Amgen Inc. (NASDAQ: AMGN) Reiterated Buy and Raised target to $80 at Argus.
AON Corporation (NYSE: AON) Raised to Neutral from Underperform at Credit Suisse.
EQT Corporation (NYSE: EQT) Raised to Hold from Sell with $50 target at Canaccord Genuity.
Exelixis, Inc. (NASDAQ: EXEL) Started as Outperform at Credit Suisse.
Intrepid Potash (NYSE: IPI) Cut to Sell at Goldman Sachs.
LM Ericsson Telephone Co. (NASDAQ: ERIC) Maintained Buy but target now at $14 from $19 at Argus.
Medivation, Inc. (NASDAQ: MDVN) Started as Outperform at Credit Suisse.
Nike Inc. (NYSE: NKE) Raised to Buy at Argus.
NII Holdings, Inc. (NASDAQ: NIHD) named as Bear of the Day at Zacks.
NYSE Euronext (NYSE: NYX) Cut to Sector Perform at RBC Capital.
Potash Corp. of Saskatchewan (NYSE: POT) Cut to Neutral at Goldman Sachs.
Rackspace Hosting Inc. (NYSE: RAX) named Momentum stock of the day at Zacks.
Range Resources Corporation (NYSE: RRC) Raised to Hold from Sell with $59 target at Canaccord Genuity.
Symantec Corporation (NASDAQ: SYMC) Reiterated Buy and $24.00 price target at Argus.
Tesla Motors, Inc. (NASDAQ: TSLA) Started as Buy at Jefferies.
Under Armour, Inc. (NYSE: UA) Raised to Buy at Needham.
UnitedHealth Group (NYSE: UNH) named as Bull of the Day at Zacks. 

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JON C. OGG

AutoNation Inc. (NYSE: AN) 38.1% year-to-date; caution: at $38.94 the consensus price target is $31.28.

Ross Stores Inc. (NASDAQ: ROST) 38.7% year-to-date; caution: at $87.73 the consensus price target is $85.00.

Limited Brands, Inc. (NYSE: LTD) 39.0% year-to-date; at $42.71 the consensus price target is $44.71.

Goodrich Corporation (NYSE: GR) 39.2% year-to-date; This is being acquired, so no color.

Tesoro Corporation (NYSE:TSO) 39.9% year-to-date; at $25.94 the consensus price target is $20.31.

EQT Corporation (NYSE:EQT) 41.6% year-to-date; at $63.50 the consensus price target is $72.28.

Electronic Arts Inc. (NASDAQ: ERTS) 42.6% year-to-date; at $23.35 the consensus price target is $25.63. This was previously listed as our top pick for the best video game stock for 2011.

Whole Foods Market, Inc. (NASDAQ: WFM) 42.6% year-to-date; at $72.12 the consensus price target is $74.47.

Ralph Lauren Corporation (NYSE: RL) 43.2% year-to-date; caution: at $158.79 the consensus price target is $150.00.

Teradata Corporation (NYSE: TDC) 44.9% year-to-date; at $59.66 the consensus price target is $60.56.

Range Resources Corporation (NYSE: RRC) 53.0% year-to-date; at $68.84 the consensus price target is $76.50.

Mastercard Incorporated (NYSE: MA) 54.9% year-to-date; at $347.24 the consensus price target is $374.82.  It seems odd to see one financial stock here.

Humana Inc. (NYSE: HUM) 55.1% year-to-date; at $84.89 the consensus price target is $88.71. Health insurance has not been as bad of a business as the administration was looking for.

Chipotle Mexican Grill, Inc. (NYSE: CMG) 58.1% year-to-date; caution: at $336.12 the consensus price target is $328.45.  The growth continues, but it is at or close to being fully valued.

V.F. Corporation (NYSE: VFC) 60.4% year-to-date; at $138.22 the consensus price target is $144.33.

Intuitive Surgical, Inc. (NASDAQ: ISRG) 68.3% year-to-date; caution: at $433.86 the consensus price target is $419.27.  DaVinci sales remain robust as more surgeons are looking for robotic surgery capabilities.

Biogen Idec Inc. (NASDAQ: BIIB) 73.5% year-to-date; caution: at $116.36 the consensus priced target is $115.22.  Here is how this compared to the rest of its peers before earnings season.

El Paso Corp. (NYSE: EP) 81.8% year-to-date; being acquired so no color.

Cabot Oil & Gas Corporation (NYSE: COG) 105.3% year-to-date; ; at $77.72 the consensus price target is $91.32.

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JON C. OGG

Natural gas prices at the Henry Hub have been rising, coming within a hair’s breadth of $5.00/million BTUs, a level last seen in August 2010. The low prices have slowed the growth in onshore drilling for natural gas in the US, at the same time that it is encouraging some utilities to look at natural gas as a fuel for baseload power generation.

