Analyst upgrades:

• Pali Capital upgraded Lazard (LAZ) to buy from neutral, citing a healthy restructuring environment, improving M&A and strength in the asset management segment. The firm has a $46 target on shares.
• Baird upgraded Scansource (SCSC) to outperform from neutral, citing strength in the channel business and growth drivers from improved telephony and security. The firm has a $30 target on shares.
• Citigroup upgraded Liberty Interactive (LINTA) to buy from hold, citing the company's QVC unit's return to growth. The firm raised its target on shares to $13.25 from $12.
• Hess Corp (HES) was upgraded to overweight from equal weight at Morgan Stanley.
• Vulcan Materials (VMC) was upgraded to buy from neutral at UBS.
• Dillard's (DDS) was upgraded to buy from hold at Deutsche Bank.

Analyst upgrades:

• Deutsche Bank upgraded Vale SA (NYSE: VALE) to Buy from Hold on expectations the company will benefit from higher realized prices. The firm raised its target on shares to $30 from $23.
• Soleil upgraded Education Management (NASDAQ: EDMC) to Buy from Gradually Accumulate following the company's Q1 results and raised its target on shares to $34 from $32.
• Credit Suisse upgraded Medtronic (NYSE: MDT) to Outperform from Neutral. The firm also added the stock to its Focus List and raised its target on shares to $49 from $41. Credit Suisse believes Medtronic's base business is stabilizing and the stock's risk/reward is compelling.
• Medivation (NASDAQ: MDVN) was upgraded to Buy from Hold at Roth Capital.
• Martha Stewart (NYSE: MSO) was upgraded to Buy from Hold at Morgan Joseph.
• Dominion Resources (NYSE: D) was upgraded to Hold from Underperform at Jefferies.

Dominion Resources' stock has been in a mild uptrend since first recommend in May, but it's still undervalued, for those investors who missed the May call.

Hence, it goes without saying that I'm reiterating my Buy rating for Dominion Resources (NYSE: D), first recommended on May 8, 2009 at a price of $31.87.

Readers of this space know that one of the preferred sectors is the electric power generation sector.

And the sector is favored for a reason that may not be obvious to all. Electricity via wind, solar, and nuclear generation is likely to play a larger role in energy as climate change reduction, then elimination, becomes a societal goal. Electricity also remains a potential propulsion source for cars, particularly once oil resumes its inevitable climb. And with the above in mind, electric power generator Dominion Resources (NYSE: D) is worth a review.

TheStreet.com's Jim Cramer says that Dominion Resources saw a lot of the green movement coming and moved aggressively.

What do you do with a company that raises its dividend twice in two years by 11%, that has superior growth characteristics in its sector, enlightened management and a plan for executives to buy stock regularly?

Well, in this market, that's an easy question to answer: You sell it. That's what's been going on with Dominion Resources (NYSE: D) (Cramer's Take), the Richmond, Va.-based utility that yields more than 6%, but is bumping along its 52-week low like every other stock I follow.

This post is part of a series featuring bargain stocks that are worth a look now. See more Cheap Stocks.

In addition to old standbys like consumer staples, utility stocks are a proven favorite during times when your portfolio needs a defensive touch. Among utilities, Virginia-based Dominion Resources (NYSE: D) stands out for its solid price action, its exposure to natural gas, and its heavy potential for future upgrades.

While natural gas might not seem terribly thrilling, many analysts expect it to be a hot commodity in the coming years. It's a plentiful resource in North America, and no less an energy tycoon than T. Boone Pickens is banking on a natural-gas boom. With 1.1 trillion cubic feet of oil and natural gas reserves, Dominion looks poised to capitalize on a shift toward this source of energy.

The utility firm already seems to be thriving, in fact. In its October 30 earnings report, the company exceeded analysts' profit expectations by 4 cents per share, and offered upbeat guidance for fiscal 2008 and 2009.

For value investors, though, the third-quarter report contained even more good news. Thomas Farrell II, Dominion's president, chairman, and CEO, stated, "Given its confidence in the strength of our company's earnings and business model, the board of directors recently declared our fourth-quarter dividend and reconfirmed our dividend policy to sustain increases in 2009 and 2010 that will allow us to reach our targeted 2010 payout ratio of 55%."

Analyst upgrades:

• Jefferies upgraded shares of Constellation Energy (NYSE: CEG) to Buy from Hold and raised its target to $26.50 from $25 on valuation as they believe MidAmerican Energy will consummate the merger. The firm points out shares are trading at a 14% discount to the $26.50 offer.
  
