Analyst Upgrades

• Akamai (AKAM) to overweight from neutral at Piper Jaffray.
• Las Vegas Sands (LVS) to buy from neutral at UBS.
• Aetna (AET) to Outperform from market perform at Leerink.
• Hot Topic (HOTT) to buy from neutral at Janney Capital.
• Colonial Properties (CLP) upgraded to Outperform from market perform at FBR Capital and to buy from hold at Citigroup.
• Altera (ALTR) to buy from hold at Citigroup.
• American Reprographics (ARC), CarMax (KMX) and American Campus (ACC) to outperform from neutral at RW Baird.
• Zebra Tech (ZBRA) to neutral from underweight at JPMorgan.
• IMAX (IMAX) to buy from hold at Canaccord.
• Basic Energy (BAS) to neutral from sell at Goldman.
• Mednax (MD) to buy from neutral at BofA/Merrill.
• UTi Worldwide (UTIW) to buy from hold at Stifel Nicolaus.

Independent oil and natural gas company Devon Energy (DVN), first discussed on May 27, 2009, at a price of $60.89, has soared this winter from about $70 to $90. Now would be a good time to consider taking some profits off the table if you're in near $61 with DVN.

However, those investors who can tolerate the risk can maintain their full position and go for an even bigger gain, as there's more upside ahead for DVN.

Analyst Upgrades

• Aetna (AET) to buy from neutral at Goldman.
• Kellogg (K) to buy from neutral at UBS.
• PetSmart (PETM) to outperform from market perform at JMP Securities.
• NetApp (NTAP) and Scripps Networks (SNI) to buy from hold at Wunderlich.
• Thoratec (THOR) to buy from hold at Auriga.
• ArcelorMittal (MT) to overweight from neutral at HSBC.
• Bristol-Myers (BMY) to outperform from neutral at Cowen.
• Eaton Vance (EV) to neutral from sell at Ticonderoga.
• Adtran (ADTN) to buy from underperform at BofA/Merrill.

As discerned earlier this fall, Devon Energy (DVN), an independent oil/natural gas company first discussed on May 27, 2009, at a price of $60.89, bottomed at $60, and has since moved smartly to higher ground.

Devon is transforming itself in to a pure onshore exploration and production company and divesting offshore assets. In 2010, Devon's oil sands/shale production will only partially offset natural gas revenue declines, stemming from a soft natural gas market. Devon will spend about $2 billion on shale plays in 2010, hence a high oil price is critical, given the higher production costs associated with oil sands extraction.

Devon Energy Corporation (DVN), an independent oil/natural gas company first discussed here on May 27, 2009 at a price of $60.89, appears to be righting itself after a nearly year-long, incremental downtrend.

Further, Devon is transforming itself in to a pure onshore exploration and production company and divesting offshore assets. In 2010, Devon's oil sands/shale production will only partially offset natural gas production declines, stemming from a soft natural gas market. More-favorable DVN production increases should reappear in 2011.

Further, Devon will spend about $2 billion on shale plays in 2010, hence a high oil price is critical, given the higher production costs associated with oil sands extraction.

Analyst Upgrades

• Canaccord believes growth in DigitalGlobe's (DGI) commercial business will be a catalyst for shares. The firm upgraded shares to buy from hold and has a $38 price target on the stock.
• Standpoint upgraded Abercrombie & Fitch (ANF) to accumulate from hold based on valuation. The firm has a $47 target on the stock.
• Morgan Keegan upgraded Open Text (OTEX) to outperform from market perform based on the company's strong FY2011 EPS outlook.
• Devon Energy (DVN) was upgraded to overweight from equal weight at Morgan Stanley.
• Magna (MGA) was upgraded to outperform from sector perform at RBC Capital.
• EnCana (ECA) was upgraded to outperform from neutral at Macquarie.

After the crunch of quarterly reports over the past two weeks, things will be fairly quiet on the earnings front Monday. Analysts polled by Thomson Reuters expect Allergan (AGN), Loews (L) and Vulcan Materials (VMC) to report higher second quarter earnings, compared to a year ago. Oshkosh (OSK) is anticipated to have swung to a profit from a year-ago loss, and Humana (HUM) is expected to post earnings per share (EPS) about the same as last year.