The abundant supplies of US natural gas available throughout the drilling technique known as hydraulic fracturing, or ‘fracking’ or ‘fracing’, has swept the industry, leading to massive amounts of new gas discoveries and production, as well as to lower prices. The industry needs prices to rise to around $7-$8/million BTUs in order for it to make a decent profit, but with prices stuck below $5, that day appears to be well into the future.

Investing in natural gas purely as a commodity play is best left to experienced traders. There are, of course, other ways. Four funds we’ll look at here are United States Natural Gas Fund (NYSE: UNG), First Trust ISE-Revere Natural Gas Index Fund (NYSE: FCG), SPDR S&P Oil & Gas Exploration and Production (NYSE: XOP), and PowerShares Dynamic Oil & Gas Services Fund (NYSE: PXJ).

United States Natural Gas Fund (NYSE: UNG) invests in near-month natural gas NYMEX futures contracts. In the past 52-weeks, the fund has lost more than -25% of its NAV, but with $1.9 billion in assets it is the largest natural gas fund available. Because it invests only in near-month contracts, UNG must roll-over its contracts every month, in effect selling its about-to-expire position and purchasing new contracts for the following month. In a contango market, where future-month contract prices exceed near-month contract prices, such a strategy loses money every month. Thus, even when natural gas prices rise, UNG can lose money because the future contract price will rise at least as quickly as the current price.

Why own such a thing? Primarily as a hedge against inflation and almost no correlation with equity prices. Pretty small beer, all things considered. UNG is trading at $11.93 at about mid-day, within a 52-week range of $10.02-$17.68.

The First Trust ISE-Revere Natural Gas Index Fund (NYSE: FCG) tries to replicate the ISE-Revere Natural Gas Index by investing at least 90% of its funds in the common stock of that index’s companies. The fund’s top five holdings are Stone Energy Corp. (NYSE: SGY), Petrohawk Energy Corp. (NYSE: HK), Cabot Oil & Gas Corp. (NYSE: COG), Southwestern Energy Co. (NYSE: SWN), and SandRidge Energy, Inc. (NYSE: SD). These five comprise 18.95% of the fund’s holdings. The fund’s assets total $586 million and it is trading today at $21.19, within a 52-week range of $14.39-$23.75. In the past year, the fund has gained more than 30%.

The SPDR S&P Oil & Gas Exploration and Production (NYSE: XOP) invests in equities  of companies that explore for and produce oil and natural gas. The fund’s top five holdings are Cabot, W&T Offshore, Inc. (NYSE: WTI), Petrohawk, EQT Corp. (NYSE: EQT), and Southwestern Energy. The fund’s assets total $908 million. The fund is trading at $56.55 today, within a 52-week range of $37.44-$65.76. Over the past year, the fund has gained about 42%.

The PowerShares Dynamic Oil & Gas Services Fund (NYSE: PXJ) tracks an equity index called the Dynamic Oil Services Intellidex. It invests at least 80% in common stock of oil and gas services companies, and may invest up to 90% of its assets in the Intellidex index companies. Its five largest holdings are Baker Hughes Inc. (NYSE: BHI), Nabors Industries, Ltd. (NYSE: NBR), Halliburton Co. (NYSE: HAL), FMC Technologies, Inc. (NYSE: FTI), and Diamond Offshore Drilling, Inc. (NYSE: DO). The fund’s assets total about $247 million and it is trading today at $23.35, in a 52-week range of $13.98-$26.84. The fund has gained about 66% in the past year.

A reasonable conclusion from this quick survey is that investing in natural gas producers pays off nicely, but the real gains have come in the services sector. Holding natural gas futures has very limited appeal, but plenty of investors do it.

Growth in the services sector is likely to continue as drilling picks up both onshore in the US and offshore in the US Gulf of Mexico. As for the producers, Cabot, Stone, and Petrohawk are all involved in natural gas plays that produce significant amounts of liquids. And that’s where the money is, not in gas. Gas may become worth more over the next year or so, but the price differential between liquids and gas is never likely to close again.

Paul Ausick

Today’s crop of thrifty companies includes Devon Energy Corporation (NYSE:DVN), SandRidge Energy Inc. (NYSE:SD), and Mariner Energy, Inc. (NYSE:ME). Actually, Devon only announced that it would announce its 2009 capital budget "in early 2009" when it reports earnings for 2008. This is news because the company historically disclosed its spending plans in December for the following year. This development is not unlike Apple’s announcement that Steve Jobs won’t be attending the Macworld this year.

In October, SandRidge said it was reducing its capex budget from $2billion to $1 billion and upping production to 120 billion cubic feetequivalent. Today the company cut its capex budget by 50%, to $500million and reduced its production guidance for 2009 to 110 billioncubic feet equivalent for the year. That’s a big change in just twomonths.

SandRidge has also been trying to sell properties in East Texas, andtoday’s press release notes that the company had "several bids … thatwould have been accepted had there been certainty with respect tocapital availability." So the company has decided to keep theproperties. Now, the company is reducing its rig count from a high of47 in September to just 12 by December 2009.

