MOST NOTEWORTHY

• Jefferies upgraded shares of Thornburg Mortgage Inc Corp (NYSE: TMA) to Buy from Hold as they believe the stock is at an inflection point, characterized by accelerated earnings and dividend growth.
• Expedia Inc (NASDAQ: EXPE) was upgraded to Outperform from Neutral at Credit Suisse, as they believe the company is well-positioned to benefit from global e-travel and media opportunities, strong free cash flow, and attractive valuation.
• Perot Systems Corporation (NYSE: PER) was upgraded to Sector Perform from Underperform at RBC Capital following its Q4 report.

• HSBC raised Swiss Reinsurance Company (OTC: SWCEY) to Overweight from Neutral.
• The Estee Lauder Companies Inc (NYSE: EL) was upgraded to Equal Weight from Underweight at Lehman.
• Cantor upgraded Genomic Health Inc (NASDAQ: GHDX) to Buy from Hold.

With the market being propelled upward due to private equity and corporate acquisitions, investors should not stay on the sidelines. Rather, they should target private equity's next frontier -- IT services. Of the companies in this sector, Unisys Corp. (NYSE: UIS), Perot Systems Corp. (NYSE: PER) and Ingram Micro, Inc. (NYSE: IM) may be worth examining.

A few months ago, I suggested several sectors and companies that private equity could target next. On Friday, TheStreet.com reiterated one of those sectors -- IT services. Here's how much seven such companies have gone up or down since my March 29th post along with their market capitalizations ranked by their Price/Earnings to Earnings Growth (PEG) ratios:

An analyst with Jefferies & Co., Joseph Vafi, has done a buyout analysis on Perot Systems Corp. (NYSE:PER), a computer consulting firm. His conclusion: this would be an ideal candidate for a private equity firm.

He thinks the takeout value is about $20 to $21 per share (the current stock price is $16.20).

True, this is no guarantee a deal will get done, but Vafi does think the stock is cheap. After all, Perot Systems has been growing nicely -- there was a 14% increase in sales during the prior quarter. What's more, the company is selling at about 0.73X revenues, which is comparatively low.

Also, the cash flow is reliable and the customer contracts are fairly secure and long-term.

Tom Taulli is the author of various books, including the Complete M&A Handbook and operates DealProfiles.com.