaller companies, it is often tough for investors to find the research that they need in their selection process, so they have to rely on their own research in order to find that perfect small cap stock.

One thing to look for when examining small cap stocks is a long and established track record. The downside to this approach is that these stocks are not going to be the next "big thing" and bring you huge profits in the short run. These stocks are the ones that typically serve a niche market, and perform that service successfully. While these will not make you rich overnight, they are fairly reliable companies you can look to for nice and steady returns. If you are the type of investor who likes to buy and hold, these are the small cap stocks for you.

MOST NOTEWORTHY: NuVasive, Buffalo Wild Wings and Invesco were today's noteworthy initiations:

• Merriman believes NuVasive's (NASDAQ:NUVA) expanding product and distribution should continue to drive growth and feels the recent pullback provides a good entry point into shares. Merriman started NuVasive with a Buy rating.
  
• Buffalo Wild Wings (NASDAQ:BWLD) was initiated at Jefferies with a Hold rating and $30 target as they believe consensus estimates are aggressive and that shares are approaching fair valuation.
  
• William Blair believes Invesco's (NYSE:IVZ) investment capabilities and diversified client base are key differentiators that will drive superior relative growth over the long term; shares were assumed with an Outperform rating.

OTHER INITIATIONS:

• Baird initiated XenoPort (NASDAQ:XNPT) with an Outperform rating and $74 target.
  
• KeyBanc assumed Felcor Lodging (NYSE:FCH) with a Buy rating and $14 target.
  
• Trimble Navigation (NASDAQ:TRMB) was initiated at Thomas Weisel with a Market Weight rating and $30 target.

Buffalo Wild Wings(NASDAQ:BWLD) owns, operates and franchises 495 restaurants featuring chicken wings. BWLD is expected to report Q4 EPS on February 12. BWLD is recently down 61c to $24.74. BWLD call option volume of 740 contracts compares to put volume of 2,847 contracts. BWLD February 25 straddle is priced at $5.40. BWLD March option implied volatility of 80 is above its 26-week average of 56 according to Track Data, suggesting hedging for downside price movement.

Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com

Buffalo Wild Wings-(NYSE: BWLD) August volatility Elevated at 98 into 7/31 EPS. The company owns, operates and franchises 445 restaurants featuring chicken wings. BWLD is recently up .28 to $39.54. It will report EPS after the close on July 31st. BWLD August option implied volatility of 98 is above its 26-week average of 42 according to Track Data, suggesting larger risk.

Indymac Bancorp-(NYSE: IMB) August volatility Elevated at 110 into 7/31 EPS. Indymac, the 7th largest savings and loan and the 9th largest mortgage originator in the nation, will report EPS on July 31. Shares are recently down .48 to $22.61 on subprime mortgage concerns. IMB call option volume of 4,261 contracts compares to put volume of 13,489 contracts. IMB August option implied volatility of 110 is above its 26-week average of 44 according to Track Data, suggesting larger risk.

Disney-(NYSE: DIS) August volatilities up as expected into 8/1 EPS. Disney is expected to report EPS of .55 cents after the close on 8/1 according to Thomson First Call. CIBC has a $40 price target on DIS. DIS August option implied volatility of 27 is above its 26-week average of 21 according to Track Data, suggesting larger price fluctuations.

Time Warner-(NYSE: TWX) August volatility Elevated at 31 into EPS & Outlook. TWX is expected to report EPS of .21 cents on 8/1. TWX August option implied volatility of 31 is above its 26-week average of 21 according to Track Data, suggesting larger price fluctuations.

Daily options Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.

Buffalo Wild Wings (NASDAQ: BWLD) was hit with another downgrade today, as shares continue a'blazin' three-year climb northward, up as much as 61% since the start of this year. Sanders Morris Harris downgraded Buffalo Wild Wings to Sell from Buy, telling investors to take profits this morning, despite still being favorable on the restaurant's long-term outlook.

This isn't the only recent Buffalo Wild Wings downgrade. Last Thursday, Merriman downgraded shares to Neutral from Buy, suggesting the company's potential second quarter upside was already reflected in the stock's valuation. They recommended investors to wait on the sidelines for a better entry point.

Despite the favorable long-term outlook of the company and what BB&T called Buffalo Wild Wings' third-straight "blowout quarter," according to the Chicago Tribune, the short position of the company has grown to nearly 25%. This suggests many investors believe shares may be getting ahead of themselves.

When looking at the company's $700 million in cash and zero debt, along with the solid fundamentals and goal to have 1,000 restaurants by 2012, one could see the long-term potential of Buffalo Wild Wings. With shares up nearly 61% since January, a recent 2-for-1 stock split and a 25% short position pressuring shares, investors must take Merriman and Sanders Morris' recommendations seriously.

Shares of Buffalo Wild Wings were down -1.38%, to $42.15, in mid-day trading.

Kevin Shult is a writer for TheFlyOnTheWall.com (subscription required).

