The top calls of the week were seen in the following companies: Avalon Rare Metals Inc. (AMEX: AVL); Berkshire Hathaway Inc. (NYSE: BRK-B); Carrizo Oil & Gas (NASDAQ: CRZO); Domino’s Pizza, Inc. (NYSE: DPZ); Gilead Sciences Inc. (NASDAQ: GILD); Goodyear Tire & Rubber Company (NYSE: GT); Google Inc. (NASDAQ: GOOG); Green Mountain Coffee Roasters Inc. (NASDAQ: GMCR); Hewlett-Packard Co. (NYSE: HPQ); Lululemon Athletica Inc. (NASDAQ: LULU); Research In Motion Ltd. (NASDAQ: RIMM); Sina Corporation (NASDAQ: SINA); and Western Digital Corporation (NYSE: WDC).

We have outlined the research summaries here on each, and we have added color or linked to more details on the calls if applicable. 

Avalon Rare Metals Inc. (AMEX: AVL) is considered the speculative step child in the field of rare-earth metals.  Still, this week came coverage from Citigroup with a “Buy” rating this last Monday. The prior closing price had been $2.63 and the stock ramped mid-week.  The high close was $3.34 on Wednesday even though it closed down over 5% on Friday at $3.05.  The high close in the week would have given a gain of 27% and the gain for the week was still up 16%.  The 52-week range is $2.29 to $10.11, making this a leveraged call with huge upside if things work out at the company.

Berkshire Hathaway Inc. (NYSE: BRK-B) very rarely shows up in research calls, so it was a surprise when Zacks came out and named Warren Buffett conglomerate as the Bull of the Day with a $91.00 target for the next six-months.

Carrizo Oil & Gas (NASDAQ: CRZO) was only a reiterated Buy rating on Thursday by Canaccord Genuity but the implications offer huge upside if the firm is right.  The firm called it a top small cap idea with multiple ways to win and with a “valuation too tepid.” The new $49.00 price target implies upside of 71%. 

Domino’s Pizza, Inc. (NYSE: DPZ) was a cautious call because of valuation, but it may offer insight into how much investors should be willing to pay for the pizza delivery leader.  The stock was started as Hold at KeyBanc on Friday, which was also the day that this hit a 5-year high.  24/7 Wall St. originally went out with the “buy the value here” call early in 2011 when shares were under $20.00 and we had already taken this one off the list because of value concerns.  Friday’s call may point to more and more peak-values here.

The unofficial closing bells put the DJIA down less than 1 point to 12,019.42 (-0.01%), the NASDAQ rose less than 1 point (0.03%) to 2,626.93, and the S&P 500 fell 0.02% or less than 1 point to 1,244.28. Folks, that’s flat!

There were several analyst upgrades and downgrades today, including Lululemon Athletica Inc. (NASDAQ: LULU) raised to ‘buy’ at KeyBanc. Other ratings action Cliffs Natural Resources Inc. (NYSE: CLF) raised to ‘outperform’ at Credit Suisse; Domino’s Pizza Inc. (NYSE: DPZ) started as ‘hold’ at KeyBanc; Western Refining Inc. (NYSE: WNR) raised to ‘outperform’ at Credit Suisse; Sina Corp. (NASDAQ: SINA) raised to ‘buy’ at Deutsche Bank; and Guess? Inc. (NYSE: GES) cut to ‘neutral’ at Citigroup.

Here are today’s big post-earnings news reactions with prices during the last half-hour of trading:
Big Lots, Inc. (NYSE: BIG) is down -8.6%% at $36.34; Zumiez Inc. (NASDAQ: ZUMZ) is up 23.9% at $28.95; Royal Bank of Canada (NYSE: RY) is up 3.4% at $47.82; and Bank of Nova Scotia (NYSE: BNS) is down -3.1% at $48.08.

Several other standouts from today are as follows…

YRC Worldwide Inc. (NASDAQ: YRCWD) is up 29.7% at $12.61. The freight hauler concluded a 1-for-300 reverse split that drove the share price to $9 from $0.03.

