Analyst Upgrades

• Qualcomm (QCOM) was upgraded to outperform from neutral at Credit Suisse.
• JPMorgan upgraded Allegheny Tech (ATI) to overweight from neutral.
• NetApp (NTAP) was upgraded to buy from hold at Canaccord.
• Estee Lauder (EL) was upgraded to perform from underperform at Oppenheimer.
• Citigroup upgraded Suntech (STP) to hold from sell.

This post is part of a 12 articles feature on the best bets for investing in China. To see all the other recommendations in this special report, click here.

"Today, most independent drug stores in the U.S. have been replaced by the behemoth pharmacy departments; but in China, the business is still dominated by mom-and-pop operations." explains China stock expert Tony Sagami.

In his The Asia Stock Alert, he says, "But that is changing, and getting in on the ground floor with China Nepstar (NYSE: NPD) could make you a bundle of money."

Last quarter was a record period for handset sales in the U.S. Bloomberg says "U.S. customers shelled out 40 percent more for handsets last quarter than a year earlier, just as Apple Inc. (NASDAQ: AAPL) put its Web-browsing iPhone on sale and Research In Motion Ltd. (NASDAQ: RIMM) brought out BlackBerry e-mail phones with video features."

Handset buyers spent $3.2 billion on phones, or $83 each, up from $2.2 billion a year earlier, and the most since research firm NPD has recorded since it began tracking the data in 2005.

There may be a lesson here for the companies that could not push up sales at that rate in the past, especially Nokia (NYSE: NOK) and Motorola (NYSE: MOT). Americans are willing to spend a lot of money for highly featured smartphones, especially with faster wireless connection speeds.

Nokia is not the dominant handset company in America. though it has the No.1 position worldwide. It should be able to develop product for the US market that is more attractive than its current fairly mundane products. And for Motorola, it is clearly another opportunity lost. Its RAZR was the hot product two years ago. It could have introduced the touch screen or an e-mail based product. But Motorola missed the boat.

Douglas A. McIntyre is an editor at 247wallst.com.

Apple Inc. (NASDAQ: AAPL) is now the third largest music retailer in the U.S., according to a study by research firm NPD. iTunes now has a market share of 9.8% in the sales of albums. NPD defines "every 12 tracks purchased online as equivalent to an album in compact disc format" for the purpose of measuring online sales.

Target Corp. (NYSE: TGT) has now moved behind Apple in market share, and has only 6.6% of the market. Wal-Mart Stores Inc. (NYSE: WMT) is still the leader at 15.8% followed by Best Buy Co. (NYSE: BBY) at 13.8%.

But the retailers are likely to lose their positions to Apple soon, and the days where CD sales made up any significant part of their sales are coming to an end. Research operation SoundScan shows CD sales off 16% this year while digital sales are up 49%.

With same-store sales at multi-year lows, Wal-Mart and its competitors can hardly use one more headache. But, they have gotten one anyway.

Douglas A. McIntyre is a partner at 24/7 Wall St.