Analyst Upgrades

• Bristol-Myers (BMY) to hold from underperform at Jefferies.
• Pep Boys (PBY) to buy from hold at Stifel Nicolaus.
• Tesla Motors (TSLA) to overweight from equal weight at Morgan Stanley.
• Emerson (EMR) to buy from hold at Deutsche Bank.
• ARM Holdings (ARMH) to buy from neutral at BofA/Merrill.
• NetLogic (NETL) and Cavium Networks (CAVM) to buy from hold at Auriga.
• Aimco (AIV) to hold from sell at Citigroup.
• Ceragon Networks (CRNT) to overweight from equal weight at Barclays.

"Our stock selection is based on assessing the investment criteria of various legendary investors, ranging from Ben Graham to Marty Zweig," explains John Reese.

The editor of Validea newsletter continues, "In this case, our latest feature on Western Digital (WDC) is based on the strategy of Peter Lynch. Indeed, the stock scores a 100% rating based on our Lynch model.

"Western Digital Corporation designs, develops, manufactures and sells hard drives. Its hard drives are used in desktop computers, notebook computers, and enterprise applications such as servers, workstations, network attached storage, storage area networks and video surveillance equipment.

When it comes to hard-disk drives, Western Digital (WDC) is the largest publicly traded operator in the U.S. And with its recent deal, it will get much larger. That is, the company has agreed to pay $4.3 billion for the data storage business of Hitachi.

Based on the stock move for Western Digital, investors love the transaction. In early Monday trading, the shares were up a sizzling 17.33% to $35.21.

Analyst upgrades:

• Verizon (VZ) to conviction buy from buy at Goldman.
• CSX (CSX) to outperform from market perform at Wells Fargo.
• AK Steel (AKS) to overweight from neutral, as well as Lorillard (LO) and Fifth Third Bancorp (FITB) to neutral from underweight, at JPMorgan.
• Marathon Oil (MRO) to overweight from equal weight at Morgan Stanley.
• Corning (GLW) to buy from outperform at CLSA.
• Quest Diagnostics (DGX) to buy from hold at Jefferies and to outperform from sector perform at RBC Capital.
• Salesforce.com (CRM) to buy from neutral at Roth Capital.
• Baker Hughes (BHI) to buy from hold at Weeden and to outperform from neutral at Macquarie.
• Western Digital (WDC) and Seagate (STX) to buy from underperform at BofA/Merrill.

At the time of this writing, Western Digital (WDC) was down 3% to $32.91. The data-storage entity reported fiscal second-quarter numbers yesterday after the bell; how should we take the price action today in light of that event?

Well, according to Bloomberg, net income dropped 48% to 96 cents per share. While that doesn't offer any satisfaction for shareholders, this just might: earnings were projected by analysts to be 61 cents per share. The cited article says that investors sent the shares up over 5% on the news during Tuesday's extended-hours session.

Analyst Upgrades

• Tyco Electronics (TEL) and Weight Watchers (WTW) to buy from neutral, and Smithfield Foods (SFD) to buy from underperform, at BofA/Merrill.
• Red Hat (RHT) to overweight from equal weight at Morgan Stanley.
• Gold Fields (GFI) to overweight from neutral at HSBC.
• Novartis (NVS) to outperform from neutral and GlaxoSmithKline (GSK) to neutral from underperform at Credit Suisse.
• Dollar General (DG) to buy from hold at ThinkEquity.
• Eagle Rock Energy (EROC) to outperform from sector perform at RBC Capital.

"Investors can boot up their portfolios by investing in a cheap, cyclical stock that Wall Street has punished unfairly; I'm referring to Western Digital (WDC)," says Lou Basenese.

The contributing editor to Investment U explains, "The company is a manufacturer of hard disk drives used in personal computers, consumer electronics and enterprise applications.

"We have seen a sustained analyst crusade against its prospects (which merely means it's arguably the best time to invest). For months, Wall Street's 'finest' have ratcheted down the company's expectations, plus those of its competitors.

Analyst Upgrades

• Barclays upgraded Western Digital (WDC) to overweight from equal weight.
• LDK Solar (LDK) was upgraded to buy from hold at Needham.
• Legg Mason (LM) was upgraded to outperform from neutral at Macquarie.
• Agilent (A) was upgraded to buy from hold at Stifel Nicolaus.
• Wells Fargo upgraded Dean Foods (DF) to outperform from market perform and Developers Diversified (DDR) to market perform from underperform.
• Deutsche Bank also upgraded Developers Diversified, to buy from hold.
• Northrop Grumman (NOC) was upgraded to sell from conviction sell at Goldman.
• MYR Group (MYRG) was upgraded to buy from hold at BB&T.

