Burger King Holdings Inc. (NYSE: BKC) Cut to Neutral at Piper Jaffray.
Collective Brands, Inc. (NYSE: PSS) Cut to Neutral at Susquehanna.
DRDGOLD Ltd. (NASDAQ: DROOY) Cut to Equal-Weight at Morgan Stanley.
Gold Fields Limited (NYSE: GFI) Raised to Overweight at Morgan Stanley.
K-Sea Transportation Partners L.P. (NYSE: KSP) Raised to Hold at Stifel Nicolaus.
McAfee, Inc. (NYSE: MFE) Cut to Neutral (exit coverage yesterday) at Cowen (clean up call only).
Mitel Networks Corp. (NASDAQ: MITL) Cut to Neutral at JPMorgan.
MercadoLibre, Inc. (NASDAQ: MELI) Reiterated Overweight at Piper Jaffray.

You can join our free daily email distribution list to hear more about dividend trends, analyst upgrades and downgrades, top day trader and active trader alerts, news on Buffett and other investment gurus, IPOs, secondary offerings, private equity, and more.

JON C. OGG

Reuters:   The cost of Gulf clean-up hit $8 billion.

Reuters:   China said that its $2.45 trillion currency holdings was mostly in dollars and said it may have to depreciate part of the value of the fund.

Reuters:   The White House said that no second stimulus is being considered.

Reuters:   One Senator said food safety was a priority for the body.

Reuters:   Google Inc (NASDAQ: GOOG) is preparing a music download business to compete with Apple Inc. (NASDAQ: AAPL).

Reuters:  Netflix (NASDAQ: NFLX) may get new growth due to its relationship with Apple.

Reuters:   Verizon (NYSE: VZ) will offer prepaid options for cellphones.

Reuters:   Hewlett-Packard (NYSE: HPQ) won the bidding for 3PAR (NYSE: PAR) and paid $2.4 billion, topping a bid by Dell Inc. (NASDAQ: DELL).

WSJ:   Toshiba will launch a new tablet PC.

WSJ:   Roche has created a cost-cutting plan.

WSJ:   The Treasury must decide how many large foreign investors it will allow to put money into GM.

WSJ:   Retailers had a modest uptick in August sales.

WSJ:   Workers carried a bigger burden of healthcare costs last year.

WSJ:   Samsung launched an Apple Inc iPad rival.

WSJ:   Aol (NYSE: AOL) widened its relationship with Google Inc.

WSJ:   Baidu (NASDAQ: BIDU) started an app store.

WSJ:   The European Central Bank raised its growth forecasts for the year.

WSJ:   3G Capital Management bought Burger King (NYSE: BKC) for $3.3 billion.

WSJ:   GM, Ford Motor (NYSE: F) and Toyota (NYSE: TM) posted sales gains in China.

WSJ:   Avis (NYSE: CAR) raised its bid for Dollar Thrifty (NYSE: DTG).

WSJ:   Walt Disney (NYSE: DIS) and Time Warner (NYSE: TWC) reached a deal on content carriage fees.

WSJ:   Average mortgage rates hit another new low.

NYT:   BP plc says limits on Gulf drilling will hurt its oil spill payouts.

NYT:   Google’s YouTube should bring in $450 million in revenue this year, most of which will be from advertising.

NYT:   A strong yen has helped German exports.

NYT:   Theong yen will cripple Toyota Motor profits.

NYT:   Putin extended a ban on grain exports.

FT:   There is growing anxiety about food shortages around the world.

FT:   Foreign companies are up against unreasonable rules in China, according to the European Chamber of Commerce.

Bloomberg:   The EU may limits naked shorting and shorting of government debt.

Douglas A. McIntyre

Brocade Communications Systems, Inc. (NASDAQ: BRCD) is trading up almost 3% at $5.34 on more than 20,000 shares as the takeover circle continues to throw this name around as a takeover candidate in the datacenter and networking wars unfolding.

