Jefferies upgraded shares of Genentech (NYSE: DNA) to Buy from Hold and raised its target to $100 from $95 on increased likelihood of an acquisition after Roche (OTC: RHHBY) reaffirmed commitment to its $100/share offer.
Baird expects Broadcom (NASDAQ: BRCM) to gain market share in 2009 in mobile phones, IPTVs, and digital TVs. Shares were upgraded to Outperform from Neutral.
Keefe Bruyette upgraded shares of Torchmark (NYSE: TMK) to Outperform from Market Perform as they see limited earnings risk and an attractive risk/reward.
Apple (NASDAQ: AAPL) was raised to Buy from Add at Calyon.
Tellabs (NASDAQ: TLAB) was upgraded to Buy from Neutral at UBS and to Hold from Underperform at Jefferies.
Jefferies upgraded shares of Safeway (NYSE: SWY) to Hold from Underperform on valuation as they believe the company's pricing pressure and sluggish sales trends are now priced in. The firm raised its target to $23.50 from $21.
Merrill upgraded Pfizer (NYSE: PFE) to Buy from Underperform citing attractive dividend yield and stabilizing businesses.
Banc of America upgraded shares of Apollo Group (NASDAQ: APOL) to Neutral from Sell and raised APOL's target to $60 from $48 on valuation as they see a balanced risk/reward at current levels.
Nucor (NYSE: NUE) was raised to Overweight from Equal Weight at Morgan Stanley.
Oppenheimer upgraded shares of Shanda Interactive (NASDAQ: SNDA) to Outperform from Perform following the company's better-than-expected quarter to reflect its growth acceleration in the casual games platform and margin improvements.
SAIC (NYSE: SAI) was upgraded to Outperform from Market Perform following the solid Q2 report and guidance.
Susquehanna upgraded Zumiez (NASDAQ: ZUMZ) to Positive from Neutral citing positive August comps, revised merchandising, easier comps, and solid financial position.
Novellus (NASDAQ: NVLS) was raised to Overweight from Equal Weight at Morgan Stanley.
Analyst downgrades:
Morgan Stanley downgraded the Semiconductor Capital Equipment sector to In-Line from Attractive citing optimistic expectations for Q4 orders following the recent bounce in stocks. The firm downgraded Lam Research (NASDAQ: LRCX) to Underweight from Overweight and KLA-Tencor (NASDAQ: KLAC) KLAC to Equal Weight from Overweight.
MOST NOTEWORTHY: Steel Dynamics, Nucor, Nokia and Wachovia were today's noteworthy upgrades:
UBS upgraded Steel Dynamics (NASDAQ: STLD) and Nucor (NYSE: NUE) to Buy from Neutral and added them to their Short-Term Buy list citing oversold valuations and the belief that both will beat Q2 Street estimates and guide higher.
Dresdner Kleinwort upgraded shares of Nokia (NYSE: NOK) to Buy from Add as they believe the company's second half of the year looks strong due to new product launches.
Merrill Lynch upgraded Wachovia (NYSE: WB) to Neutral from Underperform on valuation as they believe credit headwinds are priced into the stock at current levels. Merrill also thinks WB would make a "good fit" for JP Morgan (JPM) and puts a realistic acquisition value on the company of $16-$20 per share.
OTHER UPGRADES:
Verisign (NASDAQ: VRSN) was upgraded at Baird to Outperform from Neutral.
Lehman upgraded Penn Virginia (NYSE: PVG) to Overweight from Equal Weight.
Steel Dynamics (NASDAQ: STLD) is the fifth largest producer of carbon steel products in the United States. The firm operates five mid-western electric-furnace mini-mills, producing merchant bars, engineered bar products, wide-flange beams, rails, and flat-rolled steels. It also runs six fabrication facilities, making joists, girders, and decking for non-residential construction projects. Steel scrap is processed at 42 locations in the eastern U.S. and Canada. Nucor (NYSE: NUE) and U. S. Steel (NYSE: X) are major competitors.
The company raised its second quarter outlook last week, citing "stronger than anticipated shipping volume and selling values for flat-rolled steel products and stronger volume and margins in recycling." Management predicted Q2 EPS of 90-95 cents (80-90 cent prior estimate, 89 cent Street consensus).
Steel Dynamics (NASDAQ: STLD) is the fifth largest producer of carbon steel products in the United States. The firm operates five mid-western electric-furnace mini-mills, producing merchant bars, engineered bar products, wide-flange beams, rails, and flat-rolled steels. It also runs six fabrication facilities, making joists, girders, and decking for non-residential construction projects. Steel scrap is processed at 42 locations in the eastern U.S. and Canada. Nucor (NYSE: NUE) and U. S. Steel (NYSE: X) are major competitors.