Western Digital Corp. (NYSE: WDC) is up about 7% at $31.30. The computer disk drive maker announced that it was resuming operations at one of its flooded Thai plants and raised its revenue estimate for the current quarter. More details here.

Research in Motion Ltd. (NASDAQ: RIMM) is down about -9.6% at $16.79. The smartphone and tablet maker announced an inventory writedown of $485 million for unsold PlayBook tablets and said that full-year earnings would be lower. Detailed coverage here.

Tenet Healthcare Corp. (NYSE: THC) is down more than -10% at $4.20. The health care facilities operator likely is suffering from a lowered target price from BMO Capital Markets with rating of ‘market perform’.

JA Solar Holdings Co. Ltd. (NASDAQ: JASO) is down nearly -7% at $1.74. The solar PV maker is likely giving back gains made over the past two days. The was little reason for the gain in the first place, so that investors are taking it back should be no surprise.

Stay tuned for Monday. We have noted a speech due from Chicago Federal Reserve President Charles Evans and short-term Treasury bill auctions in the morning. Here are other noteworthy events scheduled for Monday (all times Eastern):

• 10:00 a.m. – Census Bureau factory orders report
• 10:00 a.m. – Industrial Supply Management non-manufacturing index

Have a great weekend.

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Arch Coal, Inc. (NYSE: ACI) named as Bear of the Day with a $13.00 price target at Zacks.
American Tower Corporation (NYSE: AMT) Started as Outperform at Macquarie.
Berkshire Hathaway Inc. (NYSE: BRK.B) named as Bull of the Day with a $91.00 price target at Zacks.
Cliffs Natural Resources Inc. (NYSE: CLF) Raised to Outperform at Credit Suisse.
Crown Castle International Corporation (NYSE: CCI) Started as Outperform at Macquarie.
Deere & Company (NYSE: DE) named as value stock of the day at Zacks.
Domino’s Pizza, Inc. (NYSE: DPZ) Started as Hold at KeyBanc.
Guess? Inc. (NYSE: GES) Cut to Neutral at Citigroup.
Lowe’s Companies Inc. (NYSE: LOW) Raised to Buy at Goldman Sachs.
Lululemon Athletica Inc. (NASDAQ: LULU) Raised to Buy at KeyBanc.
Sina Corporation (NASDAQ: SINA) Raised to Buy at Deutsche Bank
Smith & Nephew plc (NYSE: SNN) Raised to Overweight at Morgan Stanley.
Western Refining Inc. (NYSE: WNR) Raised to Outperform at Credit Suisse.

Argus made changes to its institutional model portfolio: added shares of Walgreen Co. (NYSE: WAG) and sold out of shares of Sun Life Financial Inc. (NYSE: SLF).

Credit Suisse is out positive on generics saying that the news flow on generic Lipitor has obscured the bigger picture on Watson Pharmaceuticals, Inc. (NYSE: WPI) and Teva Pharmaceutical Industries Limited (NASDAQ: TEVA). The firm recommends buying WPI after its recent weakness as strong fundamentals just got cheaper.  It also recommends buying TEVA for the longer term and as a turnaround story for 2012.

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JON C. OGG

Other noteworthy companies with ratings news include PPL Corp. (NYSE: PPL), Domino’s Pizza, Inc. (NYSE: DPZ), Cemex, S.A.B. de C.V. (NYSE: CX), Entergy Corp. (NYSE: ETR), FedEx Corp. (NYSE: FDX), European Aeronautic Defence and Space N. V. (OTC: EADSY), and BHP Billiton plc (NYSE: BHP).

PPL Corp. (NYSE: PPL) received affirmation of its ‘Baa2′ rating from Moody’s on senior unsecured debt at its PPL Energy Supply subsidiary. At the same time, the agency affirmed its ‘Baa3′ rating on PPL’s issuer rating with a stable outlook. PPL is a classic defensive utility stock, with a forward dividend yield of 4.8%.

