The unofficial closing bells put the DJIA down more than 22 points to 12,734.63 (-0.18%), the NASDAQ fell about 13 points (-0.46%) to 2,805.28, and the S&P 500 fell -0.57% or nearly 7 points to 1,318.45.

There were several analyst upgrades and downgrades today, including General Dynamics Corp. (NYSE: GD) cut to ‘perform’ at Oppenheimer; Vale S.A. (NYSE: VALE) cut to ‘hold’ at Deutsche Bank; Green Mountain Coffee Roasters Inc. (NASDAQ: GMCR) started as ‘perform’ at Williams Capital; Corning Inc. (NYSE: GLW) cut to ‘underweight’ at Morgan Stanley; and Chesapeake Energy Corp. (NYSE: CHK) cut to ‘underweight’ at JPMorgan.

Earnings reports since markets closed on last night have led to some price changes as of the last half hour of trading today: Airgas Inc. (NYSE: ARG) is down -3.66% at $77.29; Arctic Cat Inc. (NASDAQ: ACAT) is up more than 19% at $28.40 after posting a new 52-week high of $29.20 earlier today; AT&T Inc. (NYSE: T) is down -2.65% at $29.41; Bristol-Myers Squibb Co. (NYSE: BMY) is down -0.92% at $32.40; Caterpillar Inc. (NYSE: CAT) is up 1.95% at $111.18; Cypress Semiconductor Corp. (NASDAQ: CY) is down more than -11% at $17.03; Lockheed Martin Corp. (NYSE: LMT) is up 0.95% at $82.51; McCormick & Co. Inc. (NYSE: MKC) is up 0.90% at $78.55; Monster Worldwide Inc. (NYSE: MWW) is down more than -20% at $7.18; Potash Corp. of Saskatchewan Inc. (NYSE: POT) is up 1.61% at $45.96; and Raytheon Co. (NYSE: RTN) is up 0.34% at $49.88.

Other standouts from today include the following stocks:

VIST Financial Corp. (NASDAQ: VIST) is up more than 62% at $11.20 after posting a new 52-week high of $11.50 earlier today. The bank holding company has agreed to be acquired by Tompkins Financial Corp. (AMEX: TMP) in an all-stock deal at an 86% premium to last night’s closing price, or about $85 million.

RealNetworks Inc. (NASDAQ: RNWK) is up more than 35% at $9.98. The digital media company has sold a video codec and a number of patents to Intel Corp. (NASDAQ: INTC) for $120 million.

Momenta Pharmaceuticals Inc. (NASDAQ: MNTA) is down nearly -21% at $15.13. The biotechnology company lost its bid for an injunction against certain competitors.

Netflix Inc. (NASDAQ: NFLX) is up about 22% at $116.01. The digital video streaming and rental company reported a better-than-expected number of new subscribers after markets closed last night.

Enterprise Financial Services Corp. (NASDAQ: EFSC) is down more than -19% at $12.51. The bank holding company will restate earnings for 2010 and the first three quarters of 2011 and expects to dilute 2010 earnings by half as a result.

Stay tuned for Friday. New York Fed President William Dudley is giving a speech in the morning. We have noted the following events on the schedule (all times Eastern):

• 8:30 a.m. – US GDP report
• 9:55 a.m. – Reuters/University of Michigan consumer sentiment index

