The three major US stock indexes opened marginally higher this morning as more European countries come out in support of a eurobond, a proposal Germany has flatly declined to discuss. The impasse weighed on European markets and the weight crossed the Atlantic when US markets opened today. The only new data point in the US today was better-than-expected reading on Reuters/University of Michigan consumer sentiment index (our coverage here). The US dollar index rose today, now up 0.07% at 82.406. The GSCI commodity index is up fractionally at 618.78, with commodities prices mixed. WTI crude oil is trading up 0.12% at $90.77/barrel, and Brent crude trades up 0.31% at $106.88/barrel. Natural gas fell -4.4% today to $2.53/thousand cubic feet. Gold is trading up 0.52% today, at $1,567.90/ounce.

At 2:00 p.m. ET, the DJIA is down about 45 points at 12,484.68 (-0.36%), the NASDAQ is up more than 3 points (0.12%) at 2,842.72, and the S&P 500 is down -0.02% or less than 1 point at 1,320.43.

There were several analyst upgrades and downgrades today, including Ebay Inc. (NASDAQ: EBAY) maintained as ‘buy’ with a target price of $44 at BofA/ML; Lululemon Athletica (NASDAQ: LULU) cut to ‘hold’ at KeyBanc; Siemens AG (NYSE: SI) raised to ‘buy’ at Deutsche Bank; Salesforce.com (NYSE: CRM) raised to ‘outperform’ at Oppenheimer; and First Solar Inc. (NASDAQ: FSLR) maintained as ‘buy’ with a target price of $30 at BofA/ML.

Earnings reports since markets closed last night have led to some price changes as of the last half hour of trading today: America’s Car-Mart Inc. (NASDAQ: CRMT) is down -7.8% at $41.52; Mentor Graphics Inc. (NASDAQ: MENT) is down -12.7% at $13.28; Post Holdings Inc. (NYSE: POST) is up 6.8% at $29.89; and Frontline Ltd. (NYSE: FRO) is up 8.8% at $5.42.

On Tuesday, we are scheduled to get earnings reports from American Superconductor Corp. (NASDAQ: AMSC), DryShips Inc. (NASDAQ: DRYS), Ku6 Media Co. Ltd. (NASDAQ: KUTV), Sanderson Farms Inc. (NASDAQ: SAFM), Seanergy Maritime Holdings Group Corp. (NASDAQ: SHIP), and Shanda Games Ltd. (NASDAQ: GAME).

We’ve also reviewed this week some potential value stocks among major oil companies, gold & silver miners, conglomerates, industrials, retail, semiconductor, and solar stocks.

Other standouts from today include the following stocks:

The Talbots Inc. (NYSE: TLB) is down -38.9% at $1.57. The clothing retailer failed to reach a deal with a potential private equity buyer.

Verifone Systems Inc. (NYSE: PAY) is down -15% at $38.27. The electronic payment systems company forecast a weaker-than-expected third quarter.

Facebook Inc. (NASDAQ: FB) is down -3.8% at $31.78. The social network company continues to seek a floor for its stock price.

Stay tuned for Tuesday. US markets are closed Monday to observe the Memorial Day holiday. We have also noted the following events on the schedule for Tuesday (all times Eastern):

• 9:00 a.m. – S&P Case-Schiller housing price index
• 10:00 a.m. – Conference Board consumer confidence survey
• 10:00 a.m. – State Street investor confidence index
• 10:30 a.m. – Dallas Fed manufacturing survey
• 11:30 a.m. – 3- and 6-month bill auction

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Have a great long weekend.

Paul Ausick

The unofficial closing bells put the DJIA down about 2 points to 12,502.66 (-0.01%), the NASDAQ fell about 8 points (-.029%) to 2,839.08, and the S&P 500 rose 0.05% or less than 1 point to 1,316.63.

There were several analyst upgrades and downgrades today, including Gap Inc. (NYSE: GPS) raised to ‘buy’ at Lazard Capital; DryShips Inc. (NASDAQ: DRYS) started as ‘buy’ at Global Hunter; Domino’s Pizza Inc. (NYSE: DPZ) reiterated as ‘buy’ with a target price of $46 at Argus; LyondellBasell Industries (NYSE: LYB) started as ‘outperform’ with a target price of $60 at Credit Suisse; and Tesla Motors Inc. (NASDAQ: TSLA) started as ‘buy’ at Maxim Group.