Domino’s Pizza, Inc. (NYSE: DPZ) postponed the issuance of $1.625 billion in senior unsecured notes leading S&P to withdraw its preliminary ‘BBB+’ rating on the notes. Domino’s stock price has more than doubled in the past 12 months.

Cemex, S.A.B. de C.V. (NYSE: CX) had its global scale ‘B’ rating and ‘mxBB+/mxB’ national scale corporate credit ratings placed on  CreditWatch with negative implications at S&P. One of the world’s largest cement makers, Mexico-based Cemex faces a slowdown in activity related to the weaker global economy. S&P also noted that it anticipates that Cemex “might need to renegotiate the credit conditions in its financing agreement with lenders, to avoid a covenant breach by year-end.” Cemex shares are trading up in the early afternoon today, at $3.43, in a 52-week range of $3.33-$11.15. The shares posted a new 52-week low yesterday.

Petroplus Holdings AG (OTC: PEPFF), a Swiss-based pure-play oil refiner, received a downgrade to its long-term credit rating from ‘B+’ to ‘B’ at S&P. This is interesting because Petroplus has been struggling for some time, and S&P especially notes weak refining margins in Europe and poor operating performance at Petroplus. US refiner Valero Energy Corp. (NYSE: VLO) recently purchased a refinery in the UK and one or more of Petroplus’s six European refineries may be available at an attractive price.

Entergy Corp.’s (NYSE: ETR) Entergy Louisiana LLC (NYSE: ELB) subsidiary received a ‘AAA’ rating on $207 million senior secured investment recovery bonds from S&P. The bonds are essentially risk-free because the company has an irrevocable right to recover its investment by raising rates. That’s why utility stocks are popular defensive plays.

FedEx Corp. (NYSE: FDX) and its Federal Express Corp. subsidiary received re-affirmation of issuer default ratings of ‘BBB’ from Fitch Ratings. FedEx’s senior unsecured credit facility and its senior unsecured debt were also affirmed at ‘BBB’. Fitch noted that the unsecured debt totaled $1.7 billion and the unsecured credit facility totals $1 billion. The agency’s outlook on FedEx is stable.

European Aeronautic Defence and Space N. V. (OTC: EADSY), makers of the Airbus, has had its long-term issuer default rating and its senior unsecured debt rating affirmed at ‘BBB+’ with a stable outlook by Fitch. EADS’s record backlog of 4,200 orders indicates strong revenue growth and the company’s solid cash position contributed to the rating.

BHP Billiton plc (NYSE: BHP) subsidiary Petrohawk Energy Corp. received an ‘A’ rating on its outstanding senior unsecured debt from Fitch. BHP itself had its long-term issuer default rating and senior unsecured ratings affirmed at ‘A+’. Fitch attributes the one-notch difference to the limited operational integration between mining company BHP and its newly purchased Petrohawk oil & gas business, as well as change-of-control language for the 2014-15 bonds that sets the re-purchase premium so low that few takers are expected.

Paul Ausick

Alcatel-Lucent (NYSE: ALU) Cut to Sell at S&P Equity Research.
Altria Group Inc. (NYSE: MO) Raised to Buy at Stifel Nicolaus.
American International Group, Inc. (NYSE: AIG) Started as Hold at Citigroup.
Banco Bilbao Vizcaya Argentaria, S.A. (NYSE: BBVA) Cut to Hold at Citigroup.
Domino’s Pizza Inc. (NYSE: DPZ) Reiterated Buy and raised target to $33 at Argus.
Eaton Corporation (NYSE: ETN) Reiterated Buy as Value at Zacks.
EarthLink Inc. (NASDAQ: ELNK) Raised to Strong Buy at S&P Equity Research.
Fastenal Company (NASDAQ: FAST) Raised to Outperform as Bull of the Day at Zacks.
3M Co. (NYSE: MMM) Reiterated Buy with $108 target at Argus.
Morgan Stanley (NYSE: MS) Maintained Underperform as Bear of the Day at Zacks.
Royal Caribbean Cruises Ltd. (NYSE: RCL) Cut to Neutral at JPMorgan; Raised to Overweight at Barclays.
Sprint Nextel Corporation (NYSE: S) Maintained Outperform but cut target to $7 at Credit Suisse.
Starbucks Corporation (NASDAQ: SBUX) Reiterated Outperform and raised target to $48 at Credit Suisse.
Vistaprint N.V. (NASDAQ: VPRT) Cut to Perform at Oppenheimer.