The crush of quarterly reports is back on come Tuesday, with Coach (COH), Harris (HRS), MasterCard (MA), Molson Coors (TAP), Pfizer (PFE), Priceline.com (PCLN) and Whole Foods (WFMI) among those expected to post earnings growth. The highlight of the day though may be Parker Hannifin's (PH) fiscal fourth-quarter results.

The stock of independent oil/natural gas company Devon Energy (DVN), first discussed on May 27, 2009 at a price of $60.89, has exhibited a range-bound pattern for the better part of six months, but I still like the shares. Here's why:

In the fall 2009, Devon announced a strategic restructuring in which it will divest its Gulf of Mexico and international assets, and focus on high-growth North American onshore assets.

Tuesday morning, Tudor Pickering Holt decided to upgrade Devon Energy (DVN) to accumulate, noting that the company is a "cash-rich company with solid-but not-outstanding assets that trades at a discount." The brokerage house believes that Devon will issue a $3 billion share buyback program, leading to the upgrade.

The company is the largest producer and largest lease holder in the Barnett Shale area of North Texas, and has exploration and production assets in North Texas, Oklahoma, Wyoming, and western Canada. The company's impressive success rate and substantial assets suggest that the company will continue to perform well.

Thursday morning, it was announced that British petroleum firm BP (BP) will pay $7 billion for a group of Brazilian assets held by American firm Devon Energy (DVN). In exchange, Devon will receive half of BP's Kirby assets in Alberta, Canada for $500 million.

BP believes the its entry into Brazil will "add a major position in another attractive deep-water basin." BP will dish out $7 billion for interests in 10 exploration blocks in Brazil, 240 leases in the U.S. Gulf of Mexico deep water, and a nearly 6% stake in an Azerbaijan development. As a result of the deal, BP will have complete control of the Kaskida field in the Gulf of Mexico.

Independent oil/natural gas company Devon Energy (DVN), which I first wrote about on May 27, 2009 at a price of $60.89, is still 'a contender' among stock investments. Here's why:

In November 2009, Devon announced a strategic restructuring in which it will divest its Gulf of Mexico and international assets, and focus on its high-growth North American onshore assets.

"Devon Energy (DVN) is refocusing itself," says money manager and advisor Jim Stack. In his InvesTech Market Analyst he says, "We continue to view Devon as an untapped opportunity."

"Non-core holdings are being shed, and the proceeds are being used to accelerate growth of the company's premier North American assets."

El Paso (EP) closed at $11.10. EP is expected to report Q4 EPS in late February. February option implied volatility is at 36, versus its 26-week average of 42. DVN options were active on January 19 with trading volume of 71,749 contracts, according to Track Data. Average daily volume in EP is 6,610 according to IVolatility.com.

Devon Energy (DVN) closed at $73.57. WTI Crude oil futures are recently down 0.83% to $77.35, according to Bloomberg. DVN is expected to report Q4 EPS on February 17. February option implied volatility of 33 is below its 26-week average of 37, according to Track Data.

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

Patience is a virtue. My Buy rating issued on May 27, 2009 for independent oil/natural gas company Devon Energy (NYSE: DVN) at $60.89 was, from one perspective, a tad late.

But the reason for the late entry was technical: although DVN's fundamentals were and are solid, the Buy rating was delayed because DVN was struggling with both the $50 level and the 50-day moving average earlier in the spring. Concerning the $50 level, it's a psychological level that can create resistance.

Given oil's recent run-up, at times it appears that all oil/natural gas plays have been bid-up, but Devon Energy (NYSE: DVN) hasn't and it's worth a review.

Devon's shares were rudely treated by the Street from mid-2008 to early-2009, following the collapse in oil prices. Some of it was justified, due to the large, likely decline in FY 2009 revenue stemming from crude's price collapse. But valuing DVN with a p/e of 6 or 7 is a tad low, given the company's assets, hence the Buy rating that has been generated here.