Friedman Billings believes Aeropostale (NYSE:ARO) has an impressive back-to-school floorset and that momentum should carry into the fall. Additionally, the firm, which initiated shares with an Outperform rating and $38 target, expects the company to buyback shares.
Thomas Weisel believes ImClone (NASDAQ:IMCL) is attractively valued as Erbitux is positioned to capitalize on a number of label-expanding opportunities and that concerns of KRAS-related revenue loss in colorectal cancer and the clinical utility of FLEX lung cancer data are overstated. Shares were assumed with an Overweight rating and $50 target.
TheStreet.com's Jim Cramer says these stocks rise because they're doubly blessed. Integrateds fall because they aren't.
So many people have been puzzled why the major integrateds have not moved with the last $30 rally in oil's spot price. The answer?
They can't take advantage of it.
They either didn't believe, and therefore didn't drill, or they have been so in the crosshairs of sovereign lunacy that they haven't been able to. They didn't have the rigs or they judged that the rigs were so expensive that, like 1980, they would look like dopes when oil came back to $40-$50, where many thought it would. (Go back and check even last year's research for price targets, most of which were from the oil companies' themselves.)
Or maybe it didn't matter anyway. So many of the contracts these companies have signed with governments around the world are either being abrogated or just outright confiscated that you have to ask yourself "Who can invest under those scenarios?" Exxon (NYSE: XOM) (Cramer's Take) in Venezuela. Shell (NYSE: RDS.A) (Cramer's Take) and now BP (NYSE: BP) (Cramer's Take) in Russia. You can't continually invest billions and then write it off because the contracts you wrote don't mean anything.
TheStreet.com's Jim Cramer says as crude goes higher, it makes more and more sense to go for other energy options.
Every day that oil goes up, there is a new set of technologies that had formerly been priced out of the market that comes back to life. Let's take wind. Wind, in itself, just seems so stupid. It needs, well, wind. Much of our country doesn't have enough wind to make this economic. There are only certain regions that can really benefit.
But when oil is at $130, SO WHAT! The parts of the country that have a lot of wind are nuts not to do wind. Wind, when properly integrated into the grid, costs 4 cents a kilowatt. The issue has been shortage of everything that goes into a windmill, because nobody in the chain thought it was worthwhile to mass-produce them. So even though the cost is low, no companies felt it was worth it because the market seemed so niche.
In other words, it was the wind supply chain that was the problem, because we only thought in terms of gigantic plants that created energy. But with nuclear not an option -- never will be in this country, if you ask me -- natural gas falling out of favor post-Katrina as being unreliable, and coal simply intolerable because of the climate problems, wind has become the most natural fuel of all.
Readers of this space know that the investment bias is toward large-cap companies with demonstrated business models and who have a competitive advantage in established markets, preferably with a favorable global trend as a support. And with the above in mind, El Paso Corp. is worth a review.
El Paso Corp. (NYSE: EP) operates the largest natural gas transportation system in the United States, with a host of attractive, lateral business lines including natural gas production, gas storage, power generation, and trading.
El Paso is in a sweet spot, of sorts, concerning energy. Record-high oil prices -- plus the unknown regarding how high the price of oil will rise ($150?, $175?, $200?) -- means that a good number of businesses and residences will convert to natural gas, where possible, which, of course, benefits transmitters and producers of natural gas. The U.S has experienced two other periods with mass defections from oil to natural gas, during the two previous oil shocks, in 1973-74 and 1979-80.
JP Morgan raised El Paso (NYSE:EP) from "neutral" to "over weight", according toBriefing.com. The news agency also reports that RBC upgraded Ericsson (NASDAQ:ERIC) from "sector perform" to "outperform"
If you haven't noticed the surging price of oil at the pump or the surging prices of your electric bills, maybe oil at $124.00 and higher per barrel will catch your eyes. Maybe proposing higher margin limits on oil futures trading isn't such a bad idea after all.
Despite this, retail sales managed to come in better than most were expecting... even if you can chalk that up to an extra day because of Easter in March. Jobless claims also fell by 18,000 from last week to about 365,000. Below are the unofficial closing levels for the major US index levels:
Barr Phrarmaceuticals, Inc. (NYSE: BRL) was the drug company blow-up today. The company missed earnings estimates and lowered guidance. As the company is a generic drug giant, does this mean people are going off their meds? Shares tanked by 22% to $38.28 in the final minutes today.
MOST NOTEWORTHY: ICF International, General Mills, Kellogg and Caterpillar were today's noteworthy upgrades:
Jefferies upgraded shares of ICF International (NASDAQ: ICFI) to Buy from Hold on valuation to reflect the company's accelerating core business momentum and upped Road Home funding.