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

Amazon.com Inc. (NASDAQ: AMZN) Started as Overweight at JPMorgan.
Applied Micro Circuits Corporation (NASDAQ: AMCC) Cut to Hold at S&P Equity Research (late-Tuesday).
AU Optronics Corp. (NYSE: AUO) Cut to Underweight at Barclays.
Clean Energy Fuels Corporation (NASDAQ: CLNE) Raised to Buy at BofA/ML.
Domino’s Pizza Inc. (NYSE: DPZ) Reiterated Buy with $30 target at Argus.
Google Inc. (NASDAQ: GOOG) Started as Overweight at JPMorgan.
HollyFrontier Corporation (NYSE: HFC) Started as Outperform at Credit Suisse.
The Interpublic Group of Companies, Inc. (NYSE: IPG) Started as Outperform at Wells Fargo.
Marriott International, Inc. (NYSE: MAR) Raised to Outperform at Baird.
The McGraw-Hill Companies, Inc. (NYSE: MHP) Raised to Buy at Goldman Sachs.
Montpelier Re Holdings (NYSE: MRH) Cut to Underperform as Bear of the Day at Zacks.
Netflix, Inc. (NASDAQ: NFLX) Started as Overweight at JPMorgan.
News Corporation (NASDAQ: NWS) Cut to Hold at Argus.
Quest Diagnostics Inc. (NYSE: DGX) Started as Neutral at JPMorgan.
Teva Pharmaceutical Industries Ltd. (NASDAQ: TEVA) Started as Buy with $58 target at Argus.
United Continental Holdings (NYSE: UAL) Raised to Outperform as Bull of the Day at Zacks.

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

No money was injured while filming

Buffalo Wild Wings Inc. (NASDAQ: BWLD) has been a phenomenal stock and it is a very well-run company.  It arguably has a brand leadership role, at least for public companies, in its restaurant mix of feel-good food, beer, and a sports bar all rolled into one.  That being said, its current share price does not seem to reflect the risks of a fall season without the NFL and without the NBA.  It is not alone.

There are also risks in shares of BJ’s Restaurants, Inc. (NASDAQ: BJRI), Domino’s Pizza, Inc. (NYSE: DPZ), Papa John’s International Inc. (NASDAQ: PZZA), Dreams Inc. (AMEX: DRJ), Collectors Universe Inc. (NASDAQ: CLCT), and in Under Armour, Inc. (NYSE: UA).  There are certainly others which would be considered at risk, but these are the most likely to be sports-sensitive out of our current watch-lists.

As of today, the professional football season is still a question mark.  As of today, there is a lock-out in the NBA level for professional basketball that looks certain to delay the season.  It was believed that Buffalo Wild Wings could mitigate one league being on the sidelines.  Now, strikes have the risks being in the August-football and October-basketball being on the sidelines.  Sure, there is the Saturday flurry for college football and through September there will be baseball games on just about every single day.  There are also other sports matches that will be played.

What Buffalo Wild Wings DOES have working in its favor is several key issues.  Gas prices are lower and food prices are falling and expected to fall even more this year.  The really good news is that chicken wing prices in particular will be sharply lower if the NBA and NFL go dark for this season.  The rise in beer prices has also likely peaked.  That means that promotions will vary from wing chain to wing chain, but the idea that Hooters or Buffalo Wild Wings will cut prices deeply (other than the promotions and giveaways) is not something we would expect to see on the full menu day in and day out.  Companies know that raising prices on the full menu is hard to do.