Burger King Holdings (NYSE: BKC) is trading up 22% at $23.00 on over 2 million shares after CNBC’s David Faber said a deal from private equity will be announced shortly at $24.00 per share.  Wendy’s/Arby’s Group, Inc. (NYSE: WEN) is trading up 5.5% at $4.35 as a secondary beneficiary of the fast food consolidation.

Cardiome Pharma Corporation (NASDAQ: CRME) is trading up over 13% at $7.02 on over 25,000 shares on news of a $30 million milestone payment.

Melco Crown Entertainment Limited (NASDAQ: MPEL) is trading up nearly 4% at $4.06 on over 50,000 shares on an analyst upgrade after WSJ reported that Macau gambling revenues rose 40%.

Orexigen Therapeutics, Inc. (NASDAQ: OREX) is trading up about 27% st $5.81 on over 300,000 shares after signing what could ultimately be a $1 billion marketing license pact for its obesity drug with Takeda for North America.

3PAR, Inc. (NYSE: PAR) was down over 2% at $31.30 on over 40,000 shares after the Wednesday deadline for Dell to raise its offer against HP has passed without any formal deal match or deal hike.  Now just before 9AM EST the WSJ reports that HP is bidding $33 after Dell did apparently make a higher overture to 3PAR.  Shares are now up on the day as Dell is said to not be out of the bidding.

You can join our free daily email distribution list to hear more about dividend trends, analyst upgrades and downgrades, top day trader and active trader alerts, news on Buffett and other investment gurus, IPOs, secondary offerings, private equity, and more.

JON C. OGG

Apple Inc. (NASDAQ: AAPL), the only tech company anyone still cares about, is trading higher ahead of its new iPod and TV development expectations due at the Apple event today.  Shares are indicated up 1.3% at $246.30 on over 100,000 shares.

Burger King Holdings, Inc. (NYSE: BKC) is trading up on private equity buyout chatter.  Interestingly enough, options already signaled this.  Shares are trading up at $19.40 on over 120,000 shares versus a $16.45 close on Tuesday.

LM Ericsson Telephone Co. (NASDAQ: ERIC) is trading up after discussing a joint venture between Sony and Ericsson to grow in China, shares are up 3.8% at $9.63 on 35,000 ADRs.

G-III Apparel Group, LTD. (NASDAQ: GIII) is trading up sharply after beating earnings and guiding higher.  Shares are up 21% at $29.28 on over 20,000 shares; the 52-week range is $12.83 to $31.20.

Joy Global Inc. (NASDAQ: JOYG) is up only marginally after earnings came to $1.13 EPS and $850 million in revenues versus Thomson Reuters estimates of $1.02 EPS and $787.2 million in revenues.  Joy also raised 2010 guidance to $4.10 to $4.15 EPS versus $3.85 to $4.00 prior and versus $4.01 EPS from Thomson Reuters.  Shares are up only 0.8% at $57.00 versus a 52-week range of $35.32 to $65.93 on 12,000 shares.

Microvision, Inc. (NASDAQ: MVIS) is a day-two move after new financing and also on hope that its Pico projector will be tied in to Apple somehow.  Shares are up 4.6% at $2.72 on 10,000 shares.

Netflix, Inc. (NASDAQ: NFLX) is up after Piper Jaffray maintained an Overweight rating as any rumored deal with Apple TV would expand its business.  Shares closed at $125.52 and shares are now up over 3% at $125.52 on over 20,000 shares.

Saks Inc. (NYSE: SKS) may have just had some wind taken out of its sails after JPMorgan cut the rating to Neutral as all upside in any deal (which has been rumored on multiple occasions in the past).  Shares are down 5.7% at $7.45 on nearly 100,000 shares.

Salary.com, Inc. (NASDAQ: SLRY) is seeing a major price surge on crummy volume.  The HR-software company is up 43% at $4.11 after Kanexa offered $81 million to buy the company.  This is a $4.07 all cash tender offer.

You can join our free daily email distribution list to hear more about dividend trends, analyst upgrades and downgrades, top day trader and active trader alerts, news on Buffett and other investment gurus, IPOs, secondary offerings, private equity, and more.