Citigroup raised its rating on General Mills (NYSE: GIS) and Kellogg (NYSE: K) to Buy from Hold on valuation, as they believe food consumption stocks are recession proof.
Bear Stearns upgraded shares of Caterpillar (NYSE: CAT) to Outperform from Peer Perform as they believe the company will benefit from the interest rate cuts.
OTHER UPGRADES:
Merck (NYSE: MRK) was raised to Buy from Neutral at UBS.
El Paso (NYSE: EP) was upgraded to Overweight from Equal Weight at Morgan Stanley.
Lehman raised Kimberly Clark (NYSE: KMB) to Overweight from Equal Weight.
MOST NOTEWORTHY: Dendreon Corp (DNDN), Whole Foods Market, Inc (WFMI), Rio Tinto plc (RTP), El Paso Corp (EP), and Oplink Communications, Inc (OPLK) were today's more notable downgrades:
Banc of America downgraded shares of Dendreon Corp (NASDAQ: DNDN) to Sell from Neutral following the FDA's request for additional clinical data for Provenge.
HSBC cut Whole Foods Market (NASDAQ: WFMI) to Underweight from Neutral after the second quarter miss.
BMO Capital downgraded Rio Tinto plc (NYSE: RTP) to Underperform from Market Perform based on valuation.
El Paso Corp (NYSE: EP) was cut to Sell from Buy at Matrix after the company's weak operating performance.
Merriman downgraded shares of Oplink Communications (NASDAQ: OPLK) to Sell from Neutral based on concerns over the OCP acquisitions and inventory...
Since September 2003, when Halliburton's former CEO Doug Foshee stepped in to role as President and CEO of El Paso Corporation (NYSE: EP), the company has steered in a strong direction. I think this is a terrific pick.
A provider of natural gas and related energy products, El Paso is focused on two core businesses: Pipelines and exploration/production. With around 43,000 miles of pipeline in North America, it is the largest pipeline owner in the U.S., connecting production basins in the east and the west coasts, and transporting about a quarter of the natural gas consumed in the country each day.
With Foshee's direction, El Paso is making strong gains in cost cutting measures, selling assets and focusing on the pipeline and production business. It suffered in 2002, but then sold assets to pay down debt. Now, it's growing. It has recorded profits for the last three quarters. While it continues to sell off assets in a smart way, it is also making margin gains at the pipeline and E&P units.
MOST NOTEWORTHY: Some of today's most notable upgrades include Qualcomm, Inc (QCOM), Countrywide Financial Corp (CFC), American Eagle Outfitters (AEO) and Chevron Corp (CVX):
JP Morgan upgraded Qualcomm, Inc (NASDAQ: QCOM) to Neutral from Underweight, to reflect the company's re-accelerating business fundamentals and positive pre-announcement on Tuesday.
Friedman Billings upgraded shares of Countrywide Financial Corp (NYSE: CFC) to Outperform from Market Perform as they believe the company remains among the premiere mortgage originators and will be the ultimate beneficiary of the mortgage market shakeout.
Susquehanna upgraded shares of American Eagle Outfitters Inc (NYSE: AEO) to Positive from Neutral based on a strong spring assortment and long-term earnings power from new brand concepts aerie and MARTIN+OSA.
Deutsche Bank upgraded shares of Chevron Corp (NYSE: CVX) to Hold from Sell based a backlog of resources that keeps growing and increased pressure on the need for delivery.
OTHER UPGRADES:
Lehman upgraded Darden Restaurants, Inc (NYSE: DRI) to Equal-Weight from Underweight to reflect the company's strong management team and what they believe to be "very achievable" guidance.
Cadbury Schweppes plc (NYSE: CSG) was upgraded to Neutral from Sell at Goldman Sachs as they believe the company may break up Nelson Peltz acquired a stake in the company.
AG Edwards upgraded El Paso Corp (NYSE: EP) to Buy from Hold with a $16 target.
Gladstone Capital Corp (NASDAQ: GLAD) was upgraded to Market Perform from Underperform at Wachovia.
Gabelli upgraded shares of Boston Beer Company (NYSE: SAM) to Buy from Hold following the strong fourth quarter report.
Southwest Airlines Co (NYSE: LUV) and JetBlue Airways Corp (NASDAQ: JBLU) were upgraded to Overweight from Neutral at HSBC.
Fall earnings are winding down, but there were still a number of notable companies reporting this week.
Excellent
AES Corporation (NYSE:AES) 27c per share vs analyst expectations of 21c - at $22.45 (yesterday's close) the stock is up 42% year-to-date and is near its 52-week high of $22.66.
American International Group (NYSE:AIG) $1.53 vs $1.42 - AIG is only now returning to its levels from the beginning of the year with just over a 2% return YTD. The stock is up more than 2.5% today.