The reality is that Buffalo Wild Wings is not alone in its risks of a seasonal lock-out in two professional sports.  We already noted Hooters, even if it is private.  It is also not just food chains at risk if the NBA and NFL go without a 2011-2012 season.  These are some other observed names with real risk if both the NBA and NFL, and we have tried to list the good news about each as well.  These are as follows:

BJ’s Restaurants, Inc. (NASDAQ: BJRI) just hit a new 52-week and all-time high of $54.82 today.  It has a high forward P/E of almost 50-times earnings with some 107 owned and/or operated casual dining restaurants.  The good news here is that BJ’s is not just a sports destination.  The bad news is that it feels priced for perfection, even if we ultimately think a private equity group would love to own this chain.

Domino’s Pizza, Inc. (NYSE: DPZ) and Papa John’s International Inc. (NASDAQ: PZZA) are in the same boat being equally tied to pizza and other comfort foods available for delivery or pick-up.  Papa John’s stock has actually pulled back more (with a downgrade today from SunTrust) at $32.13 from its 52-week highs of $34.75.  Domino’s is getting very close to now being outside of our “value zone” after we picked it out in April when shares were under $19.00.  If NBA games and NFL games are not going to be there this year, Domino’s could easily find its multi-pizza orders suffering from fewer house party events around sports.

Dreams Inc. (AMEX: DRJ) was previously lower on the thought that the NFL no-season was mostly priced into the stock.  At $2.60, its 52-week trading range is $1.17 to $3.18 but it is currently close to 3-month highs.  Sports licensed products and collector case sales are likely to suffer without NBA and NFL seasons combined.

Collectors Universe Inc. (NASDAQ: CLCT) is the owner and operator of PSA grading for cards and other memorabilia grading and authentication.  At $15.28, its 52-week range is $11.01 to $17.03 and shares are close to the highest levels of the summer.  What PSA’s owner has going for it that others do not is a dividend yield of between 8% and 9% as of today.

Under Armour, Inc. (NYSE: UA) was bashed over the weekend as being overvalued and trading at multiples that are twice that of rivals, according to Barron’s.  At $79.29, its 52-week range is $32.11 to $80.00 and this is effectively close to all-time highs.  Non-professional athletes are likely to keep buying sportswear even if there is not a pro-season in the NBA and NFL, but this one was singled out in Barron’s this weekend and is one we believe may have more at risk compared to other growth apparel stocks.

Buffalo Wild Wings Inc. (NASDAQ: BWLD) has already gone through a period of some downs.  Still, at $67.00 it is near all-time highs and the official 52-week range is $35.01 to $67.30.  Analysts have not exactly gone out and rushed to cut earnings estimates for the September quarter as of yet because we do not have the June-quarter results nor do we have formal guidance for both leagues being in the dark.

What needs to be considered is simple.  Long-term, sports leagues do not stay on the sidelines endlessly.  Even major wars have not ended play for too long.  It seems unlikely that the leagues and the players will allow a full season to be interrupted, even if the seasons are much shorter and without pre-seasons.

The good news is for price-sensitive consumers looking for deals.  You will likely have less wait times for seating and deliveries, and you can probably expect better promotions by the companies.

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

Domino’s earnings beat estimates by $0.08 on strong international sales.  The pizza chain said earnings were $0.42 EPS and revenue rose over 2% to $389.2 million versus Thomson Reuters consensus estimates of $0.34 EPS and $380.6 million in revenues.

Domestic same store sales were down 1.4% in quarter, which the company noted was a tough comparable sales period because the first quarter of 2010 saw a whopping 14.3% gain. Global same store sales rose by 8.2% for the first quarter, but that would have been a gain of 6.2% if you eliminate the benefits from currency fluctuations.  It seems that a new customer base was established and has resulted in strong two-year sales growth.

When our April 6 note went out we said, “Analysts have a mere $19.00 price target today, but that is likely to improve as the company grows cash and pays down more debt.”  That target had climbed to $19.56 before earnings and shares closed yesterday at $19.20.  This morning we saw shares hit a new 52-week high of $20.93 and shares are still up about 6.7% at $20.50.

