AstraZeneca PLC (NYSE: AZN) Cut to Underweight at JPMorgan.
BlackRock, Inc. (NYSE: BLK) Cut to Neutral at Stern Agee.
Broadcom Corp. (NASDAQ: BRCM) Reiterated Buy with $46 price target at Argus.
Constellation Energy Group, Inc. (NYSE: CEG) Cut to Neutral at Citigroup.
Consolidated Edison Inc. (NYSE: ED) Cut to Neutral at Citigroup.
eBay Inc. (NASDAQ: EBAY) Reiterated Buy with $40 price target at Argus.
LM Ericsson Telephone Co. (NASDAQ: ERIC) Cut to Neutral at Credit Suisse.
Exelon Corporation (NYSE: EXC) Cut to Neutral at Citigroup.
Google Inc. (NASDAQ: GOOG) downgraded to Hold at Benchmark; Raised targets at boutique firm Global Equities Research.
Netflix, Inc. (NASDAQ: NFLX) Maintained Underperform and cut estimates at Needham.
Nokia Corporation (NYSE: NOK) Raised to Outperform at Credit Suisse (full summary).
Pacific Sunwear of California Inc. (NASDAQ: PSUN) Raised to Buy at Janney Capital Markets.
ReneSola Ltd. (NYSE: SOL) named as the Bear of the Day at Zacks Investment Research.
SAP AG (NYSE: SAP) Raised to Neutral at BNP Paribas.
Sanofi (NYSE: SNY) Cut to Neutral at JPMorgan.
Trinity Industries, Inc. (NYSE: TRN) named as value stock of the day at Zacks.
United Parcel Service, Inc. (NYSE: UPS) Cut to Neutral at HSBC.
VIVUS Inc. (NASDAQ: VVUS) Started as Perform at Rodman & Renshaw.
VMware Inc. (NYSE: VWM) Started as Buy at Stern Agee.

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JON C. OGG

The most attractive stock investments for periods when GDP growth stalls are those of corporations that proved they could improve sales during the 2007-2009 recession. Many of these corporations have additional attractions. They often generate so much cash they can afford to pay large dividends. This gives investors yields when the value of many equities fall due to concerns about the economy and in a period that interest rates on bonds are near all-time lows.

Recession-resistant companies are also often part of recession-resistant industries. Many of these industries’ sales come from a number of countries around the world. Their sales may slow in the U.S. and Europe, but remain strong in emerging nations. Coke and P&G are examples of corporations in such industries. Other companies are in sectors whose products are used in almost any economic environment. Tobacco companies like Altria and Reynolds American are examples of these. Still other industries have companies that have appeal in an economic downturn. McDonald’s, which offers many meals for a few dollars, often prospers when people cannot afford fresh groceries or more expensive restaurants.

24/7 Wall St. picked its recession proof companies by choosing: 1) corporations with revenue that grew during the last recession or where sales dropped slightly and profits rose, 2) companies in industries that are not usually sensitive to changes in the economy, 3) corporation that have demonstrated they have the balance sheet to pay large cash dividends, 4) corporations that are large enough to be among the most dominant companies by sales or market share within their sectors, and 5) stocks that trade within 10% of their 52-week highs. With the S&P 500 near a one year low, these are obviously companies that Wall St. thinks will do well over the next several quarters.

This is the 24/7 Wall St. “America’s Recession-Proof Companies”

From an investor’s point of view, the most interesting is a lawsuit filed in China by American Superconductor Corp. (NASDAQ: AMSC) seeking civil and criminal penalties against what was once the company’s largest customer, Sinovel Wind Group Co. Ltd. Sinovel’s refusal to take contracted shipments and to pay for shipments delivered in 2010 have put a serious dent in American Superconductor’s business. Now the US company is suing, complaining that Sinovel illegally obtained and used American Superconductor’s intellectual property. A form employee of the US company has been arrested in Austria for passing the Sinovel source code that allowed the Chinese company to upgrade their 1.5-megawatt turbines.

For its part, Sinovel has denied the charges, claiming that American Superconductor didn’t meet Sinovel’s contract or grid connection requirements. Sinovel claims that American Superconductor has failed to adapt to the fast-changing demands of the Chinese wind power market since 2006. That’s an odd defense given that Sinovel has been paying for this shoddy stuff.