Earnings reports since markets closed last night have led to some price changes as of the last half hour of trading today: Autozone Inc. (NYSE: AZO) is down -1.67% at $362.40; Best Buy Co. Inc. (NYSE: BBY) is up 1.3% at $18.41 (more coverage here); Ralph Lauren Corp. (NYSE: RL) is up 3.4% at $151.24 (more coverage here); Williams Sonoma Inc. (NYSE: WSM) is up 3.4% at $35.90; and Express Inc. (NYSE: EXPR) is down -26.9% at $16.88.

Tomorrow we are scheduled to get earnings reports from American Eagle Outfitters Inc. (NYSE: AEO), Big Lots Inc. (NYSE: BIG), Hormel Foods Corp. (NYSE: HRL), NetApp Inc. (NASDAQ: NTAP), Pandora Media Inc. (NYSE: P), Suntech Power Holdings Co. Ltd. (NYSE: STP), and Trina Solar Ltd. (NYSE: TSL).

Other standouts from today include the following stocks:

Patriot Coal Corp. (NYSE: PCX) is down nearly -40% at $2.22 after posting a new 52-week low of $1.36 earlier today. The coal miner was reported to be interviewing firms to help with a restructuring. Patriot issued a non-denial denial later to stem the bleeding. More coverage here and here.

Benihana Inc. (NASDAQ: BNHN) is up 21.3% at $16.13. The restaurateur is being acquired for $296 million.

Facebook Inc. (NASDAQ: FB) is down -8.6%% at $31.12 after posting a new low of $30.98 earlier today. Shares are getting pummeled again today. We’ve started a deathwatch here and here. Just search for ‘facebook deathwatch’ to get the latest dope.

Stay tuned for Wednesday. Minneapolis Fed President Naryana Kocherlakota is giving a speech. We have also noted the following events on the schedule (all times Eastern):

7:00 a.m. – Mortgage Bankers Association purchase applications
10:00 a.m. – New home sales
10:00 a.m. – FHFA house price index
10:30 a.m. – EIA weekly petroleum status report
1:00 p.m. – 5-year note auction

Paul Ausick

ABIOMED Inc. (NASDAQ: ABMD) Cut to Neutral at Lazard Capital.

ArcelorMittal (NYSE: MT) named Bear of the Day at Zacks.

Boston Properties Inc. (NYSE: BXP) Reiterated Buy with target price of $120 at Argus.

Domino’s Pizza Inc. (NYSE: DPZ) Reiterated Buy with target price of $46 at Argus.

DryShips Inc. (NASDAQ: DRYS) Started as Buy at Global Hunter.

Forum Energy Technologies, Inc (NYSE: FET) Started as Outperform with $28.00 target price at Credit Suisse; Started as Outperform at Howard Weil; Started as Buy at Citigroup.

Gap Inc. (NYSE: GPS) Raised to Buy at Lazard Capital.

Infoblox Inc. (NYSE: BLOX) Started as Buy with $21 target at UBS.

LyondellBasell Industries (NYSE: LYB) Started as Outperform with $60.00 target at Credit Suisse.

Oaktree Capital Group, LLC (NYSE: OAK) Started as Neutral with $45.00 target at Credit Suisse; Started as Buy at Goldman Sachs; Started as Neutral at JPMorgan.

Pool Corporation (NASDAQ: POOL) raised to Bull of the Day at Zacks.

Synta Pharmaceuticals Corp. (NASDAQ: SNTA) Started as Buy at Jefferies.

Tesla Motors, Inc. (NASDAQ: TSLA) Started as Buy at Maxim Group.

Urban Outfitters (NASDAQ: URBN) Maintained as HOLD with $26 target price but lower estimates at Canaccord Genuity.

Watson Pharmaceuticals Inc. (NYSE: WPI) Reiterated Buy with $90 target as “Top Idea Post” at Canaccord Genuity.

Zipcar, Inc. (NASDAQ: ZIP) Started as Overweight at Morgan Stanley.

If you enjoyed the top analyst upgrades and downgrades, you can join our free email newsletter that includes analyst summaries each morning sent right to your inbox.  We also cover top issues such as IPOs, special financial exclusives, mergers and more. Sign up in the box below.

