Analyst Upgrades

• Intel (INTC) was upgraded to overweight from equal weight and Autodesk (ADSK) to equal weight from underweight at Morgan Stanley.
• Citigroup upgraded Blackrock (BLK) to buy from hold.
• 99c Only Stores (NDN) was upgraded to buy from hold at Deutsche Bank.
• PetSmart (PETM) was upgraded to overweight from equal weight at Barclays.
• Piper Jaffray upgraded Ruth's Hospitality (RUTH) and Morton's Restaurant (MRT) to overweight from neutral.
• BioMed Realty (BMR) was upgraded to market perform from underperform at FBR Capital.
• Wells Fargo upgraded Piedmont (PDM) to market perform from underperform.

After testifying before a Senate committee about AIG (NYSE: AIG) last week, the Fed's Ben Bernanke participates in a Council of Foreign Relations event Monday evening.

Economic data due to be released this week include wholesale trade and job vacancies for January on Tuesday morning, the U.S. Treasury budget for February on Wednesday, retail sales for February and business inventories for January on Thursday morning, and the U.S. trade balance for January on Friday morning.

The news today the Israeli defense company Elbit Systems (NASDAQ: ESLT) signed a $40 million deal with the Royal Netherlands Army (RNLA) is not just the latest in a string of new deals for Elbit, but could help the company penetrate the NATO countries as well.

Elbit Systems will supply systems to the RNLA's ground forces that will include enhanced tactical computers (ETCs), incorporating tactical communication devices, and data communication software. The systems will be installed in more then 1,800 of the RNLA's vehicles, including tanks, armoured vehicles, and others. The project involves extensive cooperation with the Netherlands MoD's C2 Support Centre.

Commenting on the deal, Bezhalel Machlis, Corporate VP & General Manager Land Systems & C4I Division, Elbit Systems said: "Winning the tender to supply Battlefield Management Systems to the Netherlands MoD constitutes another step in establishing our position as leader in the C4I fast growing and developing market. Elbit Systems' BMS systems are in use today by over 20 militaries worldwide and we view this contract awarded by the Netherlands MoD, a leading country in NATO, as a springboard to potential future business in this market."

Elbit has been signing deals all over the place, but if they can crack NATO member countries defense budgets, this stock will soar higher.

Aaron Katsman is the lead Portfolio Manager and Managing Director of America Israel Investment Associates, LLC. and Senior Editor of IsraelNewsletter.com. DISCLOSURE: Writer has a position and is long ESLT. He has no positions in any other stock mentioned as of 1/27/08

Israeli business site, Globes, ran an article today that summarized a recent Citibank research note. What caught my eye is that instead of publishing analysis on a severely undervalued (IMHO) Israel tech firm, Comverse Technology (OTC: CMVT.PK) or an unheard of diamond-in-the-rough (IMH0), Elbit Medical (Nasdaq: EMITF), this piece was on the take-aways of what's going on in Middle Eastern history in Annapolis, Maryland today.

If you haven't heard the harbingers of peace chirping away, you haven't see the fanfare going on in Annapolis. Everyone who is everyone is there (well, almost). Check out my piece over the weekend about two interesting stock picks as a play on the conference.

Beyond the tongue and cheek surrounding the love fest, Citibank wrote the following about the Israeli economy:
"In the past couple of years, strong domestic economic performance has allowed Israeli markets to shrug off several regional geo-political developments, including the victory of Hamas in the 2006 Palestinian Authority (PA) elections and last year's war in the north versus Hezbollah."

As Middle East leaders prepare to convene together, again, I was looking for some ways to play this event in my portfolio via Israeli Ingenuity, something we discuss a lot at IsraelNewsletter.com. This time around, the location is Annapolis, Maryland, site of the U.S. Naval Academy. Tuesday's conference aims to relaunch Israeli-Palestinian peace talks for the first time in seven years. Looks like almost everyone is going to attend. Even Lebanon looks ready to join the U.S., Israel, the Palestinians, and Syria in making history.

I'd be a buyer here of Elbit Systems (NASDAQ: ESLT), an Israeli defense contractor working on some large deals and really cool technology. BloggingStocks' Aaron Katsman wrote this past week about the anti-hijacking technology Elbit is marketing and this will certainly come in handy in Annapolis while each attending party will be working diligently to secure its best interest at the expense of all the others'. We've been here before and most of us do not so readily imbibe the peace kool-aid as in years past.