On a different note, New York utility Consolidated Edison (NYSE: ED) and two local utilities have have filed a lease application with the federal government for a proposed 700-megawatt wind farm offshore of Long Island’s Rockaway Peninsula. Costs for such a project could easily reach $4 billion. But this is just the first step in a lengthy approval process.

Complications to new wind generation may come from recent studies that indicate wind generation may not reduce carbon dioxide emissions. In fact, due to the need for load balancing, which causes coal- and gas-fired plants to start and stop more often, this cycle generates more CO2 than would be emitted if the gas and coal plants were just left running and the wind power generation were shut off.

One answer to this problem could be the new gas-fired design from General Electric Co. (NYSE: GE). The so-called FlexEfficiency 50 is specifically designed to operate efficiently through many start-stop cycles. Conventional power plants are designed to operate efficiently at a pre-determined point, and any ups or downs make the plant less efficient and more polluting.

American Superconductor’s shares are up about 1.5% this morning, on a very down day for the overall market. Shares are trading at $5.41, in a 52-week range of $5.10-$38.88.

Paul Ausick

Suntech Power Holdings Co. Ltd. (NYSE: STP) reported first quarter EPS of $0.17, up more than 54% from the same period a year ago, but far short of estimates of $0.36. Revenue rose 49% year-over-year, to $877 million compared with a consensus estimate of about $865 million. Sequentially, revenue fell from $945 million or about -7%. Suntech also lowered its revenue guidance for the full-year from $3.4-$3.6 billion to $3.3-$3.5 billion. The company still expects to ship 2,200 megawatts of modules in 2011.

Amazingly, the company’s gross margins increased from 16.2% in the fourth quarter of 2010 to 19% in the first quarter. Suntech managed to achieve that by increasing its silicon wafer production and avoiding purchases from third-party suppliers.

The company expects second quarter gross margins to be flat. Other Chinese solar PV makers like Trina Solar Ltd. (NYSE: TSL) and Yingli Green Energy Holding Co. Ltd. (NYSE: YGE) expect margins to fall over the next year. The difference is that both Trina and Yingli start from higher margins than Suntech posted for this quarter. Both expect margins greater than 20%, although on smaller volume. Suntech’s secret, of course, is lots of shipments.

Suntech’s shares are down about -3%, at $7.43, approaching the bottom of the stock’s 52-week range of $7.05-$11.41.

Japan’s Softbank Corp. (OTC: SFTBF) has said that it will put up nearly $100 million of its own money to build 10 solar PV plants in eastern Japan. Softbank’s goal is to help push the country away from its heavy reliance on nuclear power and toward solar, wind, and geothermal power. Each of the plants is expected to cost about $97 million, of which Softbank will contribute 10% with the rest coming from local authorities and Softbank borrowing.

Softbank, a telecom company, could form a partnership with Sharp Corp. (OTC: SHCAY) to use Sharp’s modules. The Japanese company is following in the footsteps of Google Inc. (NASDAQ: GOOG) which has pumped more than $400 million into several alt energy projects in the US.

The search giant has now agreed to join with Citibank to inject $110 million into the fourth phase of the Alta Wind Energy project in southern California. Alta currently generates about 720 megawatts and is expected to generate 1,500 megawatts of power when it is completed. Google and Citi will buy the fourth of five phases and lease the completed installation back to the developer over a long-term contract.

New York utility Consolidated Edison, Inc. (NYSE: ED) is fighting a proposed state rule that would require it to buy back solar-generated energy at rates that would be higher than those for either gas- or coal-fired generation. The company profited from regulations governing solar energy installations in New Jersey, where renewable energy credits that can be sold attracted more than 137 megawatts of new solar installation in 2010, the second-highest total in the US after California’s 259 megawatts.

Finally, the Electric Power Research Institute (EPRI) has estimated that it would cost about $476 billion over the next 20 years to modernize the US electricity grid. That’s the bad news. The good news is that the rejuvenated grid will deliver some $2 trillion in customer benefits. EPRI estimates that by 2050 a typical electricity bill will rise by 50% if the changes are made, and by nearly 400% if they are not.