Mariner plans to disclose its capex and production guidance for 2009after the market closes today. Hess Corporation (NYSE:HES) previouslyrevealed acapex budget of $3.1 billion for 2009, compared with spending of $3.3billion in the first nine months of 2008 against an original budget of$5 billion. Equitable Resources Inc. (NYSE:EQT) has also revealed a capex budgetcut of nearly 40% for 2009.

So far, capex spending levels look like they are headed back to 2002 or2003 levels, when oil prices were in the $20s/barrel. This is not goodfor the oil companies because when demand picks back up, they won’t bein a position to meet it. Another price spike comes along, and thenasty cycle continues.

With the exception of Devon and Hess, these are either small- ormid-cap companies. That’s important because big companies need bigprojects to invest in. There are no big projects around. Either they’retied up by national oil companies or they cost a fortune, which eventhe biggies aren’t going to spend now.

But smaller companies usually can find projects that provide a decentreturn on a much smaller investment. If SandRidge and Mariner arepulling in, its not because the projects aren’t there. It’s thefinancing. The companies can’t finance new spending strictly from cashflow; they need credit. There’s no credit available at a reasonableprice, so they hold on to as much cash as they can and hope for animprovement soon.

If OPEC’s 4+ million barrel per day cut doesn’t drive oil higher, then capex cuts may become more and more frequent.

Paul Ausick
December 17, 2008

When the company reported its third quarter results, it said it wouldnot have to go to the capital markets to fund a 2009 capex budget ofabout $1 billion. It appears to have made good on that statement.

The company also expects to increase natural gas sales by 15% in 2009.That amounts to about 97 billion cubic feet equivalent. The bigquestion, of course, is how much they can sell the gas for. Equitableholds swaps on about 30% of its production at $5.91 per thousand cubicfeet, and collars on about a fourth at a low of $7.34 and a high of$13.68. Unless the market turns around completely, these hedges shouldpay off for the company.

Equitable shares closed at $30.09 yesterday, about 60% below the 52-week high.

Paul Ausick
December 4, 2008

• Encore Acquisition (EAC) Raised to Buy at Goldman Sachs.
• Equitable Resources (EQT) Started as Outperform at Credit Suisse.
• Health Net (HNT) Raised to Neutral at Goldman Sachs.
• Sovereign Bancorp (SOV) Raised to Buy at Citigroup.
• Whole Foods (WFMI) Raised to Hold from Underperform at Jefferies.
• XTO Energy (XTO) Raised to Buy at Goldman Sachs.

Jon C. Ogg
November 6, 2008

Chevron reported earnings of $6 billion, or EPS of $2.90, for thesecond quarter of 2008, up from $5.4 billion and EPS of$2.52 for thesame period last year. Revenues totaled $83 billion for the quarter.But analysts were expecting revenues of $92.41 billion and EPS of$3.03. It’s the same story as last quarter: production revenues are wayup, following crude oil prices, and refining/marketing revenues are waydown.

Equitable, which focuses mainly on natural gas production, reportedsecond quarter earnings of $55.39 million (EPS of $0.44) on revenues of$215 million. For the same period a year ago, the company had revenuesof $176.29 million, income of $107.34, and EPS of $0.88. Analystsexpected EPS of $0.44 on revenues of $289.71 million. Like Chevron,Equitable fell short on revenues mainly due to production problems andhigher operating costs.

In oilfield services, Tidewater reported earnings of $84.8 million, orEPS of $1.64, on $340.1 million in revenues. For the same period a yearago, the company earned $87.5 million ($1.55 EPS) on $205.5 million inrevenues. The company beat expectations of $1.52 EPS and revenues of$333.24 million. But operating costs are up sharply, and that’sdragging the stock down in early trading.

As for gold, El Dorado reported net income for the second quarterof$25.16 million, or EPS of $0.07, on revenues of $82.53 million. Inthe same period last year, the company posted revenues of $76.66million, net income of $26.73 million, and EPS of $0.08. El Dorado metanalysts EPS estimates. The stock is up about $0.35 in early trading.The big plus in El Dorado’s report is its low cash costs per ounce ofgold produced. Average costs were $229/ounce, and average sales pricewas $904/ounce. In the same period last year, El Dorado’s cash costswere $259/ounce and its sales price was $664/ounce. Production was thedifference. In the second quarter of 2007, the company produced 112,702ounces of gold compared with 88,610 ounces in the 2008 second quarter.

The high cost of fuel helps Chevron and Equitable, but Chevron’sproduction and operating costs rose more than 50% y-o-y. Equitable’sproduction operating expenses in the 2008 second quarter were $50.8million, 35% higher than the same period a year ago. Tidewater’s vesseloperating costs were nearly 28% higher y-o-y. Only El Dorado reducedits production costs.

Historically, gold trades at about 10x the price of oil. Oil is up morethan $4.00 so far today, to more than $128/b. Gold is up about $1.60,to about $924/ounce. If you believe the prior ratios are relevant intoday’s world, this looks like an opportunity.

Paul Ausick
August 1, 2008