• Merriman upgraded Denny's Corp. (NASDAQ: DENN) to Buy from Neutral as they believe the company's restructuring and successful menu and food cost management should stabilize operating margins.
  
• Daimler (NYSE: DAI) was upgraded at Merrill to Buy from Neutral on valuation as they believe the stock is oversold at current levels.
• Taiwan Semi (NYSE: TSM) was upgraded to Overweight from Neutral at HSBC.
  
• Veolia Environnement (NYSE: VE) was lifted to Neutral from Underperform at Credit Suisse.
  
• Goldman raised PMC Sierra (NASDAQ: PMCS) to Buy from Neutral.

Analyst downgrades:

The Washington Post reports that pension fund managers representing $1 trillion have petitioned the Securities and Exchange Commission (SEC) to required public companies to disclose the impact of global warming on their business prospects. If the SEC agrees, the change could threaten investors in utility stocks -- which are among the biggest private sources of carbon dioxide emissions that cause global warming.

Here's a list of utility stocks which could be most affected:

• American Electric Power (NYSE: AEP). AEP produced 145.4 million tons of carbon dioxide in 2006. In Europe, where legislation already limits carbon dioxide emissions, allowances for a ton of carbon dioxide sell or 20.5 euros, or about $28.50. So if its 2006 carbon dioxide had been emitted in Europe, AEP would have had to pay over $4 billion.
• Dominion Resources (NYSE: D)
• Dynegy (NYSE: DYN)
• Xcel Energy (NYSE: XEL)

Coal producer, Peabody Energy Corp. (NYSE: BTU) could also be among those companies affected.

Stocks seem to start the week on a down note as geopolitical concerns, combined with another slide in Chinese stocks are putting pressures on U.S. markets. Stock futures are down at this time, responding to the numerous forces playing out internationally and domestically.

Last week, the Dow industrials rose 1.2%, the S&P 500 rose 1.4% and the Nasdaq Composite rose 2.2%. Both the Dow and the S&P 500 closed at record highs on Friday following two days full of economic reports. In response to the strong jobs reports, bond yield soared. The yield on 10-year Treasury notes surpassed 5%, the highest level since mid-August, making fixed income an attractive vehicle again. This might also explain some of the decline this morning as money shifts from equities to the safer instrument -- government bonds.

Today, there is news coming in from around the globe, news that can pressure stocks down:

• Russian President Vladimir Putin said today that Moscow could aim nuclear weapons at targets in Europe as part of "retaliatory steps" if Washington proceeds with building a missile defense system on the continent.
• After reaching levels not seen since 2000, European markets reacted to Putin's statement, naturally, but also to the Chinese stock market plunge. China's main stock index tumbled 8.3% Monday, extending losses from last week. Hong Kong and Japan stocks didn't follow China's example, however, gaining on the strong U.S. economic data. Similarly, other Pan-Pacific markets reached record highs.
  
• April factory orders are the only economic report due out today at 10:00 a.m. EDT. Orders are expected to have risen 0.7% after a 3.1% jump in March.

Corporate:

Palm Inc. (NASDAQ: PALM) said it will sell a 25% stake to private equity firm Elevation Partners for $325 million. Palm shares are up 11.9% in pre-market trading (7:373 a.m.).

Private equity firms TPG Capital LLP and Silver Lake Partners are in a leading position to buy Avaya Inc. (NYSE: AV) for about $17 per share, according to The Wall Street Journal. Avaya shares are up 2.9% in pre-market trading (7:35 a.m.).

Loews Corp. (NYSE: LTR) said it agreed to buy natural gas exploration and production assets in three states from Dominion Resources Inc. (NYSE: D) for $4.025 billion.

Krispy Kreme Doughnuts Inc. (NYSE: KKD) is set to release its first-quarter earnings. Analysts are calling for 5 cents earnings per share.

Wal-Mart Stores Inc. (NYSE: WMT) shares are rising 2% in pre-market trading (7:41 a.m.) after gaining 3.9% on Friday. WMT was upgraded to Overweight from Equal-Weight at Morgan Stanley and to Overweight from Neutral at J.P. Morgan. Wal-Mart revealed plans to cut capital expenditure and return more cash to shareholders.
Update: Wachovia and HSBC also upgraded Wal-Mart, from Market Perform to Outperform and from Neutral to Overweight respectively.

Ben Berkowitz is the business news editor at AOL. His weekly column highlights business stories with significant implications that were overlooked at first glance.

The story you didn't read this week but should have is that Bill Gates is heading for the exit on housing and energy stocks. When the world's richest man, who certainly has money to burn, says "nah, no thanks" to an entire sector, pay heed.