Paul Ausick

Acorda Therapeutics, Inc. (NASDAQ: ACOR) Raised to Neutral at Piper Jaffray.
BP plc (NYSE: BP) Raised to Buy at Soc-Gen.
Consolidated Edison Inc. (NYSE: ED) Cut to Underperform at BofA/ML.
Fair Isaac Corp. (NYSE: FICO) Raised to Hold at Argus.
Franklin Resources, Inc. (NYSE: BEN) Maintained Outperform as Bull of the Day at Zacks.
Gap Inc. (NYSE: GPS) Raised to Hold at Deutsche Bank.
iRobot Corporation (NASDAQ: IRBT) Raised to Overweight at JPMorgan.
Kinder Morgan Energy Partners LP (NYSE: KMP) Started as Buy at Janney Capital.
LDK Solar Co. Inc. (NYSE: LDK) Cut to Hold at Argus.
Limited Brands, Inc. (NYSE: LTD) Raised to Neutral at Goldman Sachs; Reiterated Buy at Argus.
LM Ericsson Telephone Co. (NASDAQ: ERIC) Cut to Underperform at BofA/ML.
Maxim Integrated Products Inc. (NASDAQ: MXIM) Raised to Neutral at Goldman Sachs.
Merge Healthcare (NASDAQ: MRGE) Cut to Underperform as Bear of the Day at Zacks.
Mosaic Co. (NYSE: MOS) Raised to Overweight at JPMorgan; Raised to Buy at Stifel Nicolaus.
OmniVision Technologies Inc. (NASDAQ: OVTI) Reiterated Buy with $45 target at Gleacher & Co.
Pinnacle Entertainment (NYSE: PNK) Raised to Outperform at Credit Suisse.

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JON C. OGG

A variety of utilities and companies have received federal grants to implement various pieces of the smart grid. Constellation Energy Inc. (NYSE:CEG), CenterPoint Energy (NYSE:CNP), Duke Energy (NYSE:DUK), NextEra Energy (NYSE:NEE), Progress Energy (NYSE:PGN), and Exelon (NYSE:EXC) have all been awarded the maximum $200 million stimulus grants. Honeywell International (NYSE:HON), Consolidated Edison (NYSE:ED), and Whirlpool Corp. (NYSE:WHR) have been awarded grants for projects related to customer systems, electric distribution systems, and equipment manufacturing, respectively. General Electric Co. (NYSE:GE) also recently announced a $200 million investment in smart grid. Two other companies, Echelon (NASDAQ:ELON) and MasTec (NYSE:MTZ) have been working on partnerships in smart metering and energy management (Echelon) and building out transmission and distribution lines (MasTec). There’s even an ETF play available, the First Trust NASDAQ Clean Edge Smart Grid Infrastructure Index ETF (NASDAQ:GRID).

The concept of the smart grid is to open a two-way, real-time communications path between utilities and consumers. The current grid is not able to handle real-time events, such as lower prices at certain times of the day when electricity rates are in less demand and therefore lower. Smart meters, sophisticated and scalable demand response systems, and meter data management all need to be able to communicate with one another as well as with utility companies and customers over all kinds of networks.

By comparison with today’s grid, the smart grid is a supercomputer replacing an abacus. Utility companies now get monthly meter readings and batch them up before sending them to the billing system. Under a smart grid system, the utility company will be able to handle millions of data transactions every day.

One research firm estimates that for every million smart meters a utility company’s smart metering operations must support every day over 2,000 meter sways, more than 1,000 customer moves, 10,000 missing reads, 20 meter failures, and more than 97 million meter reads. This is a sea change on an order of magnitude that utility companies have never faced before.

So let’s assume that the smart grid is in place. What are the benefits, both the utility and to the customer? The chief gain to a utility will come from its ability better to balance supply and demand, and to provide greater reliability by making their power purchases more rational. From a strategic perspective, better use of assets such as generating plants and other infrastructure will help utilities make better investment decisions. Operationally, load factors will improve and system losses and outages will decline. As a result, costs should fall.

For consumers get new tools that will help them see how much electricity they are using, when they are using, and how much it costs at exactly the time they use it. Savvy consumers will have far more control over their use of electricity, and once the initial cost of the smart meters and appliances is amortized, consumers will save money.