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JON C. OGG

According to the press announcement:

Companies affiliated with our Chairman and Chief Executive Officer have agreed to purchase 1,900,000 common shares from us in the offering at the public offering price.

DryShips’ shares are up about 0.8% at $3.22 in the first few minutes of trading, in a 52-week range of $1.75-$4.82.

Ocean Rig’s shares are up nearly 5.5% at $17.15 in a 52-week range of $11.70-$18.73.

The underwriting group is rather large for an offering of this size: Deutsche Bank Securities, Credit Suisse, Evercore Partners, Raymond James, Simmons & Company, ABN AMRO, and COMMERZBANK.

Based upon the most recent share price, the offering would be close to 6 million shares at the full $100 million.

Ocean Rig UDW will not receive any proceeds from the sale of the common shares by the selling shareholder.  DryShips intends to use the net proceeds from the sale of the common shares offered by this prospectus for general corporate purposes.   Ocean Rig UDW shares closed at $17.30 and their shares have traded in recent months since their debut in recent months in a range of $11.70 to $18.73.  Google Finance listed the market capitalization rate on a fully diluted basis for Ocean Rig UDW as being almost $2.3  billion and DryShips with a market cap of $1.4 billion.

FULL FILING

JON C. OGG

The unofficial closing bells put the DJIA up more than 46 points to 12,984.91 (0.36%), the NASDAQ rose nearly 24 points (0.81%) to 2,956.98, and the S&P 500 rose 0.43% or nearly 6 points to 1,363.46.

There were several analyst upgrades and downgrades today, including Chesapeake Energy Corp. (NYSE: CHK) reiterated as ‘neutral’ at Credit Suisse; Level 3 Communications Inc. (NASDAQ: LVLT) raised to ‘overweight’ at Morgan Stanley; TJX Companies Inc. (NYSE: TJX) reiterated as ‘hold’ at Argus; Hewlett-Packard Co. (NYSE: HPQ) reiterated as ‘neutral’ at Credit Suisse; and Juniper Networks Inc. (NASDAQ: JNPR) cut to ‘market perform’ at FBR.

Earnings reports since markets closed last night have led to some price changes as of the last half hour of trading today: Angie’s List Inc. (NASDAQ: ANGI) is up 10.10% at $15.92; Boston Beer Company Inc. (NYSE: SAM) is down -4.5% at $99.88; Caribou Coffee Co. Inc. (NASDAQ: CBOU) is down -1.8% at $17.28; DryShips Inc. (NASDAQ: DRYS) is up 6.7% at $3.67; Flowserve Corp. (NYSE: FLS) is up 2.8% at $121.08; Fluor Corp. (NYSE: FLR) is up 6.2% at $64.11; Goodrich Petroleum Corp. (NYSE: GDP) is down -4.4% at $16.07; Hewlett Packard is down -6.4% at $27.08; KBR Inc. (NYSE: KBR) is up 9.1% at $36.01; American Tower Corp. (NYSE: AMT) is up 0.68% at $63.69; Bill Barrett Corp. (NYSE: BBG) is down -0.5% at $27.77; Charles & Colvard Ltd (NASDAQ: CTHR) is up 22.3% at $3.73 after posting a new 52-week high of $3.99 earlier today; Dillard’s Inc. (NYSE: DDS) is up 10.6% at $57.73; Dish Network Inc. (NASDAQ: DISH) is up 1.5% at $29.60 (more coverage here); Foster Wheeler AG (NASDAQ: FWLT) is up 7.5% at $25.58; Officemax Inc. (NYSE: OMX) is up 7.25% at $5.92; and Target Corp. (NYSE: TGT) is up 3.5% at $54.80 (more coverage here).

Other standouts from today include the following stocks:

Vivus Inc. (NASDAQ: VVUS) is up nearly 80% at $18.93 after posting a new 52-week high of $21.44 earlier. The drug maker yesterday received an FDA panel approval for its obesity drug. More coverage here, here, and here.

Onvia Inc. (NASDAQ: ONVI) is up about 34% at $4.21. The government contractor service provider has rejected a buyout bid at $4.25/share, boosting hopes of a bidding war.