Buffalo Wild Wings-(NASDAQ: BWLD) volatility decreases as BWLD rallies 14% on upside EPS. BWLD, owns, operates and franchises 439 restaurants featuring chicken wings. BWLD is recently up $9.09 to $73.93. SMH Capital reiterated its Buy rating and raised its 12-month price target to $84. SMH Capital says "The robust cash balance of over $8 a share and strong franchise partners should fuel that unit development at an annual clip of 15%- 17%." BWLD call option volume of 4,230 contracts compares to put volume of 3,057 contracts. BWLD over all option implied volatility of 38 is below its 17-week average of 41 according to Track Data, suggesting decreasing risk.

Chipotle Mexican Grill, Inc.-(NASDAQ: CMG) option implied volatility decreases as CMG rallies 18% on upside EPS. CMG, an operator of over 500 companies owned and eight franchise fast-casual Mexican restaurants, reported 1st quarter revenues increased 26.2% to $236 million. CMG is recently up $11.81 to $78.07. CIBC says "CMG delivers big Upside despite tougher comparisons...Foiling shorts." CMG June call option implied volatility is priced at 25, puts are at 33; near its 26-week average of 27, but below yesterday exaggerated level of 38-44 according to Track Data, suggesting decreasing risks. CMG puts are more expensive than calls because CMG is difficult to borrow.

Option volume leaders today are: MasterCard (NYSE: MA), Cisco Systems (NASDAQ: CSCO), Intel Corp. (NASDAQ: INTC) and Newmont Mining Corp. (NYSE: NEM).

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

MOST NOTEWORTHY: The more notable downgrades today included Playboy Enterprises (PLA), Embratel Participacoes (EMT) and Choice Hotels Int'l Inc (CHH):

• Bank of America and UBS downgraded Playboy Enterprises (NYSE: PLA) to Neutral from Buy, citing limited visibility.

• Citigroup downgraded Embratel Participacoes ADS (NYSE: EMT) to Sell from Hold on expected lower liquidity following Telfonos de Mexico SA ADS (NYSE: TMX) voluntary tender expiration.

• Choice Hotels Int'l Inc (NYSE CHH) was downgraded to Underperform from Peer Perform at Bear Stearns following the company's Q4 report and guidance.

OTHER DOWNGRADES:

• VeraSun Energy Corp (NYSE: VSE) was downgraded to Sell from Neutral at Goldman based on relative valuation.

• Goldman Sachs also downgraded 1-800-Flowers.com Inc (NASDAQ: FLWS) to Sell from Neutral based on valuation.

• Piper Jaffray downgraded Buffalo Wild Wings Inc (NASDAQ: BWLD) to Market Perform from Outperform citing difficult year-over-year comps and increased chicken wing prices.

• CIBC downgraded Nasdaq Stock Market Inc (NASDAQ: NDAQ) to Sector Performer from Outperformer.

• ThinkEquity downgraded Zoltek Companies inc (NASDAQ: ZOLT) to Accumulate from Buy.

• BMO Capital Markets cut Weyerhaeuser Co (NYSE: WY) to Market Perform from Outperform based on valuation.

Analyst summaries provided by TheFlyOnTheWall.com (subscription required).

MOST NOTEWORTHY: Marvel Entertainment Inc (MVL) and Affymetrix Inc (AFFY) were today's most notable initiations:

• Sanders Morris started Marvel Entertainment Inc (NYSE: MVL) with a Buy rating and $34 target on the belief that 2007 guidance is conservative.

• Thomas Weisel initiated Affymetrix Inc (NASDAQ: AFFY) with an Overweight rating and is positive on Hematide, their lead drug, to treat anemia.

OTHER INITIATIONS:

• Morgan Stanley initiated Emmis Communications Corp (NASDAQ: EMMS) with an Equal-Weight rating and $10 target.

• Nollenberger started LSI Logic Corp (NYSE: LSI) with a Neutral rating and $10 target; they believe it will take several quarters for the LSI-Agere business plan to pan out.

• Morgan Keegan believes shares of Buffalo Wild Wings Inc (NASDAQ: BWLD) are fairly valued, starting the company with a Market Perform rating.

Analyst summaries provided by TheFlyOnTheWall.com (subscription required).

On tonight's episode of "Mad Money," host Jim Cramer discussed a situation where he wondered if it was too late, or only the end of the beginning. Buffalo Wild Wings (BWLD) rose a huge 20% after reporting earnings and it is still a Buy at $50. He said it is even more of a Buy at $50 than it was at $42, and even though that sounds weird, it is true.

Cramer noted its small $500 million market cap and small float of only 7.4 million shares. He said there were many shorts going into the earnings. He warned that if you are very conservative or nervous, then this is a "Don't Buy!" The company doesn't give quarterly guidance, and doesn't set targets.

Cramer also likes the business. He did a taste test and said the Buffalo Wild Wings are hotter than Hooters and they are branding themselves as a family wings place. He said this is a family friendly place where you can stay sober and eat wings with the kids -- unheard of previously.

He says the sauce is the difference from this and other wing joints because Buffalo Wild Wings has 14 sauces and only 24% of sales actually came from wings. He said this is a regional to national story. The chain is in 36 states with only 400 stores, but most are in the Midwest. He said you even get more growth here than you do with Panera.

Cramer said you better only buy on limit orders and on pullbacks, and best not to buy it in after-hours.