Analyst Upgrades

• Bunge (BG) to buy from hold at Deutsche Bank.
• Textron (TXT) to overweight from neutral at JPMorgan.
• CSX (CSX) to buy from neutral and Pulte Group (PHM) to conviction buy from neutral at Goldman.
• Aol (AOL) to buy from neutral at UBS.
• Kohlberg Capital (KCAP) to outperform from market perform at JMP Securities.
• Owens Corning (OC) to buy from neutral at BofA/Merrill.
• Jefferies (JEF) to buy from neutral at Ticonderoga.
• Harris (HRS) to outperform from perform at Oppenheimer.

Analyst Upgrades

• Netflix (NFLX) and Zions Bancorp (ZION) to outperform from neutral at Credit Suisse.
• Akamai (AKAM) to buy from neutral at Merriman.
• CSX (CSX) to overweight from equal weight at Barclays.
• Nordstrom (JWN) to buy from neutral, WellCare (WCG) to conviction buy from buy and Humana (HUM) to neutral from sell at Goldman.
• E-Commerce China Dangdang (DANG) to overweight from neutral at Piper Jaffray.
• VMware (VMW) to buy from neutral at BofA/Merrill.
• Celanese (CE) to overweight from equal weight at Morgan Stanley.

Analyst Upgrades

• Expedia (EXPE) to buy from hold at Citigroup.
• Weatherford (WFT) to outperform from market perform at Wells Fargo.
• Abercrombie & Fitch (ANF) to buy from neutral at BofA/Merrill.
• MDC Holdings (MDC) to outperform from neutral at Credit Suisse.
• AutoNavi (AMAP) to buy from neutral at Goldman.
• Ciena (CIEN) and Nvidia (NVDA) to neutral from underweight at JPMorgan.
• Canadian Pacific (CP) to outperform from market perform at Raymond James.
• First Midwest (FMBI) and Quiksilver (ZQK) to buy from hold at Jefferies.
• Sonic (SONC) to neutral from negative at Susquehanna.
• MIPS Technologies (MIPS) to buy from hold at Benchmark Co.
• Arrow Electronics (ARW) and Avnet (AVT) to buy from hold at Stifel Nicolaus.

Take an investment page from Warren Buffett's playbook: Buffett likes the rails -- perhaps you should too? And Canadian Pacific Railway (CP) fits the bill.

Canadian Pacific was first discussed here on May 1, 2009, at a price of $37.47, and the stock continued to rise this winter after a period of choppy action last summer. Shares easily took out $60 resistance, tested $70, and will likely trend toward $80 by the end of 2011.

Canadian Pacific will probably register an impressive 7% to 9% revenue increase in 2011, after a 10% to 12% surge in 2010.

Analyst Upgrades

• GC Financial upgraded Microsoft (MSFT) to buy from hold, citing expectations that the company will raise its quarterly dividend by 15%. The firm upped its target for shares to $30 from $29.
• JPMorgan upgraded Agrium (AGU) to overweight from neutral, citing valuation and strengthening agricultural fundamentals. The firm raised its target for shares to $75 from $70. Note JPMorgan downgraded Mosaic (MOS) this morning to neutral from overweight.
• Susquehanna upgraded Baker Hughes (BHI) to positive from neutral based on valuation. The firm has a $53 target on the stock.
• Target (TGT) was upgraded to buy from neutral at BofA/Merrill.
• CF Industries (CF) was upgraded to conviction buy from neutral at Goldman.
• Portugal Telecom (PT) was upgraded to buy from hold at Deutsche Bank.

It goes without saying that I favor the rails. In a highway-congested, high-energy-cost nation, the rails are looking very attractive, from a goods transport standpoint.

And that's why I'm Reiterating my Buy rating for Canadian Pacific Railway (NYSE: CP), first recommended on May 1, 2009 at a price of $37.47. If you purchase then, you're up a cool 35% with CP - not bad, for an 'un-sexy' sector.

Not all values are within the U.S. Some values reside primarily outside the nation -- including Canadian Pacific Railway (NYSE: CP).

In general, analysts see F2009 carloads declining, netting a 0-5% revenue loss. That said, analysts also see an increase in potash shipments; meanwhile, the auto, intermodal, and coal export businesses will continue to struggle this year.

Readers of this space know that the railroad sector is one of the preferred sectors. After decades of unconscionable neglect, U.S. railroads are experiencing a resurgence, driven by international trade, commodities transport, and the rail's cost advantage over truck transport.

