Apollo Group Inc. (NASDAQ: APOL) Reiterated Buy and raised price target to $63 from $55 at Argus.
ASML Holding N.V. (NASDAQ: ASML) Raised target at Credit Suisse.
AutoNation Inc. (NYSE: AN) Started as Neutral at Stern Agee.
Bank of America Corporation (NYSE: BAC) Cut to Underperform from Neutral at Zacks (late Monday call).
Choice Hotels (NYSE: CHH) Cut to Underperform from Neutral at Credit Suisse.
Gulfmark Offshore, Inc. (NYSE: GLF) Started as Outperform at Credit Suisse.
HSN, Inc. (NASDAQ: HSNI) Started as Buy at Stifel Nicolaus.
ICICI Bank Ltd. (NYSE: IBN) Cut to Underperform as Bear of the Day at Zacks.
Intel Corporation (NASDAQ: INTC) maintained as the top tech/semi pick for 2012 from Credit Suisse.
Macy’s Inc. (NYSE: M) Reiterated Outperform and raised target to $36 from $32 at Credit Suisse.
Motorola Mobility Holdings Inc. (NYSE: MMI) Maintained Sell at Argus.
Netflix, Inc. (NASDAQ: NFLX) Cut to Underperform from Neutral at BofA/ML.
Overseas Shipholding Group Inc. (NYSE: OSG) Cut to Market Perform at Wells Fargo.
Republic Services, Inc. (NYSE: RSG) Cut to Neutral at JPMorgan.
Ryder System, Inc. (NYSE: R) named as value stock of the day at Zacks.
SM Energy Co. (NYSE: SM) Maintained Outperform as Bull of the Day at Zacks.
Starbucks Corporation (NASDAQ: SBUX) Reiterated Buy and raised estimates at Argus.
Tidewater Inc. (NYSE: TDW) Started as Neutral at Credit Suisse.
The Walt Disney Co. (NYSE: DIS) Cut to Equal-weight at Barclays.
Xerox Corporation (NYSE: XRX) Cut to Equal-weight at Barclays.

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JON C. OGG

24/7 Wall St. has compiled detailed earnings previews for the following companies: Novellus Systems Inc. (NASDAQ: NVLS); Alcoa Inc. (NYSE: AA); ADTRAN Inc. (NASDAQ: ADTN); Host Hotels and Resorts Inc. (NYSE: HST); Pepsico Inc. (NYSE: PEP); Google Inc. (NASDAQ: GOOG); J. B. Hunt Transport Services Inc. (NASDAQ: JBHT); J.P. Morgan Chase & Co. (NYSE: JPM); Safeway Inc. (NYSE: SWY); and Mattel Inc. (NASDAQ: MAT).

Some of these companies will not really seem on the surface to be sector-movers or market-moving companies, but these have been selected because they are the first ones of their peer groups to be reporting earnings. 

We have created a detailed earnings preview for each with consensus estimates from Thomson Reuters and added color in on each for investors to see what exactly is worth consideration this earnings season.  We have also added in recent price history and named where to look for additonal action (or fallout).

Monday, October 10

Novellus Systems Inc. (NASDAQ: NVLS) is the first chip equipment player to report for this earnings season.  it has been a few weeks since we have had earnings reports or guidance in the sector so we will be paying close attention since so many companies that are chip equipment customers have talked down their numbers in recent weeks.  Our belief is that expectations are very low for the quarter ahead. Estimates are $0.68 EPS and $311.9 million in revenue; next quarter estimates are $0.50 EPS and $278.5 million in revenue.  With shares hovering around $30.00 on Friday, the 52-week range is $25.26 to $41.82 and shares were above $36 in early July.  After Novellus reports, we would be watching the following: Applied Materials Inc. (NASDAQ: AMAT), KLA-Tencor Corporation (NASDAQ: KLAC), and Lam Research Corporation (NASDAQ: LRCX).

Tuesday, October 11

Alcoa Inc. (NYSE: AA) has already talked down aluminum prices and we have already seen slowing demand out of China talked about by many sectors.  Alcoa keeps maintaining that it can double its business by 2020 and we do not expect that to be changed by management even if it guides lower expectations ahead.  Estimates are $0.23 EPS and $6.24 billion in revenue; next quarter estimates are $0.23 EPS and $6.11 billion in revenue. At $9.80 on Friday, the 52-week range is $8.45 to $19.47 and this one was above $16 at the start of July.  There are many metals stocks to watch, some in aluminum and some in other metals: Century Aluminum Co. (NASDAQ: CENX), Reliance Steel & Aluminum Co. (NYSE: RS); Kaiser Aluminum Corporation (NASDAQ: KALU); Titanium Metals Corporation (NYSE: TIE); and Nucor Corporation (NYSE: NUE).