Sears Holdings Corp. (NASDAQ: SHLD) is up nearly 19% at $61.93. The retailer reported an enormous loss, but also announced plans to pare down the company. More coverage here.

Penn Virginia Corp. (NYSE: PVA) is down nearly -15% at $4.92. The independent oil & gas company missed EPS estimates badly, and lowered its production forecast for 2012.

GrafTech International Ltd. (NYSE: GTI) is down more than -15% at $13.07. Volume is more than 10x the daily average of 1 million shares traded. The industrial products company reported a big revenue miss this morning.

Stay tuned for Friday. St. Louis Fed president James Bullard and New York Fed president William Dudley are giving speeches. We have noted the following events on the schedule (all times Eastern):

• 9:55 a.m. – Reuters/University of Michigan consumer sentiment index
• 10:00 a.m. – New home sales

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Paul Ausick

Many of the shipping stocks have been recovering in 2012 while the index for the pricing basis (chart at end) has been weak.  Some shipping companies pay out more than they earn and some keep making dividend payments when they are losing money. What we really want to know is if these dividends are sustainable.  There have been some pressures that recently forced one shipper to suspend dividend payments. We have glanced at the following shipping players with recent earnings and/or dividend news: Nordic American Tankers Limited (NYSE: NAT); Alexander & Baldwin, Inc. (NASDAQ: ALEX); Overseas Shipholding Group, Inc. (NYSE: OSG); Euroseas Ltd. (NASDAQ: ESEA); Ship Finance International Limited (NYSE: SFL); DryShips Inc. (NASDAQ: DRYS); and Seanergy Maritime Holdings Corporation (NASDAQ: SHIP).

We also took a look at the Guggenheim Shipping ETF (NYSE: SEA), the shipping ETF, is trying to signal that a turnaround is heading to the shipping sector. This one pays a very sporadic dividend and there is jus not even a two-year history to be able to track how its payments rise and fall through time. Because of uncertainty and pressure, the shipping sector was not a part of the 2012 Model Dividend Portfolio.

Now look at the chart on the ETF.  At $17.99, the 200-day moving average is $18.21 and this has not been anywhere close to the 2300-day moving average since back in April of 2011.  The question is whether this will act as a huge overhang and allow sellers to take profits or if this will be a new bullish mechanism that allows the run from the start of 2012 to continue.

Nordic American Tankers Limited (NYSE: NAT) recently posted a loss and its tax treatment understanding is that the dividend distributions of 2011 should count as a return of capital rather than as income for income tax purposes.  Where the story gets interesting is that earlier this week it posted a wider than expected loss.  It also sold 5.5 million more common shares back in January “to strengthen the Company’s resources, to fund future acquisitions and for general corporate purposes.”  Shares are down close to 10% from when they sold shares to the brokerage firms and the prior payouts have been $0.30 per quarter for a yield of close to 8.6% if it remains static in the quarters ahead.  At $13.93, the 52-week range is $1.58 to $26.18.

Alexander & Baldwin, Inc. (NASDAQ: ALEX) recently lost 7% after reporting lower 2011.  The company saw a weak trans-Pacific ship market after a recent parent split-up announcement in 2011 even forced the company’s Matson unit to shut down its second China-Long Beach service.  Its payout of $0.315 earlier in February at least compares to earnings estimates of $2.06 EPS for all of 2012. At $44.00, this stock only yields 2.8% today and the 52-week range is $33.09 to $55.50.

It was just a week ago that Overseas Shipholding Group, Inc. (NYSE: OSG) in the energy transportation services announced that it had suspended regular quarterly dividends based upon the downturn in international flag markets being deeper and longer than expected.  Unlike other sectors, this company’s management talked about economic uncertainty in the world persisting while banking markets have become more challenging.  The move is to preserve liquidity and the company plans to reassess the dividend as its end markets improve.

A smaller player named Euroseas Ltd. (NASDAQ: ESEA) in drybulk and containerized cargoes had normalized earnings of $0.04 in earnings per share while it declared a quarterly dividend of $0.05 per share as its twenty-sixth consecutive dividend.  It is smaller in market cap at $93 million today, but it listed an average of 16.00 vessels were owned and operated in the fourth quarter with an average day rate of $12,099 per day.