An almost forgotten benefit of the smart grid is the reduction in CO2 emissions. Because supply will be better fitted to demand, fewer new generating plants will need to be built. Electricity will be more efficiently used and, thus, less will be required. The federal government has targeted a 5%-8% improvement in energy efficiency by 2020 to go along with a 12%-15% renewable energy generation target.

Renewable generation projects using solar PV cost about $396/MWh, solar thermal projects cost about $257/MWh, and onshore wind projects cost about $149/MWh. Energy efficiency projects cost about $50/MWh. And energy efficiency is the goal of the push for a smart grid.

The US Energy Information Administration estimates that an investment of $520 billion in the smart grid will return $1.2 trillion in gross savings by 2020. No other technology even comes close to that kind of return.

Over the next four or five years investment in the smart grid could reach $215 billion, according to an analyst at the Bank of America. The total investment needed to revamp the US electricity grid could be into the trillions of dollars, according to the American Society of Civil Engineers.

The takeaway here is that smart grid technologies boost energy efficiency, which the most cost-effective way we have to reduce energy consumption and CO2 emissions. Nothing else comes close.

Paul Ausick

Akamai Technologies Inc. (NASDAQ: AKAM) Cut to Hold at Citigroup.
Barclays plc (NYSE: BCS) Maintained Buy but cut target and estimates at BofA/Merrill Lynch.
Consolidated Edison Inc. (NYSE: ED) Raised to Neutral at Goldman Sachs.
El Paso Electric Co. (NYSE: EE) Cut to Sell at Goldman Sachs.
Federated Investors, Inc. (NYSE: FII) Raised to Market Perform at FBR.
Intuitive Surgical, Inc. (NASDAQ: ISRG) Cut to Hold at Brean Murray.
Lions Gate Entertainment Corp. (NYSE: LGF) Cut to Market Perform at BMO Capital.
Portland General Electric (NYSE: POR) Cut to Neutral at Goldman Sachs.
Polaris Industries, Inc. (NYSE: PII) Raised to Buy at KeyBanc.
T. Rowe Price Group, Inc. (NYSE: TROW) Raised to Outperform at FBR.

The Home Depot Inc. (NYSE: HD) Raised target to $45 and raised estimates at Citigroup.

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JON C. OGG

Sponsor: 26 Cheap Stocks to Sell – Cheap stocks have been on a tear recently, but nine out of ten stocks are circling the drain!

Kinder Morgan Energy Partners, L.P. (NYSE: KMP) has priced a public secondary offering of 4,500,000 common limited partner interests at $57.15 per common unit.  The underwriters, Goldman Sachs, Citi, Barclays, and others have a 30-day option to purchase up to 675,000 additional common units to cover over-allotments.  The company will be raising more than $250 million.  Shares, or LP interests, are down 2% at $57.09 on triple average volume.

Vanguard Natural Resources, LLC (NYSE: VNR) priced its public secondary offering of 2.25 million shares (common units representing limited liability company interests) at $18.00 per unit.  Vanguard said it expects to receive net proceeds of approximately $38.5 million and it intends to use the net proceeds to redeem 250,000 common units from one of its unitholders, Nami Capital Partners, LLC, and to repay debt.  Citi, Wells Fargo Securities and RBC Capital Markets are the joint book-running managers for the offering and they have been granted a 30-day option to purchase up to an additional 337,500 common units.

Assured Guaranty Ltd. (NYSE: AGO) has announced an agreement to sell 23,924,000 common shares via a public secondary offering.  Assured Guaranty intends to use the net proceeds for general corporate purposes and to complete the external capital portion of the rating agency capital initiatives announced in November, but the company noted that it does not expect to complete the external reinsurance arrangement discussed then. UBS is the sole underwriter for the offering and it will have a 30-day option to purchase up to an additional 3,588,600 common shares to cover overallotments.  This will raise more than $500 million and shares are down 4.6% at $21.62 this morning.

U.S. Energy Corp. (NASDAQ: USEG) has announced a public secondary offering of 5,000,000 shares of common stock to fund its capital expenditure program through 2010, with specific emphasis on the expansion of its Williston Basin drilling program with Brigham Exploration Company and further drilling participation with PetroQuest Energy and Yuma Exploration.  SMH Capital Inc. is the sole book-running and lead manager and C.K. Cooper is co-manager, and these underwriters will have a 30-day option to purchase up to 750,000 additional shares of common stock to cover over-allotments.  This will raise approximately $30 million in gross funds and the stock is actually up 2.5% at $6.09.

