In what's becoming more and more common, a small Israeli company Silicom Ltd. (NASDAQ: SILC) announced that it has received a $1.8 million order from one of China's largest domestic server companies, representing its first significant penetration into the vast Chinese market. The order is for production quantities of Silicom's advanced fiber multi-port Gigabit Ethernet adapters scheduled for delivery during the first quarter.

"We are excited to achieve this significant initial penetration of the strategic Chinese market," commented Shaike Orbach, Silicom's President and CEO. "China's rapid growth represents a huge new opportunity for Silicom, especially the fact that its server usage is growing in step with the phenomenal development of its telecom, transportation, banking and other sectors. In fact, according to CCID Consulting, more than half a million x86 servers were sold in China in 2007, with additional strong growth projected for 2008."

Silicom stock is up strongly on the news. Silicom is the latest Israeli company to break into the Chinese market, and I would expect the trend to continue. With Israeli Venture Capital firms doing joint ventures with Chinese investment firms, we should see more and more hi-tech deals being signed between the two countries.

Aaron Katsman is the lead Portfolio Manager and Managing Director of America Israel Investment Associates, LLC. and Senior Editor of IsraelNewsletter.com. DISCLOSURE: Writer's fund has a position and owns stock in SILC and is long the stock.He has no positions in any other stock mentioned as of 2/4/08.

For 25 years, Steven Halpern, editor of TheStockAdvisors.com, has surveyed the leading financial newsletter advisors asking for their favorite stocks for the coming year. This article is one of 100+ ideas in the Best Stocks for 2008 report.

"Silicom Ltd. (NASDAQ: SILC) is my favorite speculative pick for 2008," says Benson George, in Rising Star Stocks.

"The company's focus is on high-performance Ethernet server adapters. Its products facilitate interaction between servers and enable them to communicate with each other through a number of ports. Silicom's solutions are designed to increase server availability, security and throughput for server gateways.

"The company markets its products directly to OEMs that in turn sell Silicom's products under their own private labels or integrate Silicom's products into their own products.

"The company is exclusively focused on being the leader in server adapter card technology and markets. Revenues for the first nine months of 2007 increased by 74% to a record $19.3 million compared with $11.1 million for the first nine months of 2006. Net income for the period increased by 191% to $4.5 million.

"Silicom is on track for what will be a record-breaking year; the only question is by how much? The company is on pace with double what it earned per share in all of 2006 (49 cents). If demand continues unabated, revenues should reach $26 to $27 million for all of 2007, almost 70% ahead of 2006's $16 million revenues.

"Silicom is well positioned to succeed. It offers superior products in a market experiencing superlative growth. We are initiating coverage with a 'buy' rating and price target of $22, which represents a multiple of 20 times the forward year consensus analyst estimate of $1.08 in EPS."

MOST NOTEWORTHY: The technology and services sector, Cognizant, Infosys Technologies and Silicom Ltd were today's noteworthy initiations:

• Wachovia initiated shares of Dell (NASDAQ: DELL), Micron (NYSE: MU) and Nokia (NYSE: NOK) with Outperform ratings and IBM (NYSE: IBM), AMD (NYSE: AMD) and Motorola (NYSE: MOT) with Market Perform ratings.
  
• CIBC started shares of Cognizant (NASDAQ: CTSH) and Infosys (NASDAQ: INFY) with Sector Outperformer ratings and a $100 target and $60 target, respectively. The firm views risk/reward as favorable.
  
• Merriman initiated Silicom Ltd (NASDAQ: SILC) with a Neutral rating, citing valuation and low visibility into the quarter.

OTHER INITIATIONS:

• BMO Capital started shares of Apple (NASDAQ: AAPL) with an Outperform rating.
  
• Solei initiated Lincoln Electric (NASDAQ: LECO) with a Buy rating and $114 target.
  
• Merrill initiated Northwest Airlines (NYSE: NWA) with a Buy rating and $23 target.