Ship Finance International Limited (NYSE: SFL) is set to report earnings on Friday, Feb. 17 and estimates are $0.38 EPS for the quarter but the estimates are $1.37 EPS in all of 2012 (versus from $1.72 EPS in 2011).  WIth its most recent payout being $0.39 per share per quarter, the company is paying out effectively all or more than all of its income.  Its yield is over 12% if it remains.  At $12.21 today, the 52-week trading range is $8.62 to $21.15.

DryShips Inc. (NASDAQ: DRYS) does not have a dividend, but its shares have skyrocketed and that rally has stepped back up even after petering out a few days ago.  While $3.57 is a far cry from its old highs, this is up over 50% this month alone.  Without a dividend this is merely a sample of how strong the moves can be around any positive news.

A smaller player named Seanergy Maritime Holdings Corporation (NASDAQ: SHIP) in dry bulk cargo is seeing a large gain on tiny volume (with a mere $25 million market cap).  The gain is after positive earnings and a profit, although it said that it expects overall shipping conditions to remain weak in 2012 with new vessel deliveries only contributing to oversupply.

The dividends here are definitely not immune to the woes of the world if they get worse again.  It is worth noting that the stock market has not agreed with the slower economy thesis.  Maybe the rail and trucking sectors are better on a risk-reward metric.  Ultimately, the verdict here remains uncertain and there is still likely to be a lot of volatility around the shipping sector as the globe floats between contraction and a low recovery continuing.

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JON C. OGG

The Baltic Dry Index is not just at a year low.  It is back to lows at the peak of the recession 2007 to 2009.  It is hard to imagine.  One of the major issues may simply be high excess in capacity.  Shipping may have run into the same problems as the worlds manufacturing lines.  There may just be too much supply now versus demand.

Since the recession, boats have continued being built.  The world just may be awash in capacity.  It is surprising but the shipping stocks are actually holding up well with the stock market rather than tanking with tanker day rates.  Here is how some of the more active ship stocks look, even though not all are exactly pertinent or covered under the Baltic Dry Index:

The Guggenheim Shipping ETF (NYSE: SEA) is up 0.7% today while its 52-week trading range is $13.37 to $28.21.  If you tally up the last four dividend payment this one has a yield of about 5.7% but you have to keep in mind that three-quarters of that dividend is from the June quarterly payment last year.

DryShips Inc. (NASDAQ: DRYS) is down 0.5% at $2.18 and its 52-week range is $1.75 to $5.19.

Ship Finance International Limited (NYSE: SFL) is up a penny at $11.56 but its 52-week range is $8.62 to $21.15.  Its dividend is well above 10% now.

Nordic American Tankers Limited (NYSE: NAT) is down five cents at $13.95 against a 52-week range of $11.58 to $26.18.  Its dividend is now over 8%.

Is it possible that not all of the old ships in the world are being sent to India and Sri Lanka for scrapping any longer now that India has slowed down its blistering pace?  There are many reports calling it a dead index as well.  Stay tuned.  Imagine how well shipping stocks might perform when the underlying price index is cooperating.

See the index chart for the last five years below….

JON C. OGG

To start with the worst, Frontline is down more than -88% for the year, and its median target price has dropped to $6.00 from $7.25 in late October. At today’s share price of $2.98, the potential upside is slightly more than 100%. DryShips is not much better, with a lower target price of $5.00. At today’s price of $2.37, the implied gain is nearly 111%. Neither Excel nor Diana is as bad, but neither is likely to achieve anywhere near their implied gains of 63% and 46%, respectively. The shipping business has too many ships sailing around at unprofitable day rates. Until that situation resolves itself — not likely until 2013 — anything that resembles value in the shipping business is likely a mirage.

Railroads are faring better because rail traffic is up. The Association of American Railroads reported this morning that November carload traffic on US railroads grew 4% compared with November 2010. Intermodal traffic (containers) grew by 3.7% year-over-year. The largest increase came in motor vehicle carloads, which grew by 42% compared with last year and petroleum product carloads which grew by more than 28%.

Another large gain, more than 30%, came in carloads of crushed stone, sand, and gravel. Because beach sand is the most common material used in hydraulic fracturing of oil and gas wells, it’s probably a reasonable assumption to give the drilling industry credit for the increase.

