Analyst Upgrades

• Stifel Financial (SF) and CVR Energy (CVI) to buy from neutral and Principal Financial (PFG) to conviction buy from buy at Goldman.
• Suntech (STP) to buy from hold at Auriga.
• Internap (INAP) to outperform from sector perform at RBC Capital.
• Andersons (ANDE) to buy from hold at BB&T.

After a weak August, stocks got off to a great start in September. The international markets were already trying to offer a bounce for support this morning, and stocks rose as Treasury prices fell after the ISM manufacturing data showed a surprise gain overall. Several smaller regional reports on manufacturing over the last ten days were offering very cautious data, so it was a welcome and somewhat unexpected surprise.

Here were today's unofficial numbers:

Dow Jones 10,269.70 +254.98 (2.55%)
S&P 500 1,080.27 +30.94 (2.95%)
Nasdaq 2,176.84 +62.81 (2.97%)

Top Analyst Calls

Analyst upgrades:

• Citigroup upgraded Lennar (NYSE: LEN) to Buy from Hold as it believes the company's near-term liquidity profile is improved following the $400M debt issuance. The firm raised its target price to $12 from $11.
• Jefferies upgraded Rowan Companies (NYSE: RDC) to Buy from Hold as it believes jack-up drillers will continue to outperform deepwater names. The firm raised its target price to $27 from $20.
• Keefe Bruyette upgraded First Financial (NASDAQ: FFIN) to Market Perform from Underperform to reflect more positive loan data for the Texas banks. The firm raised its target price on shares to $44 from $38.
• MGM Mirage (NYSE: MGM) was upgraded to Overweight from Neutral at JP Morgan.
• Morgan Stanley (NYSE: MS) was upgraded to Outperform from Market Perform at JMP Securities.
• Brinker (NYSE: EAT) was upgraded to Overweight from Equal Weight at Barclays.

Rowan Companies (NYSE: RDC) provides a range of onshore and offshore contract drilling services to the petroleum industry. The firm operates a fleet of 21 self-elevating mobile offshore drilling platforms and 29 deep-well land drilling rigs. It also manufactures and markets drilling products and systems for the oil and gas, marine, mining and dredging industries. Subsidiary LeTourneau Technologies operates a mini-steel mill and manufactures front-end loaders, log stackers and gantry cranes.

Investors were pleased two weeks ago, when UBS started coverage of the U.S. offshore drilling sector with a positive stance. The action was based on a healthy longer-term macroeconomic outlook, strong commodity prices and increasing demand for offshore rigs. Rowan was initiated with a "buy" and a $53 price target.

Barron's interview this weekend was with John Buckingham [subscription], portfolio manager with the Al Frank Fund and a long-time believer in investing in low-priced, out-of-favor stocks.

Two stocks to focus on from the interview are Rowan Companies Inc (NYSE: RDC) and Tsakos Energy Navigation Limited (NYSE: TNP). Many energy stocks have consolidated during the past year and rallied nicely since the beginning of 2007. The big issues with small- to mid-cap energy stocks in the energy sector are that they have been printing money and are under-leveraged. Many top energy company executives entered the business in the boom period of the late seventies, only to see their businesses completely collapse for some 20 years. The industry really did not begin an upswing until the early part of this decade.

This fear derived from 20 tough years has led to very conservative balance sheet management. However, this could possibly begin to change. With enormous cash flows and oil and natural gas prices meaningfully above the cost to get out of ground, these companies can lock in a lot of profit by signing long-term contracts. This could provide some of these companies the opportunity to issue some big dividends or be acquired by private equity. Rowan and Tsakos are two companies that fall into this camp.