Allscripts Healthcare Solutions, Inc. (NASDAQ: MDRX) Raised to Buy at Auriga.
AMR Corporation (NYSE: AMR) Cut to Neutral at JPMorgan.
Analog Devices Inc. (NYSE: ADI) Cut to Neutral at Stern Agee.
BHP Billiton Ltd. (NYSE: BHP) Cut to Neutral at Credit Suisse.
Boyd Gaming Corp. (NYSE: BYD) Cut to Underperform at BofA/ML.
Choice Hotels (NYSE: CHH) Raised to Neutral at Credit Suisse.
KiOR, Inc. (NASDAQ: KIOR) Started as Outperform at Credit Suisse.
Leap Wireless International Inc. (NASDAQ: LEAP) Cut to Neutral at Baird.
Marathon Oil Corporation (NYSE: MRO) Cut to Neutral at Credit Suisse.
Marriott International, Inc. (NYSE: MAR) Cut to Neutral at BofA/ML.
MetroPCS Communications, Inc. (NYSE: PCS) Cut to Neutral at Baird; Maintained Neutral but cut target to $12 at Credit Suisse; Maintained Buy with $22 target at Argus.
Overseas Shipholding Group Inc. (NYSE: OSG) Cut to Sell at Deutsche Bank; Cut to Hold at Jefferies.
P.F. Chang’s China Bistro, Inc. (NASDAQ: PFCB) Cut to Sell at Argus.
Rowan Companies (NYSE: RDC) Raised to Neutral at Credit Suisse.
Skilled Healthcare Group, Inc. (NYSE: SKH) Started as Underperform at BofA/ML.
Texas Instruments Inc. (NYSE: TXN) Cut to Neutral at Stern Agee.
Valero Energy Corporation (NYSE: VLO) Reiterated Buy with $35 target at Argus.
Yandex N. V. (NASDAQ: YNDX) Started as Overweight at JPMorgan.

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

JON C. OGG

The national average price for regular gasoline was $3.91 when AAA released its data this month, but now that is down to about $3.80 according to GasBuddy.  What is interesting is that a majority of those surveyed by AAA said that gasoline prices would not hamper their plans to drive and AAA predicted that the average distance traveled will be 792 miles from home.  A 0.2% travel increase in bodies may not matter, but the 792 miles traveled this coming weekend is 27% higher than the 2010 average distance of 626 miles.  We have reviewed and selected some value stocks that could win based upon these trends that happen to overlap with the themes around Memorial Day weekend and summer in general. 

Our value picks here are Capital One Financial Corporation (NYSE: COF), Choice Hotels International Inc. (NYSE: CHH), Exxon Mobil Corporation (NYSE: XOM), Molson Coors Brewing Company (NYSE: TAP), Southwest Airlines Co. (NYSE: LUV), and somewhat still in Domino’s Pizza, Inc. (NYSE: DPZ).  We have singled each value pick out as to why it is preferred over peers, what the price history and valuations are on each, given size data, and even given estimated projections based upon Thomson Reuters data. You will need to read each carefully as these are all different companies even if the underlying themes overlap a bit here. 

If there is one thing you must have over the summer, and Memorial Day weekend, it is money or credit.  When it comes to Average Joe, Capital One Financial Corporation (NYSE: COF) is our current best value play around money and credit versus peers.  Capital One has survived the credit crunch, its metrics continue to improve, and it seems less affected over the interchange fee fears than peers even if we see lower expected earnings in 2012 versus 2011.  A bonus is that Easter was so late in April and with Memorial Day coming we think it can collect higher interest payments this summer as it looks like cardholders may enter summer with slightly higher credit card balances compare to a year ago.  At $52.50, the 52-week trading range is $36.10 to $56.26, the consensus price target is almost $60.00, and it has a market cap of almost $24 billion.  Capital One currently trades at only about 8-times expected earnings.   

The hospitality sector is not one which trades at cheap multiples when it comes to earnings, and most are stingy when it comes to paying out dividends.  Our current value pick in the hotel and lodging sector is the same one that travellers use for value… Choice Hotels International Inc. (NYSE: CHH).  Choice franchises lodging properties under the brands of Comfort Inn, Comfort Suites, Quality, Clarion, Sleep Inn, Econo Lodge, Rodeway Inn, MainStay Suites, Suburban Extended Stay Hotel, Cambria Suites, and Ascend Collection.  Its franchise hotels at March 31 included more than 6,100 hotels with over 490,000 rooms in the U.S. and internationally and it is still rapidly adding units and rooms.  With shares now back under $35.00 and with a market cap of just under $2.1 billion, its 52-week trading range is $29.25 to $41.42 and analysts have a consensus price target of $39.18. The company also pays above 2% in dividend yields, making it one of the highest dividend payers in the hotel and lodging sector.