JON C. OGG

Reuters:   China’s manufacturing sector grew.

Reuters:   China may probe the BHP Billiton (NYSE: BHP) buyout offer for Potash (NYSE: POT).

Reuters:   Amazon.com (NASDAQ: AMZN) is considering launching a web TV service.

Reuters:   Sony (NYSE: SNE) will offer a new line of lighter e-readers.

Reuters:   Staples (NYSE: SPS) will sell the Amazon Kindle.

Reuters:   Sony will launch a new service of video and music downloads to a number of devices in a bid to compete with Apple Inc.’s (NASDAQ: AAPL) iTunes.

Reuters:   There are a number of conditions that favor a rise in M&A.

Reuters:   Genzyme (NASDAQ: GENZ) is open to a buyout but not at $69.

WSJ:   Back-to-school sales will be poor according to MasterCard Advisors

WSJ:   Worldwide currency trading has hit $4 trillion a day.

WSJ:   Apple Inc plans a 99-cent rental service for TV shows from News Corp’s (NYSE: NWS) Fox and Walt Disney’s (NYSE: DIS) ABC.

WSJ:   The FDIC said it list of troubled banks increased to 829.

WSJ:   Sprint-Nextel (NYSE: S) and its partner in 4G, Clearwire (NASDAQ: CLWR), may let T-Mobile to invest in the broadband network.

WSJ:   The US government found that China dumped aluminum in America but will not look into the role that currency may have played.

WSJ:   Young women make more than men, according to Reach Advisors

WSJ:   Gartner cut its PC sales forecasts for the second half.

WSJ:   Fed officials disagreed on helping maintain the recovery, according to FOMC notes.

WSJ:   Housing prices rose slightly but the forecast for the balance of the year fell.

WSJ:   Companies have begun to blame one another over egg recalls.

WSJ:   A judge was asked to lift the stem-cell funds ban.

WSJ:   New rules will lessen ties between oil industry regulators and the industry.

WSJ:   Hyundai will up production at a Florida plant.

WSJ:   JAL’s plan to right itself calls for huge layoffs.

WSJ:   Borders will cut the price of one of its e-readers below $100.

WSJ:   Microsoft (NASDAQ: MSFT) has set partnerships in China to increase its search engine share.

WSJ:   Sony-Ericsson expects that 80% of handset sales in China will be smartphones within five years

WSJ:   Icahn upped his bid for Lions Gate Entertainment (NYSE:LGF).

WSJ:   JP Morgan Chase (NYSE: JPM) will close its proprietary trading desks.

WSJ:   The SEC will not sue Moody’s Investor Service (NYSE: MCO) over ratings of mortgage-backed paper.

NYT:   The Financial Crisis Inquiry Board faces a drop in staff members.

NYT:   Strong exports have helped US agriculture.

NYT:   Touchscreens are becoming more important to computer sales.

FT:   US bank profits have returned to pre-crisis levels.

Bloomberg:   Emirates needs $28 billion to expand its fleet through 2017.

Bloomberg:   Japan vehicle sales rose the most since 1972 based on government incentives.

Bloomberg:   Citigroup (NYSE: C) will increase its Chinese labor force by 12,000 over three years.

Bloomberg;   Apple plans a NetFlix service.

Douglas A. McIntyre

Jack Welsh once said that GE would sell any division of the conglomerate that was not No.1 or No.2 in its industry. It was an admission that there is profit in being in second place.

24/7 Wall St. examined many sectors to find publicly traded firms that are highly profitable and, sometimes do better financially that the No.1 companies in their fields.  The shares of six of the seven No.2 companies either outperformed or matched the market performance of their larger rivals over the last year, if Ford’s stock price improvement is considered better than the increase of value in the recently bankrupt GM. The conventional wisdom may be that the firm with the most market share and the largest sales has tremendous advantages over smaller rivals, but from the standpoint of the stock market, that is not always true.