The company raised its first quarter and fiscal year outlooks last week, citing higher than anticipated flat rolled steel pricing and improved scrap processing. Management predicted Q1 EPS of $1.25-$1.30, versus Street consensus of $1.18. It also expected FY08 EPS of $5.25-$5.75, versus consensus of $5.35.
Readers of this space know that my investment bias is toward large-cap companies with demonstrated business models and a competitive advantage in established markets, preferably with a favorable global trend as a support. With this in mind, Steel Dynamics is worth a review.
Steel Dynamics (NASDAQ: STLD) operates five electric arc furnace mini-mills and six steel fabrication facilities. STLD's customers include companies in the automotive, construction, and manufacturing industries, as well as steel processors and service centers, primarily in the Midwest U.S.
Analysts expect Steel Dynamics to post robust, 45-55% revenue growth in F2008, after an impressive 27% rise in F2007. Analysts also expect continued, strong demand for structural and bar products, and a recovery in STLD's flat-rolled steel business.
Further, analysts also say the sector's sales volatility will decline over the life of the business cycle, as a result of consolidation/mergers. STLD's strong balance sheet and low cost structure add to the favorable picture. The Reuters F2008/F2009 EPS consensus estimates for STLD are $5.30/$5.65.
The risks? A failure of the flat-rolled segment to recover would obviously hurt STLD's results.
The First Call mean rating for STLD is: Buy [11 firms]. Mean 2008 target: $61 [high: $80, low: $50].
Stock Analysis: Steel Dynamics is a moderate-risk stock not suitable for low-risk investors. Investors with an investment horizon longer than 2 years should be rewarded from STLD's shares. Sell / Stop Loss if you were to purchase shares in this company: $38.
Disclosure: Lazzaro has no positions in stocks. In addition to private real estate holdings, he owns corporate and municipal bonds, and cash certificates of deposit.
In sharp contrast to the ten horrifically downtrending stocks I warned against buying in this article, today I feature these 10 solidly uptrending stocks.
It's charts like theirs that make you wonder why you're messing around with any other stocks. Ahhh, if it was only that easy. No matter that all the stocks listed above are making new highs, now the concern is that they may have come too far too fast. In 2008, several of these stocks-the gold plays in particular-have risen nearly 50%. Obviously the oil stocks have also been surging, but how much further can the "black gold" plays really run?
STLD rose during the early part of this year but has been generally sideways for the past six months. STLD opened this morning at $47.95. So far today the stock has hit a low of $47.58 and a high of $50.56. As of 11:20, STLD is trading at 50.04, up 1.80 (3.8%). The chart for STLD looks bullish and steady, while S&P gives the stock a neutral 3 STARS (out of 5) hold rating.
For a bullish hedged play on this stock, I would consider a January bull-put credit spread below the $35 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 4.2% return in 3 months as long as STLD is above $35 at January expiration. Steel Dynamics would have to fall by more than 30% before we would start to lose money. Learn more about this type of trade here.
STLD hasn't been below $35 since March and has shown support around $45 recently. This trade could be risky if the company fails to meet now-raised expectations, but even if that happens, this position could be protected by the two times that STLD bounced just above $35 in the past 8 months. Brent Archer is an options analyst and writer at Investors Observer.
DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in STLD.
A lot has been written about Steel Dynamics Inc. (NASDAQ: STLD) the growing "mini-mill" located in Fort-Wayne Indiana. In the last year it reported sales growth of 48% and many think it is still a bargain at Thursday's closing price of $41.28. I have been watching it for a couple of months and thought it makes for an interesting story.
You will not find consensus among analysts because this was news on May 29, 2007, creating some downward pressure on the stock that day only to be followed by this news the very next day. Ahhh, the joys of investing. Naturally both UBS and Citigroup had their highly-paid analysts digging deeper than us private investors ever could. Their level of analysis must be worthy of a graduate thesis, I'm sure. More recently, like today Merrill Lynch upgrades Nucor, Steel Dynamics to buy. But since they all seem to cancel each other out I thought it was time to do my own back of the napkin review.
Last December, over 100 stocks were featured in our Top Picks for 2007 report. Now, at mid-year, we turn to the 20 advisors whose picks showed the strongest gains to get an update on their previous picks, as well as a new favorite stock for the second half of the year.
Neil Macneale, editor of 2 for 1 (a newsletter focused exclusively on stocks that have announced stock splits), chose two stocks in the Top Picks for 2007 report, and both picks qualified him for our Top 20 Advisors. His previous selections were Chaparrel Steel Co. (NASDAQ: CHAP) and Steel Dynamics Inc. (NASDAQ: STLD).