Big Oil, a.k.a. Exxon Mobil Corporation (NYSE: XOM), is the big winner when it comes to gasoline and that 27% higher weekend distance is going to matter more than the tiny bump in the number of travelers.  Last year we saw the second quarter revenues of almost $92.5 billion but that is now expected to be over $120 billion.  It is no wonder that Exxon is one of our Ten Stocks To Own For The Next Decade.  It trades at less than 10-times 2011 expected earnings and has a monster stock buyback plan.  With it being ahead of peers in the game of switching to being an oil and natural gas giant rather than just “Big Oil,” we continue to favor Exxon Mobil as our top value stock in oil and gas.  Our only caveat is that Exxon Mobil is already the largest public company with a market cap of over $400 billion. With shares close to $82.00, its 52-week range is $55.94 to $88.23, and the consensus Thomson Reuters price target of analysts is $92.36.

If there is one trend we expect to see rewarded in the coming summer, it is beer even if beer is harder to invest in than you might think and even if cost pressure has been there.  Our current value pick is Molson Coors Brewing Company (NYSE: TAP).  It trades at cheaper multiples than the much larger and more global Anheuser-Busch InBev (NYSE: BUD), has close to the same pullback, and pays a better dividend.  Molson Coors trades at $46.00, has a 52-week trading range of $39.89 to $51.11, and a market cap of about $8.6 billion.  While analysts have a consensus price target of $49.25, our take is that the analysts are understating the upside and we think upside of $55.00 could be seen before valuations get stretched.  This trades at only about 12.5-times expected earnings for 2011.  Its $0.28 dividend gives a superior yield of about 2.4% and its annualized payment of $1.12 compares to estimates of $3.68 EPS this year.  If any of the larger beer companies can make an acquisition of smaller niche growth brands we think it is Molson Coors.

When it comes to airlines, Southwest Airlines Co. (NYSE: LUV) is our top pick for the Steady-Eddie investor with hardly any worries about currencies compared to peers.  That also gives us the best value outcome for the airline and it is one of the few that even bothers to pay a paltry dividend.  Investors need to understand that Southwest is not as leveraged and not as volatile, so the legacy carriers can rally much more if trends improve in oil and in air traffic.  Those same legacy carriers can also fall much more in price.  Southwest trades at about 19-times this year’s expected earnings, but that is not off the chart for an airline.  What we really like is that Southwest has closed its AirTran acquisition and this opened up many new routes that were not previously there.  Losing its sole-737 fleet status here is not a major concern and the cracks in planes issue seems to be behind it.  At $11.81, Southwest has a market cap of $8.8 billion, has a 52-week range of $10.42 to $14.32, and it has a consensus price target of above $16.00.

This one is not alphabetic in order for a simple reason… We only want you now to look at it if its shares pull back by more than 8% from any peak as many of our restaurant and casual dining stocks are at valuations above our own comfort zone… That would be Domino’s Pizza, Inc. (NYSE: DPZ).  We just revisited this as a value stock and it has risen much more than we would have expected when we first covered it at 12-times earnings and with a price then of $18.60 and then again around $21.00 more recently.  The good news is that we now think that Domino’s can go above $25.00. The bad news is that it is already close.  We like Domino’s as a return to normalcy value stock against earnings, but now it is one we can only be very favorable on if its shares get a pullback of 8% or 10%.

JON C. OGG

• China Telecom (CHA) Raised to Buy at UBS.
• Choice Hotels (CHH) Raised To Neutral From Underweight at JPMorgan.
• Comcast (CMCSA) Started as Outperform at Credit Suisse.
• Google (GOOG) Started as Outperform at Credit Suisse.
• L-1 Identity Solutions (ID) Raised to Neutral from Underweight at JPMorgan.
• PepsiAmericas (PAS) Raised to Buy at UBS.

• AmeriCredit (ACF) Cut to Underperform at KBW.
• Ericsson (ERIC) Cut to Sell at Goldman Sachs.
• National City (NCC) Cut to Market Perform at KBW.
• News Corp. (NWS) Cut to Neutral at Credit Suisse.
• Nokia (NOK) Cut to Sell at Goldman Sachs.
• PC-Tel (PCTI) Cut to Neutral at Baird.
• Ralcorp Holdings (RAH) Cut to Neutral at Credit Suisse.
• Sherwin-Williams (SHW) Cut to Neutral at JPMorgan.

Jon C. Ogg
October 28, 2008