The second company I'd be buying here is Answers.com (NASDAQ: ANSW). Answers.com is an Israeli internet firm that runs an answer-based information portal providing users with answers covering millions of topics. I hope the participants in Annapolis are using Answers.com to find a path to peace because from where I'm sitting, it doesn't look particularly promising.

Answers.com, which gets a lot of its traffic from search monolith, Google (NASDAQ: GOOG), is in the process of acquiring the parent company of Dictionary.com, in a bid to secure more organic search traffic to its site. Dictionary.com may come in handy for Annapolis participants to find the definition of "disappointment" when this is all over.

Zack Miller is the lead equity analyst for America Israel Investment Associates, LLC., the managing editor of IsraelNewsletter.com and a former equity analyst for a leading multinational hedge fund. Author's fund holds a position in ESLT but not in ANSW.

At IsraelNewsletter, we focus on opportunities to find undiscovered Israeli companies. More than 120 Israeli companies trade on U.S. exchanges and even more trade on global exchanges. Most of these companies are small and mid caps, while a few, like generic pharmaceutical giant, Teva Pharmaceutical (NASDAQ: TEVA) are large caps. This provides diligent investors with ample opportunities to make money.

Warren Buffett knows this, and that's why he made his largest ever international investment by purchasing 80% of Israeli metalworks company, Iscar, for $4 billion last year. Buffett said, on his first visit to Israel, that "Berkshire Hathaway (NYSE:BRK.A) and Israel will be here forever, as Israel and the U.S. will be here forever." The Donald (Trump) signed two huge realty deals in Israel last year: a partnership in purchasing a building in Ramat Gan for USD 44 million, and a contract to erect a luxury hotel bearing his name on a sea-side cliff in Netanya.

Israeli companies are hot and many of them are looking for growth internationally. Bloomberg reported this week about international expansion by a few of the leading Israeli conglomerates. The article describes plans by Israeli billionaire Nochi Danker and his firm, IDB, to partner with fellow Israeli investor, Yitzhak Tshuva to invest as much as $8 billion in constructing a Las Vegas casino.

"Defense companies are in a growth market of the highest order," says Gregg Early in Personal Finance. But rather than buy industry giants, he suggest looking at lower-tier companies that are "either primed for the big leagues or will be acquired by a first- or second-tier company for a big premium in coming years."

One such play is Harris Corp. (NYSE: HRS), which Early notes represents the globalization of the defense industry. According to the advisor, "Special forces in Afghanistan, army units in Iraq and astronauts rely on Harris equipment."

Now, he says, Harris is making a move into Eastern Europe. He explains, "Because these nations are small and need to be unified on a communications level, the company will have myriad contracts with new nations for years to come. Harris Corp is a buy below 56."

Also a global play, the advisor looks to Israel-based Elbit Systems (NASDAQ: ESLT). He notes, "It's difficult to overstate the breadth of the company's client list. From India to the US to Saudi Arabia, everyone has a contract with this diversified defense conglomerate."

MAJOR PAPERS:

• The Wall Street Journal reported on how the prospect of Cadbury Schweppes (NYSE: CSG) and the Hershey Co. (NYSE: HSY) merging would be bad news for the already struggling WM. Wrigley Jr. Co (NYSE: WWY).
• The Wall Street Journal's "Ahead of the Tape" column wrote that Best Buy Co., Inc.'s (NYSE: BBY) Q1 earnings report, due out today, will help the Street deduce whether Circuit City Stores Inc. (NYSE: CC) cost cutting measures announced last week were company issues, or if it was a sign of a larger industry problem.
• The Financial Times reported that U.S. authorities are planning to interview Total (NYSE: TOT) CEO Christophe de Margerie as part of an inquiry into whether his company violated U.S. bribery laws.

OTHER PAPERS:

• According to the U.K. Times, citing research by Prudential Equity Group and AXA Framlington, AstraZeneca (NYSE: AZN) could lose 38% of its revenue because key drug patents, including Arimi-dex, Seroquel and Symbicort, will expire in the next five years.
• Investor's Business Daily's "The New America" column mentioned Israeli defense firm Elbit Systems Ltd. (NASDAQ: ESLT) positively. Elbit is a small, flexible company that works with industry giants such as the Boeing Co. (NYSE: BA).