The good news is that today’s earnings report is likely to drive up 2011 earnings estimates.  Thomson Reuters has estimates of $1.45 EPS for 2011 and $1.62 EPS for 2012.  If we blend these two and increase the estimates marginally to $1.60 EPS, then Domino’s is trading closer to 13-times forward earnings.

Domino’s spent about $5.8 million to repurchase and retire 357,605 shares of its common stock in the first quarter for an average price of $16.31 per share. It has used approximately 54% of the total $200 million authorized amount and can spend approximately $91.5 million remaining under its buyback plan.

The total cash and cash came to $92.6 million, with an additional $84.8 million in restricted cash for a total of $177.4 million in its liquidity.  Its debt was static at $1.45 billion.  While spending $5 million per quarter won’t take down much debt, we would rather see Domino’s use bring down its debt level rather than spending cash to buy back stock.  In theory that just makes this more leveraged on a per share basis.

Domino’s has now crossed the adjusted consensus analyst price targets. The good news is that this one can still appreciate some more.  The problem is that Domino’s stock was up more than 12% at the peak this morning from our first value call just a month ago.  Domino’s is not exactly a major growth story as it is one of the oldest pizza delivery chains out there.  That being said, we are still optimistic that Domino’s can continue to appreciate some in 2011 and into 2012, but this pop here has just taken out much of that upside in what may be “too much, too fast.”

As far as a fair value for 2012, we think that Domino’s can reach $25.00.  If we get too close to that upside target, we’ll have to revisit our “value” thesis.  After all, the company’s balance sheet is still rather leveraged.

JON C. OGG

We are going to feature several more screens in the coming days and we are breaking these out sector by sector.  Our first list of feature stocks for value investors includes Best Buy Co. Inc. (NYSE: BBY) in retail, Domino’s Pizza, Inc. (NYSE: DPZ) in restaurants and casual dining, and JinkoSolar Holding Co. Ltd. (NYSE: JKS) in solar.  Admittedly, there are caveats on each of these.  That is generally the case when it comes to looking for value stocks.

Best Buy Co. Inc. (NYSE: BBY) is likely to feel like a painful lecture when you consider a value stock versus stock performance.  The stock has performed like a pig after its last two earnings reports and the fear is now that the PC sales are continuing to slow.  It carries Super-HD TV, PCs and peripherals, home appliances, smartphones, Apple products, and everything else.  It is just is stuck in the weeds as far as its growth and some of the cyclical benefits seem to be skipping Best Buy.  Any time that technology and retail stocks surface in a value screen, there is generally a reason. 

Sales grew during the recession but the fiscal Feb-2011 revenues of $50.27 billion compared to $49.69 billion a year ago and this figure is expected to be about $51.9 billion for the next year and almost $53.2 billion a year ahead.  The headwinds are obvious: average selling price in consumer electronics declines through time, PC sales are slowing, customers are going to the Apple stores, and on and on.

What Best Buy still has going for it is that analysts are actually seeing earnings growth due to cost management.  This is despite a drop in estimates as well.  The FEB-2012 and FEB-2013 fiscal earnings estimates from Thomson Reuters are $3.46 EPS and $3.69 EPS respectively.  If you blend the two forward years, Best Buy trades at only about 8-times earnings based on a $28.64 share price.  This stock seems to see lower share prices each week and its 52-week trading range is $28.09 to $48.83.  Its dividend yield is now 2.1% and analysts have a consensus price target of about $37.25 versus $28.64 today.

At $28.64 we can only assume and expect that guidance and sales will remain weak for some time and there may be risks to its earnings or revenues ahead.  Tech and retail are often skipped in the value screens, particularly if consumers curb shopping outings die to higher gas prices and due to higher prices on life’s staples.  It may take another wave of real PC upgrades before Best Buy gets back in favor and we have no ambition of that happening in the next quarter or two.  That being said, Best Buy could end up being one of those stealth value stocks that get overlooked.