Further, the revival of the rails is not exclusive to one nation in North America. Canada also is seeing a healthy growth in railroad services and Canadian Pacific (NYSE: CP) is worth a review.

Analysts see 4-6% revenue growth for CP in 2008, in Canadian dollars, with grain, fertilizer and oil sands related shipment gains offsetting declines in forest products.

Another positive: analysts also expect CP to continue to improve rail system efficiency and fluidity, will overall better asset utilization

When a major, metropolitan U.S. newspaper discovers a investment trend or a hot sector, count on increased share demand for companies in the sector. When that paper is one of the top three dailies, in this case The Washington Post, count on even more demand.

On Monday, The Washington Post examined the resurgence of the United States' railroad sector, touching on many of the themes discussed here during the past six months, and described why the rails' services are likely to be in demand for many years.

Readers of this space know that the preference here is for large cap companies, with demonstrated business models, and favorable long-term factors, that have the resources to ride-out short-term economic downturns, including recessions.

And in this category a railroad stock represent a prudent addition to a portfolio, for investors who can tolerate moderate risk.

Pick a railroad. Virtually any railroad. Odds are, you will do fine, long-term, as the nation continues to re-discover the valuable asset - - the national treasury, really - - of its railroads. (More on that latter topic, in a future blog.)

Here are the railroad plays, ranked by risk, with the top stock, BNI, being the lowest risk. A stop/loss, if one were to buy the stock, is also listed:

The revival of the rails is not exclusive to the United States. Canada is seeing a healthy growth in railroad services, and Canadian Pacific (NYSE: CP) is worth an evaluation.

Analysts see 5.7% revenue growth for CP in 2008, in Canadian dollars, with grain, fertilizer and oil sands-related shipment gains offsetting declines in forest products.

Also of note: Analysts also expect CP to continue to improve rail system efficiency and fluidity, and overall asset utilization.

The above positives, combined with CP's strong free cash flow and modest pricing power, make the company an acceptance investment for moderate-risk investors. CP's modest p/e of 13 also tips the risk/return ratio to the purchase side of the scale. The Reuters F2007/F2008 EPS consensus estimates for CP are C$4.27/C$4.78. [Note: Currency figures are in Canadian dollars].

The risks? Like other rails, Canadian Pacific is vulnerable to the economic cycle, hence a slowdown in the global and/or U.S./Canadian economies will hurt CP's results.

Stock Analysis: Canadian Pacific is a moderate-risk stock not suitable for low-risk investors. Investors with an investment horizon longer than two years should be rewarded from CP's shares. Sell / Stop Loss for the shares in this company: $44.

MOST NOTEWORTHY: Sonus Networks, Kenexa, Canadian Pacific, Applied Materials and Powerwave Tech were today's noteworthy upgrades:

• Merriman upgraded Sonus Networks (NASDAQ: SONS) to Neutral from Sell following its win at BT Group (NYSE: BT) for its ASX platform, which the firm believes endorses the company's technology.
  
• Cantor upgraded Kenexa (NASDAQ: KNXA) to Buy from Hold. The firm finds the stock being 40%+ off due to the 3Q weak earnings report as quite an overreaction and believes there is more than enough upside to advise buying shares. Management announced a 2M share buyback program.
  
• Shares of Canadian Pacific (NYSE: CP) was upgraded to Sector Outperformer from Sector Performer at CIBC, as they believe the strong Canadian Dollar and the delay in STB approval of the DM&E acquisition is priced into shares.
  
• Applied Materials (NASDAQ: AMAT) was upgraded to Outperform from Neutral at JP Morgan and to Buy from Hold at Citigroup; Citigroup expects capex revisions to start to reverse in mid-08 and views solar as a free option.
  
• Piper Jaffray raised its rating on Powerwave Technologies (NASDAQ: PWAV) to Outperform from Market Perform on valuation and seasonally strong Q4 capex trends.

OTHER UPGRADES:

• eBay (NASDAQ: EBAY) was upgraded to Outperform from Market Perform at Piper Jaffray.
  
• Morgan Joseph upgraded Perini (NYSE: PCR) to Buy from Hold and Shuffle Master (SHFL) to Hold from Sell.
  
• Goldman upgraded China Petroleum & Chemical Corp (NYSE: SNP) to Buy from Neutral.