Avis –  For years, “We Try Harder” was the slogan for Avis.  Shareholders have been the beneficiary of the corporate effort of Avis. Avis Budget Group’s (CAR) stock has handily outperformed Hertz (HTZ) over the last year. Avis’s shares are up from a 52-week low of $.76 to $14.95. Hertz’s shares have risen from $4.26 to $12.55. Avis is the smaller company with revenue of $5.1 billion in 2009 compared with $7.1 billion for Hertz.

Chart: HTZ vs. CAR

Lowe’s - The company runs a distant second to the home improvement retailer Home Depot (HD.  In its last fiscal year which ended in January, Lowe’s had revenue of $47.2 billion and net income of $1.73 billion.  Home Depot’s revenue was $66.2 billion with net income of $2.7 billion, during the same period. The difference in the companies’ sizes has not mattered in terms of stock price over the last year. Shares in both firms are up about 25%.

Chart: LOW vs. HD

Ford – The No.2 US car company’s shares have gone from a 52-week low of $3.27 to a 52-week high of $14.52. Ford trades at $12.72 now. Although Ford sells more vehicles than GM in some months, it is still slightly smaller in annual unit sales. In March, GM sold 188,001 cars and light trucks and, which was up 21% over the same month last year. Ford sold 183,425 units last month, up 40%. Ford survived the industry downturn while GM went though Chapter 11 and had to take $50 billion in taxpayer money.

Chart: F

Target - The No.2 big box retailer is dwarfed by its larger rival, Walmart. In the fiscal year ending in January, Target had revenue of $65.4 billion and net income of $2.5 billion. Walmart’s revenue was $408.2 billion for the same period and its net was $14.3 billion. Target, however, has trashed Walmart in the stock market over the last year, increasing nearly 40% compared to the larger company’s 7%.

Chart: TGT vs. WMT

Apple – Most investors do not think of Apple as a second place company. But, in the smartphone market, the iPhone trails RIM’s (RIMM) Blackberry. ChangeWave reports that the Blackberry’s U.S. market share is 39% to the iPhone’s 31%. RIMM’s revenue in its last fiscal year was $15 billion. Its net income was $2.5 billion. Apple’s revenue in its last fiscal year was $36.5 billion. Analysts estimate that about a third of Apple’s sales come from the iPhone. Over the last year, Apple’s shares are up 100% to 10% for RIM.

Chart: AAPL vs. RIMM

TD Ameritrade is the second largest discount broker in the US behind Charles Schwab (SCHW). In its September fiscal year, TD Ameritrade had revenue of $2.4 billion and net income applicable to common shares of $644 million. Schwab’s revenue in its December fiscal year was $4.2 billion and net applicable to common was $787 million. TD Ameritrade’s shares are up 28% over the last year. Schwab’s shares are up only 10%.

Chart: AMTD vs. SCHW

Burger King - Its larger rival McDonald’s outperformed the No.2 fast food in almost every important financial measurement. Its share price is down 10% over the last year while McDonald’s is up 22%. In its last fiscal year, Burger King had modest revenue of $2.5 billion and net income of $200 million in its June fiscal year. McDonald’s revenue for its December fiscal year was $22.7 billion. Net income was $4.6 billion. This makes Burger King the only No.2 company on the list with a share price that trailed its larger competitor.

Chart: BKC vs. MCD

Douglas A. McIntyre

No matter what legislation comes out of the frenzied health care debate, economists say that it will cost the American taxpayer a great deal. Estimates run the gamut from the Obama administration’s claim that it will be paid for by cuts on existing programs to the conservatives’ assertion that reform will cost us close to a trillion dollars over the next ten years. The public will probably spend several hundred billion dollars over the next decade or so to make the necessary changes that have been highlighted over the course of the debate, with or without the reform bill. Alternatively, the current rise in health care use will inflate national costs nearly as much as the price of any reform would.

A large number of the infirmities and chronic and fatal illnesses in the United States are based on behavior, rather than accidents or genetics. This is the reason we have a “sin tax” on tobacco and alcohol: to compensate the costs in the health care system for the damage these products do. One of the proposals to cover health care costs is to impose a  sin tax on the foods that increase the epidemic of obesity, diabetes, high blood pressure and heart attacks, and cost the health care system billions of dollars per annum.