Gates sold out of a laundry list of stocks: KB Home (NYSE:KBH), Centex Crop. (NYSE:CTX), Pulte Homes, Inc. (NYSE:PHM), Lennar Corp. (NYSE:LEN), Beazer Homes USA, Inc. (NYSE:BZH), Ryland Group Inc. (NYSE:RYL) and WCI Communities, Inc. (NYSE:WCI) in the housing space; and AES Corp. (NYSE:AES), Chevron Corp. (NYSE:CVX), Consolidated Edison, Inc. (NYSE:ED), Dominion Resources, Inc. (NYSE:D), Duke Energy Corp. (NYSE:DUK), FPL Group, Inc. (NYSE:FPL) and Ameren Corp. (NYSE:AEE) in energy and utilities.

His move in housing was particularly striking - a November filing by his foundation showed new positions in a number of home builders, only to then sell the shares by Dec. 31.

Could it be that the housing market is just so lousy that Gates does not feel compelled to bother? This is a man who is so rich that, if he sold off everything he owned, he could give every man, woman and child in the United States something like $160 and still have plenty of money left over for the Egg McMuffins he was once known to favor.

Dominion Resources Inc. (NYSE: D) is making some big changes. The company wants to unload about 83% of its oil and gas production business. The reserves are in areas such as New Mexico, the Permian Basin in Texas, the Gulf of Mexico and Canada.

Such a deal will carry a heavy price -- the estimate is $15 billion or so. But of course there is a ton of cash in the private equity sector and it looks like Dominion will have no trouble finding buyers.

According to the Wall Street Journal, one group includes firms like Madison Dearborn Partners, Warburg Pincus, First Reserve and Carlyle Group. And it looks like Goldman Sachs (NYSE: GS0) and Morgan Stanley (NYSE: MS) will also join the party.

Aren't these companies arch enemies?

Yes they are. But big-time deals require teamwork. Besides, Dominion's assets are top-notch and should be a strong source of ongoing cash flow generation as well as tax benefits.

And the interest in Dominion is another sign that private equity thinks that over the new few years energy prices should increase.

Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.

MAJOR PAPERS:

• The Wall Street Journal (subscription required) had some interesting M&A speculation:
• Morgan Stanley (NYSE: MS) and Goldman Sachs Group (NYSE: GS) may team up to acquire Dominion Resources (NYSE: D).
• According to the Journal's MarketBeat blog, Williams-Sonoma Inc (NYSE: WSM) denied rumors that it hired Goldman Sachs to "explore strategic alternatives."
• Macau has seen its revenue jump 22% in 2006 and could now be in the position to become the world's biggest casino market, topping the Las Vegas Strip.
• The Financial Times (subscription required) reported that News Corp (NYSE: NWS) has entered into talks to acquire Tribune Company (NYSE: TRB).

OTHER PAPERS:

• A New York Post exclusive wrote that Vertrue Inc (NASDAQ: VTRU) has put itself up for sale and could fetch a bid of about $43 per share.
• Investor's Business Daily's "New America" column highlighted real estate company CB Richard Ellis Group Inc (NYSE: CBG), saying the company has been dominating most major markets in the world, before and after its acquisition of rival Trammell Crow for $2.2B last month.

MOST NOTEWORTHY: Dominion Resources (D), Caremark RX (CMX), Intel (INTC) and CVS Corp (CVS) top today's extensive list of downgrades.

• Dominion Resources, Inc. (NYSE:D) was downgraded to Sell from Hold at Deutsche Bank and to Underperform from Hold at Jefferies. Both firms cited the E&P sale that would lead to near-term dilution.
• Caremark Rx, Inc. (NYSE:CMX) was downgraded at Wachovia to Market Perform from Outperform citing the merger with CVS Corp (CVS) valued Caremark RX too low. First Albany and FTN Midwest also downgraded Caremark RX to Neutral, citing the merger with CVS Corp.
• Intel Corp (NASDAQ:INTC) was downgraded at Merrill Lynch to Neutral from Buy, citing weakened demand and increased capacity.
• CVS Corp (NYSE:CVS) was downgraded to Hold from Buy at Deutsche Bank citing the uncertainties of the Caremark RX (CMX) merger. CVS Corp was also downgraded by William Blair to Market Perform from Outperform.

OTHER DOWNGRADES:

• Morgan Stanley downgraded MasterCard, Inc. (NYSE:MA) to Equal Weight from Overweight.
• Robert W. Baird downgraded SRA Int'l (NYSE:SRX) to Neutral from Outperform based on lower than expected organic revenue near-term, federal agencies to operate under CR beyond mid-November, recruiting retention challenges and valuation.

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