Analyst Upgrades

• Citigroup upgraded OpenTable (OPEN) to buy from hold, citing stronger than expected near-term trends and traction for the company's Spotlight offering. Citi upped its price target for shares to $70 from $46.
• Wells Fargo upgraded Werner (WERN) to outperform from market perform, citing valuation, the company's reduction in cost, and its above peer exposure to the pricing cycle.
• Goldman upgraded CarMax (KMX) to neutral from sell based on valuation and higher used car profitability. The firm has a $24 target on the stock.
• Apollo Group (APOL) was upgraded to overweight from equal weight at Morgan Stanley.
• Nokia (NOK) was upgraded to overweight from equal weight at Barclays.
• Zions Bancorp (ZION) was upgraded to outperform from market perform at Bernstein.

"Most investors wouldn't give a fund described as 'relatively prosaic, dull, conservative' a second glance; that, however, is exactly how John Neff described the Windsor Fund that he headed for more than three decades," notes John Reese, an advisor who models specific portfolios designed around the stated investing strategies of many of the stock market's most legendary investors.

In his Validea newsletter, Reese explains, "And, while his style may not have been flashy or eye-catching, the returns he generated for clients were dazzling -- so dazzling that Neff's track record may be the greatest ever for a mutual fund manager.

"Over his 31-year tenure (1964-1995), Windsor averaged a 13.7 percent annual return, beating the market by an average of 3.1 percent per year.

Here are some highlights from this past week's earnings coverage on BloggingStocks:

• Lockheed Martin Corp. (LMT) lower Q1 earnings were better than expected but it lowered its full-year outlook.
• McDonald's Corp. (MCD) solid Q1 numbers were driven by its value menu, McCafe, and strength overseas.
• Microsoft Corp. (MSFT) topped Q1 earnings expectations and cash from operations rose, but shares declined.
• Netflix Inc. (NFLX) shares were lifted after its strong Q1 earnings beat consensus estimates.
• PepsiCo Inc. (PEP) fell short of Q1 revenue estimates but beat earnings per share expectations by a penny.

Western Digital (WDC - option chain) shares are rising today after the company reported third quarter earnings last night, posting a profit of $400 million or $1.71 per share, on revenue of $2.64 billion. Analysts had forecast a profit of $1.55 per share on revenue of $2.54 billion. If you think that the stock won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on WDC.

WDC opened this morning at $42.26. So far today the stock has hit a low of $42.08 and a high of $44.84. As of 12:20, WDC is trading at $44.05 up $3.37 (8.3%). The chart for WDC looks bullish and S&P gives WDC a positive 5 STARS (out of 5) strong buy ranking.

Analyst upgrades

• Deutsche Bank upgraded Sonoco Products (SON) to buy from hold after the company reported Q1 results and raised guidance. The firm upped its target for shares to $38 from $32.
• Baird upgraded Western Digital (WDC) to outperform from neutral following the solid Q3 report and guidance. The firm raised its target to $50 from $48.
• Goldman upgraded Qwest (Q) to neutral from sell. Qwest is being acquired by CenturyLink (CTL).
• Hershey (HSY) was upgraded to neutral from underweight at JPMorgan.
• Principal Financial (PFG) was upgraded to neutral from sell at UBS.
• Monster Worldwide (MWW) was upgraded to market perform from underperform at Wells Fargo.

Earnings season is in full swing, and this week will bring quarterly results from Amazon.com (AMZN), DeVry (DV), Freeport McMoRan (FCX), Hershey (HSY), Kimberley-Clark (KMB), Starbucks (SBUX), Union Pacific (UNP) and United Technologies (UTX), all of which, according to analysts surveyed by Thomson Reuters, are expected to post double-digit earnings growth from the same period of last year (when most stocks were at their recessionary lows).

After strong showings last week by Google (GOOG), Intel (INTC) and JPMorgan Chase (JPM), the earnings spotlight again will be on the tech and financial sectors. So, let's take a closer look at what's expected from impending results from Apple (AAPL), International Business Machines (IBM) and Western Digital (WDC), as well as Goldman Sachs (GS), American Express (AXP) and Morgan Stanley (MS).

Analyst upgrades:

• RBC Capital upgraded Fidelity National (FIS) to outperform from sector perform. The firm upgraded the stock due to valuation, and its belief that the company will clear up issues related to its merger on its Analyst Day, scheduled for Dec. 7. The firm set a $28 target on the stock.
• Citigroup upgraded Smith International (SII) to buy from hold, citing the sell-off in shares following its 28M share equity offering. Note that Smith International priced 28M shares Tuesday at $26.50.
• Wells Fargo upgraded DynCorp (DCP) to outperform from market perform. The firm upgraded the stock on valuation, and because it believes that the impact on DynCorp of a possible indictment of PWC will be minimal, if any.
• Rockwell (ROK) was upgraded to overweight from neutral at HSBC.
• Omega Healthcare (OHI) was upgraded to outperform from market perform at JMP Securities.
• Analog Devices (ADI) was upgraded to conviction buy from buy at Goldman.