MAJOR PAPERS:

• According to the Wall Street Journal's (subscription required) "Heard on the Street" column, some investors are speculating that Warren Buffett's Berkshire Hathaway Inc (NYSE: BRK.A) could buy struggling mortgage lender Countrywide Financial Corporation (NYSE: CFC).
• Five insiders bought $592.7K in Orbitz Worldwide Inc's (NYSE: OWW) stock at per-share prices ranging from $9.55 to $10.10, reported Barron's Online's (subscription required) "Inside Scoop" column.
• The Financial Times (subscription required) reported that General Electric Company (NYSE: GE) is believed to be considering the sale of Lake, its Japanese consumer finance subsidiary.

OTHER PAPERS:

• Lehman Brothers Holdings Inc (NYSE: LEH) has bought a 26% stake in ECL Finance, the non-banking finance company of India's Edelweiss Capital, for about $4.3M, reported the Business Standard.
• Brookfield Asset Management Inc (NYSE: BAM) has shelved its plan to buy Canadian Pacific Railway Limited (NYSE: CP) due to the global credit crunch and the current lack of funding for leveraged buyouts, reported the Globe and Mail.

WEBSITES:

• According to security company Symantec Corporation's (NASDAQ: SYMC) blog, there is a new Trojan called "infostealer.monstres" which is attacking online recruitment site Monster.com (NASDAQ: MNST).

MOST NOTEWORTHY: Statoil (STO), BG Group (BRG), Repsol (REP), Flow International (FLOW) and the refining sector were today's more noteworthy downgrades:

• Citigroup cut Statoil (NYSE: STO), BG Group (NYSE: BRG) and Repsol SA (NYSE: REP) to Sell from Hold due to valuation and the difficult operating environment.

• Matrix USA downgraded Flow International (NASDAQ: FLOW) to Strong Sell from Hold, citing weak demand from Asian customers that led to slowing sales growth.

• Bernstein downgraded the refining sector to Underperform and refiners Sunoco (NYSE: SUN) and Valero Energy (NYSE: VLO) to Underperform from Market Perform...

OTHER DOWNGRADES:

• Canadian Pacific (NYSE: CP) was cut to Neutral from Outperform at Credit Suisse; RBC Capital downgraded CP shares to Sector Perform from Outperform.

• Goldman downgraded Taiwan Semi (NYSE: TSM) to Neutral from Buy.

• Buckingham lowered Johnson Controls (NYSE: JCI) to Accumulate from Buy.

• Credit Suisse downgraded Cardinal Health (NYSE: CAH) to Neutral from Outperform.

Analyst summaries provided by TheFlyOnTheWall.com (subscription required).

MOST NOTEWORTHY: CKE Restaurants. Inc (CKR), Texas Instruments Inc (TXN), SurModics, Inc (SRDX), Nokia Corp (NOK) and DirecTV Group, Inc (DTV) were today's notable initiations:

• Wedbush initiated CKE Restaurants (NYSE: CKR) with a Buy rating and $25 target.

• Wachovia resumed coverage of Texas Instruments Inc (NYSE: TXN) with an Outperform rating, as the firm believes that TXN's fundamentals have bottomed and the valuation is attractive.

• SurModics Inc (NASDAQ: SRDX) was initiated with an Underperform rating and $28 target at Piper Jaffray. Piper doesn't see a near-term catalyst to move shares higher given a lack of visibility regarding new licenses.

• Nokia (NYSE: NOK) was initiated at Nollenberger with a Neutral rating.

• HSBC started DirecTV (NYSE: DTV) with an Underweight rating and $21 target.

OTHER INITIATIONS:

• Stanford initiated Armor Holdings, Inc (NYSE: AH) with a Buy rating and $80 target.

• Wedbush initiated Jack in the Box Inc (NYSE: JBX) with a Hold rating and $68 target, citing the company's operational improvements and benefits from ongoing refranchising and share repurchases are fully reflected in the stock price.

• Canadian Pacific Railway Ltd (NYSE: CP) was initiated with a Sector Performer rating at CIBC.

• Stifel initiated Medical Properties Trust, Inc (NYSE: MPW) with a Hold rating.

• Bear Stearns initiated Teva Pharmaceutical Industries Ltd (NASDAQ: TEVA) with a Peer Perform rating.

• Thomas Wiesel initiated shares of Cepheid (NASDAQ: CPHD) and Luninex Corp (NASDAQ: LMNX) with Overweight ratings.

Analyst summaries provided by TheFlyOnTheWall.com (subscription required).