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JON C. OGG

Itron Inc. (NASDAQ: ITRI), for smart metering systems, was up 3% at $59.56 with a $2.38 billion market cap.  Comverge, Inc. (NASDAQ: COMV), for peaking and base load capacity solutions to electric utilities, operators, and electric markets, is up 10% at $12.95 with a $286 million market cap.  Echelon Corporation (NASDAQ: ELON) is up 7% at $14.70 with a $598 million market cap.

In the utility sector we are seeing the following moves:

• Consolidated Edison Inc. (NYSE: ED) up 0.3% at $41.47; $136 million grant vs. $11.4 billion market cap.
• Constellation Energy Group, Inc. (NYSE: CEG) up 0.4% at $32.03;  $200 million grant vs. $6.45 billion market cap.
• Duke Energy Corporation (NYSE: DUK) up 0.15% at $15.95; $200 million grant vs. $20.7 billion market cap.wins $200 million smart grid grant
• FPL Group Inc. (NYSE: FPL) down 2.2% at $50.95; $200 million grant vs. $21 billion market cap.
• NV Energy, Inc. (NYSE: NVE) up 1.3% at $11.52; $138 million grant vs $2.7 billion market cap.
• Pepco Holdings, Inc. (NYSE: POM) up 0.4% at $14.51; $168 million grant vs. $3.2 billion market cap.
• Southern Company (NYSE: SO) up 0.35% at $32.69; $165 million grant vs. $26 billion market cap.

Many of the beneficiary companies have not reported yet their awards.

Jon C. Ogg
October 27, 2009

Energy Conversion Devices, Inc. (NASDAQ: ENER) was up huge yesterday on rumors that the company was close to being acquired by Applied Materials (NASDAQ: AMAT).  While this rose $2.60 on over 16 million shares to $13.01, shares are playing a give-back this morning as many question the notion that a buyout is likely.  Applied Materials is further up the food chain in solar.  Shares are down 2.5% at $12.69 on fairly active trading today.

Canadian Solar Inc. (NASDAQ: CSIQ) is trading up marginally on reports that it entered into a second memorandum of understanding with a subsidiary of the LG Group of South Korea to implement at least 10 MW of PV power projects in Korea in 2010.  Shares are up 0.7% at $16.82 on fairly active volume of 530,000 shares considering an average volume of 1.9 million shares.

Veeco Instruments Inc. (NASDAQ: VECO) is trading higher after saying it has received a multi-million dollar order from GroupSat (Hong Kong) Limited for its suite of FastFlex™ Web Coating Systems for solar products and tools in Suzhou, China.  Veeco shares are up 1.9% at $22.44.

Word came yesterday that Consolidated Edison Inc. (NYSE: ED) has canceled or delayed its 12-megawatt solar pilot program that was just announced in April, according to Clean Technology Insight.  It seems that the subsidies and stimulus funds did not come through or were not enough for it to be feasible.  As that is an $11 billion utility, this is more of a blow to solar rather than a blow to Con Ed.

Also, yesterday came word from MEMC Electronic Materials Inc. (NYSE: WFR) that it will end production of silicon crystal ingots and wafers at facilities in Sherman, Texas, and St. Peters, Missouri in closures in 2010 and 2011.  This comes as the company lowered guidance on weakness in the chip demand for its products and for the continued weakness in solar demand.

Because US subsidy money has been slow to come and that Germany is under pressure over its subsidies, China is the last one that has increased its solar subsidy plans.  The problem here is that companies are now losing money in the sector which were not losing before.  Companies kept increasing capacity and inventories are rising at the same time that orders are faltering.  With the cost per watt getting closer to an average of $1.00 per watt next year, this adds woes all the way up the food chain.

What the solar sector needs for the demand to come back is either a screaming economy to return or $100 oil to jolt everyone again as a reminder that fossil fuel is both expensive and not endless.  If neither of those occur, the solar sector is likely to see a continued wave of ups and downs.  And the men will be separated from the boys.

JON C. OGG
SEPTEMBER 9, 2009