Fluor Corporation (NYSE:FLR) 31c vs (12c) - while FLR is up more than 20% in the past year, its YTD return is only 8% and at $83.39 is trading within its 52-week range of $68.70-$103.85
JC Penney (JCP) $1.26 vs. $1.23 - JCP had an amazing run. YTD return is nearly 45%. The stock is up another 1.3% today to $80.61, very near its 52-week high of $81.40 set yesterday during the session.
On the Fence
El Paso Corporation (NYSE:EP) 16c vs 16c
Watson Pharmaceutical (NYSE:WPI) 33c vs 34c
Walt Disney Company (NYSE:DIS) 36c vs 34c
Awful
Federated Department Stores (NYSE:FD) 20c vs 25c
IMAX Corporation (NASDAQ:IMAX) (30c) vs 5c
Lions Gate Entertainment Corp. (NYSE:LGF) (14c) vs (2c)
Earnings review from Tedd Cohen of TheFlyOnTheWall.com (subscription required).
Almost every single day day of last week I said the same in the morning, that futures point to a positive start. Yet it seemed the market just couldn't get a break and was hit with one economic news after another that kept bulls at bay. Once again this morning futures are positive, pointing to a higher start for stocks, and hopefully finally ending a six-day losing streak. It would be interesting to see how the market reacts a day before the midterm elections.
Part of this early positive sentiment, undoubtedly has to do with oil prices. This morning, oil prices slipped to below $59 a barrell. This is due partly due to the belief OPEC would have a hard time fulfilling its announcement to cut production and partly because the threats to disrupt production in Nigeria and the U.S. never came to pass. At the same time, OPEC President Edmund Daukoru also said this morning that there is oversupply and warned of further production cuts.
Today there are no economic data due, and this week in general will have little from the economic front. On Thursday, trade balance will be reported and that would be the major report to note. However, a number of Federal Reserve will be speaking today and the market could very well react to that.
In Corporate news:
Some companies due to report today: Anadarko Petroleum Corp. (NYSE:APC) - estimated $1.35 earnings per share, El Paso Corp. (NYSE:EP) - estimated $0.16 earnings per share, RealNetworks Inc. (NASDAQ:RNWK) - estimated $0.22 earnings per share,and XM Satellite Radio Holdings, Inc. (NASDAQ:XMSR) - estimated -$0.46 earnings per share.
Google Inc. (NASDAQ:GOOG) yesterday announced that it will test expansion of its business into offline media and will now be helping customers buy advertisements in 50 U.S. newspapers. More than 100 advertiser were invited to join the three-month test of a Print Ads service that places ads in daily papers such as the New York Times Co. (NYSE:NYT), Gannett Co. (NYSE:GCI) and the Washington Post.
Ryanair Holdings Plc (NASDAQ:RYAAY), Europe's largest low-cost airline, posted a 24% gain in quarterly profit and lifted its 2007 guidance. Shares rose more than 3% in London.
The Wall Street Journalreported this morning that General Motors Corp.'s (NYSE:GM) Rick Wagoner said that a deal between $6 billion to $7.5 billion could be reached soon with Delphi Corp. (OTC:DPHIQ) over GM's contribution on labor costs at auto-parts maker. Wagoner is touring China where GM also displayed the company's hydrogen fuel cell-powered Sequel.
Again, according to the Wall Street Journal the U.S. Justice Department, informally probing anti-competitive behavior in the private equity sector, has requested information from Merrill Lynch's (NYSE:MER) private equity arm.
ImClone Systems Inc. (NASDAQ:IMCL) and Bristol-Myers Squibb Co. (NYSE:BMY) reported mixed results from a pair of Phase III trials of Erbitux, the cancer drug.
In the radio market, in attempt to to defend its eroding market share from satellite radio and iPods, U.S. radio operators said sales of its high-definition radios will expand to Circuit City Stores, Inc. (NYSE:CC), and stations are set to air some 75,000 ads a week pushing HD Digital radio.
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MOST NOTEWORTHY: The North American Pipeline sector, Aeropostale and ImClone were today's noteworthy initiations: 
Readers of this space know that the investment bias is toward large-cap companies with demonstrated business models and who have a competitive advantage in established markets, preferably with a favorable global trend as a support. And with the above in mind, El Paso Corp. is worth a review. 
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Since September 2003, when Halliburton's former CEO Doug Foshee stepped in to role as President and CEO of 
Almost every single day day of last week I said the same in the morning, that futures point to a positive start. Yet it seemed the market just couldn't get a break and was hit with one economic news after another that kept bulls at bay. Once again this morning futures are positive, pointing to a higher start for stocks, and hopefully finally ending a six-day losing streak. It would be interesting to see how the market reacts a day before the midterm elections.
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