24/7 Wall Street analyzed the four most dangerous ingredients in food (sugar, trans fat, saturated fat, and sodium) and estimated a sin tax for each of these. The tax could serve to curb consumption  of disease-causing substances and as a way to make those who make bad choices compensate the government and responsible citizens who have to pay higher insurance premiums. These proposals will have an enormous impact on the major producers and distributors of foods if Congress passes any of these measures. 24/7 Wall Street evaluated the companies that produce and distribute the foods and beverages that are likely to make people unhealthy. We analyzed the impact a sin tax would have on these 12 corporations and estimate the amount in taxes their products would produce for the government to be use to finance the health care reform.

Conclusion:

24/7 Wall Street estimates the government could collect $17.54 billion dollars each year from the four proposed sin taxes from these 12 companies that produce the most unhealthy substances in our foods. Making the reasonable assumption the 12 corporations comprise no more than ¼ of the total sales of sugar, salt, trans fat and saturated fat in the United States, this means the total collected sin tax each year will come to over $70 billion.

Trans Fats

The foods that are the absolute worst for people normally have some dietary function.  People need calories, cholesterol, and even fat in some measure. According to the USDA, the FDA, and most other nutritional guidelines, the only  substance or chemical commonly found in food that shouldn’t be eaten in any amount is trans fat.  It contributes to heart disease, obesity, increases “bad” cholesterol, and has no notable benefit whatsoever. Some studies have also linked transfats to Alzheimer’s, liver dysfunction, some forms of cancer, and infertility in women. It is effectively illegal in both Denmark and Switzerland to sell food products containing trans fat. In 2006, New York City banned restaurants from using anything greater than .5 grams per serving. Other major American cities, including Philadelphia and Chicago, have followed this example.

Using the NYC ban as a template, any food that contains .5 grams of trans fat or more is taxed 15% of the price.

1) Yum Brands – YUM owns a sizeable chunk of America’s secondary fast food chains with $10.8 billion in sales and nearly 350,000 employees. Almost all the trans fat Americans consume comes from artificially hydrogenated vegetable oils used in frying fast food, snack foods, and baked goods. Several of the biggest names on its roster rely especially heavily on fried food (KFC, A&W, Long John Silvers, and Taco Bell.) While you can find it in most fast food, deep-fried meat is one of the biggest ways we get trans fat into our systems.

Despite a portfolio entirely in fast food, Yum Brands owns KFC, which has a trans fat-free menu. However, their other major divisions – Long John Silvers and A&W – still have a menu full of items with 4-5 grams of the dangerous substance. Yum! had 3.7 billion in domestic sales last year. 24/7 Wall Street calculates the sin tax will yield $636 million each year from Yum! Products.

2) McDonald’s (MCD) – The largest fast food corporation in the world is also the target of health proponents and politicians. The chain has had many novels and several feature films made about  the health consequences of consuming their products. McDonald’s might be the single largest culprit for trans fat distribution in the United States with its $22 billion in revenue in the last year.

McDonald’s has begun to modify its menu, and the company’s french fries are now trans fat-free in the states. This evolution towards healthy foods doesn’t extend to most of the chain’s meat-containing products, and an extra 15% tax for some of the popular items may limit the popular “dollar menu” to salads and yogurts. Because of its size and profitability, if any fast food chain is going to survive a cultural nutrition shift, it’s MCD. $4.2 billion domestic sales. Annual sin tax: $1.17 billion.

3) Wendy’s/Arby’s Group Inc. (WEN) – This is one fast food company that might be severely damaged by the fallout from the trans fat tax. The most popular menu items at Wendy’s and Arby’s (the burgers and roast beef sandwiches, respectively) all exceed the minimum of .5 grams.  With a relatively small 67,000 employees and $3.5 billion in sales, the conglomerate can’t afford to take a hit based on a new domestic tax and afford to compete with Mickey D’s. $3,198 billion in domestic revenue – sin tax revenue: $432 million.