As of June 1, 2007, Steel Dynamics has risen 49%. while Chapparel had scored a gain of 67%. Here is Neil's original recommendation for these issues.
Updating his outlook on these steel stock, he now says, "This rate of return cannot continue forever, but there is every reason to believe these remain good stocks to own.
"Steel should continue to perform, given the strength of the economy, even without a strong housing market. As the housing market improves, steel should get even stronger. In both cases, fundamentals for these companies remain strong and the stocks still sell at a discount to their peers."
MOST NOTEWORTHY: PennantPark (PNNT), Delta Air Lines (DAL) and several insurance companies were today's noteworthy initiations:
PennantPark Investment Corp. (NASDAQ: PNNT) was initiated with a Buy rating and $17 target at Jefferies. The finds shares compelling given the potential dividend growth and book multiple expansion. PennantPark was also initiated at Keefe Bruyette with an Outperform rating and $18 target, at Banc of America with a Buy rating and $16 target and at Friedman Billings with an Outperform rating and $17 target.
Delta Air Lines Inc. (NYSE: DAL) was initiated at Bear Stearns with a Peer Perform rating and at Cathay Financial with an Outperform rating.
The world steel industry is in a state of flux. Unsurprisingly, the winning firms are those best able to achieve and maintain attractive measures of efficiency, management effectiveness, profitability, growth and valuation. A Fort Wayne, Indiana steel maker is consistently among those generating solid parameters.
Steel Dynamics (NASDAQ:STLD) is the fifth largest producer of carbon steel products in the United States, with annual shipments of 4.7 million tons. The firm operates five mid-western electric-furnace mini-mills, producing merchant bars, engineered bar products, wide-flange beams, rails and flat-rolled steels. Its fabrication operation makes joists, girders, and decking for non-residential construction projects. Last week, the company reached an agreement to purchase two privately owned metals recycling facilities in eastern Tennessee.
STLD shares popped late last month, in response to the United States Steel (NYSE:X) agreement to purchase tubular steel manufacturer Lone Star Technologies (NYSE:LSS). The steel industry is in the midst of an active round of consolidation moves and the U.S. Steel announcement re-energized speculation of further acquisitions. Most analysts consider Steel Dynamics to be one of the more attractive takeover targets. UBS subsequently upgraded the shares to "buy", citing near-term benefits from higher sheet prices and long-term growth prospects. The STLD price is now consolidating the gain in a bullish "flag" pattern. Stocks frequently exit flags moving in the same direction they were traveling when they entered them. In this case, that would be to the upside.
Altogether, brokers recommend the issue with two "strong buys", two "buys" and six "holds". The STLD P/E ratio (11.62), PEG ratio (1.16), Price to Sales ratio (1.46), Price to Book ratio (3.45), Price to Cash Flow ratio (9.23), Sales Growth rate (47.43%), EPS Growth rate (57.50%), Operating Margin (20.35%), Return on Assets (19.81%), Return on Investment (23.37%), Return on Equity (37.59%), Revenue per Employee ($928k) and Net Income per Employee ($114k) compare favorably with industry, sector and S&P 500 averages.
Institutions own about 87 percent of the outstanding shares. The stock is one of those used to calculate the S&P 400 MidCap Index. Over the past 52 weeks, it has traded between $22.58 and $44.62. A stop-loss of $38.25 looks good here. Note that the firm is next expected to release quarterly results on April 16th, after the close.
On tonight's MAD MONEY on CNBC, Jim Cramer was at Indiana University in another one of his "Back to School" tours. Cramer noted that the bears may be in hibernation because of a Fear in selling stocks because any of the bottom 350 S&P 500 Index stocks are vulnerable to being acquired. They are also scared to miss rate cuts and they don't have the Iranian hostage scare. That is why we were up the last two days. Mark Cuban came on the show tonight.
Cramer's stock pick to look at is Cummins Inc. (NYSE: CMI), the truck engine maker that Cramer says is a Triple Buy. At $145 per share it isn't cheap, but Cramer thinks this one is going up. Those that follow the stock are not behind the company. Cramer said he thought it was a dog too, but he said its business in emissions controls and power generators makes it more attractive. Many have shorted the company and that didn't work because they changed manufacturing changes that are paying off and they are selling very well in Mexico and everywhere else. It has 5 sells, 5 holds, and 1 Buy rating from Wall Street; Cramer thinks it will get upgraded when they keep beating the street estimates.
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Analyst upgrades:
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In sharp contrast to the ten horrifically downtrending stocks I warned against buying in 
steel manufacturer 
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