Of the four railroads, Union Pacific and Norfolk Southern have both had target price boosts since late October. Union Pacific’s median target price is $114.00, up from $110.00. At a current price of $102.70, the potential upside in UP’s stock is 11%. The company’s dividend yield of 2.4% is also tied with Norfolk Southern’s for the best in the group.

Norfolk Southern’s median target price is $85.50, up from $82.00. At a current price of $74.90, the stock has a potential upside of 14.5%. With a slightly higher implied gain and an equal dividend yield, Norfolk Southern might be the best bet among the railroads.

In trucking, J.B. Hunt’s median target price fell from $49.00 to $48.00, but that was quite likely due to two brokers dropping coverage. At today’s price of $$45.40, the potential upside for the stock is just 5.7%. The company pays a dividend yield of 1.2%.

Landstar’s median target price is $52.00, up half a dollar from late October, and again likely due to a drop in the number of brokers covering the stock. At today’s price of $45.90, the potential upside for the stock is 13.3%. Landstar pays a dividend yield of 0.5%. Earlier this week, Landstar was downgraded from ‘buy’ to ‘neutral’ at SunTrust.

Of the two trucking companies, neither has a clear edge over the other. Hunt is more fully valued, but the company reported record results in the third quarter. If Hunt can do that again, then the current target price will be left way behind. Hunt’s strength in intermodal transportation could easily make that happen.

Of all ten stocks reviewed here, Norfolk Southern may be the safest bet, but J.B. Hunt may add more significant growth potential to its relatively limited upside potential.

Paul Ausick

General Maritime Corp. (NYSE: GMR) filed for bankruptcy protection yesterday citing low shipping rates for its fleet of 33 crude oil carriers and the company’s inability to comply with its debt covenants. Shipper Omega Navigation Enterprises Inc. (OTC: ONAVQ) filed for bankruptcy in July, and there is good reason to be concerned about other shippers like Teekay Tankers Ltd. (NYSE: TNK), Overseas Shipholding Group Inc. (NYSE: OSG), Nordic American Tanker Shipping Ltd. (NYSE: NAT), and Frontline Ltd. (NYSE: FRO).

Tanker rates are far below break-even rates and could stay there throughout 2012. The day rate for a very-large crude carrier (VLCC) is currently around $7,800, far below a break-even rate of around $30,000. To combat the low rates, some ship owners are considering selling their ships for scrap value. According to a report at Bloomberg, the cost to buy a 15-year old tanker is currently $23.5 million, while the scrap value of such a vessel is $17.25 million. That’s the narrowest difference in at least five years.

As much as 5% of the world’s oil tanker fleet could be scrapped in the next 18 months, but that would only raise rates to an estimated $12,817 by 2013, still less than half what is needed to hit a break-even rate. When profitability will return is anyone’s guess.

General Maritime and Omega Navigation depended heavily on the spot market for cargoes, which is a good position when prices are high, but a bad position when prices are low. Teekay has said that it has half its fleet booked through next summer, and could cover its costs even if the rest of the fleet remain idle. But in its third quarter earnings report, the company said it lost $291.2 million on fewer shipments and lower day rates. If there was any good news there, it was that Teekay didn’t lose as much as analysts had expected.

Tanker owners aren’t the only ones now struggling. Dry bulk shipper DryShips Inc. (NASDAQ: DRYS) actually beat estimates in its third quarter, primarily on the strength of the company’s move into offshore drilling vessels, not its shipping business. The company’s posted EPS loss of -$0.58 was better than the consensus estimate of -$0.61.

Navios Maritime Holdings Inc. (NYSE: NM), another dry bulk shipper, reported better-than-expected earnings yesterday, but net income was down year-over-year on increases in finance costs and higher depreciation/amortization charges. The company has said it is seeking a partner bank to acquire assets of distressed shippers at fire-sale prices. Frontline has also made the same claim.

Shares of Teekay Tankers are up about 1.4% in the first half hour of trading this morning, at $4.59, in a 52-week range of $3.48-$12.99. Navios shares are up about 0.8%, at $3.81, in a 52-week range of $2.88-$5.99. Frontline shares are down about -0.4%, at $5.72, in a 52-week range of $3.88-$28.93. DryShips is up nearly 0.8%, at $2.58 in a 52-week range of $1.75-$6.44.

Paul Ausick