Advanced Micro Devices (NYSE: AMD) Started as Underperform at Macquarie; Removed from Conviction Sell list Goldman Sachs (still Sell rates).
Avis Budget Group (NYSE: CAR) Raised to Overweight at Barclays.
Broadcom Corp. (NASDAQ: BRCM) Started as Neutral at Macquarie; Raised to Buy at Goldman Sachs.
Burger King Holdings Inc. (NYSE: BKC) Raised to Buy at Deutsche Bank.
Chesapeake Energy (NYSE: CHK) Cut to Hold at Lazard.
Corning Inc. (NYSE: GLW) Raised to Overweight at Thomas Weisel.
Guess? Inc. (NYSE: GES) Raised to Buy at Lazard.
HSBC Holdings (NYSE: HBC) Cut to Market Perform at FBR.
Intel Corp. (NASDAQ: INTC) Started as Neutral at Macquarie.
Micron Technology Inc. (NASDAQ: MU) Started as Underperform at Macquarie.
Nasdaq OMX Group Inc. (NASDAQ: NDAQ) Started as Outperform at JMP Securities.
Nike Inc. (NYSE: NKE) Raised to Outperform at FBR.
NVIDIA (NASDAQ: NVDA) Started as Neutral at Macquarie.
Synovus Financial Corp. (NYSE: SNV) Cut to Neutral at SunTrust Robinson Humphrey.

You can join our free daily email distribution list to hear more about dividend trends, analyst upgrades and downgrades, top day trader and active trader alerts, news on Buffett and other investment gurus, IPOs, secondary offerings, private equity, and more.

JON C. OGG

Coca-Cola (KO) and McDonald’s management are trying to get the fast food company’s franchisees on board with the unusually low price that will cut the profits on soda which is a big money-maker at McDonald’s outlets. According to The Wall Street Journal, “McDonald’s also wants the $1 drink promotions to run 150 days”, beginning at Memorial Day.

The plan is another example of how McDonald’s uses it huge store chain, which numbers more than 10,000 in the US, and its large marketing budgets to thrash is competition including Burger King (BKC) and Yum! Brands (YUM). The smaller fast food chains may have to match McDonald’s to keep market share.  Their margins are not as high as McDonald’s and they cannot afford the advertising expenditures required to get the word out about special discounts to most  fast food consumers in the US.

The weight of McDonald’s pricing strength and the diversity of its menus can be seen in the company’s earnings and same-store sales which were up over 4% last month. During the last two years, McDonald’s shares are up well over 20% . Burger Kings are down 25%.

McDonald’s will almost certainly lift its store traffic this summer with $1 sodas. And, its competitors will lose some of their traffic, which has been the trend for some time now.

Douglas A. McIntyre

Burger King (BKC) is the perennial also-ran in the fast food market in which its runs well behind McDonald’s (MCD). Burger King’s shares have underperformed those of McDonald’s and two other rivals–Yum Brands (YUM) and Wendy’s/Arby’s Group (WEN)–during the last year. Burger King’s last earnings report for the quarter that ended December 31 was lackluster.

The fast food company’s revenue rose only 4% to $477 million. Income from operations was up only 2% to $88 million. Burger King pointed to two of its most important accomplishments for the period–the “affordable” $1 1/4 lb. Double Cheeseburger and a “strong indulgent product mix including our Steakhouse XT(TM) burger.”

Burger King followed it quarterly financial results with an announcement that it would sell Starbucks (SBUX) Seattle’s Best Coffee at its outlets. The Starbucks product replaces BK Joe brew which Burger King had sold since 2005. BK Joe must not have been good enough for the customers during all of those years.

The less than mediocre results earned CEO John W. Chidsey nearly $5.5 million in the 2009 fiscal year according to the company’s proxy. Over $1 million of that was cash. In addition, Mr. Chidsey is entitled to private charter jet usage for personal use of up to $100,000 per year. He also gets personal use of a car service. The employees in his restaurants don’t do nearly as well

Douglas A. McIntyre