Your email address

subscribe

terms and conditions

Paul Ausick

Automatic Data Processing, Inc. (NYSE: ADP) Cut to Neutral at Citigroup; Cut to Market Perform at Wells Fargo.
Chesapeake Energy Corporation (NYSE: CHK) Cut to Underweight at JPMorgan.
The Charles Schwab Corporation (NYSE: SCHW) Cut to Neutral at JPMorgan.
Corning Inc. (NYSE: GLW) Cut to Underweight at Morgan Stanley.
E*TRADE Financial Corporation (NASDAQ: ETFC) Cut to Neutral at Goldman Sachs.
General Dynamics Corporation (NYSE: GD) Cut to Perform at Oppenheimer.
General Electric Co. (NYSE: GE) Reiterated Buy with $22 Target at Argus.
Green Mountain Coffee Roasters Inc. (NASDAQ: GMCR) Started as Perform at Williams Capital.
Inergy Midstream, L.P. (NYSE: NRGM) Started as Outperform with $26 target at Credit Suisse.
Illinois Tool Works Inc. (NYSE: ITW) Raised to Buy at BofA/ML.
Lam Research Corporation (NASDAQ: LRCX) Maintained Outperform with $56 target price at Credit Suisse.
Life Technologies Corporation (NASDAQ: LIFE) Raised To Outperform From Market Perform By Leerink Swann
Netflix, Inc. (NASDAQ: NFLX) Raised to Buy at Citigroup; Maintained Outperform and raised target to $125 at Credit Suisse.
NVIDIA Corporation (NASDAQ: NVDA) Raised to Positive at Susquehanna.
Ryanair Holdings plc (NASDAQ: RYAAY) Cut to Neutral at Nomura.
Vale S.A. (NYSE: VALE) Cut to Hold at Deutsche Bank.

If you enjoyed the top analyst calls, you can sign up in the box below to join our morning email list to receive news directly in your inbox each morning. We include major analyst upgrades and downgrades, IPO and M&A news, special situation developments, observations on Warren Buffett and key market gurus, as well as special exclusive feature stories.

Your email address

subscribe

terms and conditions

JON C. OGG

Read: The 10 Most Expensive Weapons in the World

To understand the magnitude of these weapons’ budgets, one only needs to look at the recent government initiatives aimed to save the economy. The $868 billion cost of the most expensive weapons in the world is much more than the $700 billion set aside by Congress as part of the TARP to salvage the nation’s massive financial system. It is also more than President Obama’s $787 billion stimulus package approved by Congress in February 2009.

The Pentagon breaks the costs of weapons into two categories. The first is research and development. The second is the actual costs to buy the weapons. Together, the two figures can be staggering. The total cost of the Virginia Class Submarine, for example, surpasses $83 billion. That entire amount has been and will be invested to launch only 30 of the weapons. All told, it is an extraordinary expense base to maintain America’s defense.

24/7 Wall St. reviewed the figures from the Department of Defense budget and provided by the General Accounting Office to find the 10 Most Expensive Weapons in the World.”

The unofficial closing bells put the DJIA up about 21 points to 12,418.57 (0.17%), the NASDAQ fell less than 1 point (-0.01%) to 2,648.36, and the S&P 500 rose 0.02% or less than 1 point to 1,277.31.

There were several analyst upgrades and downgrades today, including EMC Corp. (NYSE: EMC) added to ‘US Focus List’ at Credit Suisse; General Dynamics Corp. (NYSE: GD) raised to ‘overweight’ at JPMorgan; Green Mountain Coffee Roasters Inc. (NASDAQ: GMCR) reiterated ‘buy’ with $94 target price at Canaccord Genuity; Potash Corp. of Saskatchewan Inc. (NYSE: POT) started as ‘underperform’ at National Bank; and Tivo Inc. (NASDAQ: TIVO) raised to ‘overweight’ at Evercore Partners.

Earnings reports of note since markets closed yesterday include: Unifirst Corp. (NYSE: UNF) is up more than 3% at $59.83; and Progress Software Corp. (NASDAQ: PRGS) is down more than -11% at $17.55. Tomorrow sees earnings from Constellation Brands Inc. (NYSE: STZ), Monsanto Co. (NYSE: MON), and Family Dollar Stores Inc. (NYSE: FDO) among others.

Other standouts from today include the following stocks:

LCA-Vision Inc. (NASDAQ: LCAV) is up more than 40% at $4.33. The laser vision correction system provider said that it performed more than 14,000 procedures in the fourth quarter, up 30% year-over-year.

Rare Element Resources Ltd. (AMEX: REE) is up more than 27% at $4.53. The rare earths miner announced that its resource at the company’s Bear Lodge project is 38% higher than previously believed.

Netflix Inc. (NASDAQ: NFLX) is up nearly 11% at $80.02. The video distributor reported that it streamed more than 2 billion hours of video in the fourth quarter. More details on this story are available here.

Acme Packet Inc. (NASDAQ: APKT) is down more than -19% at $25.65, after posting a new 52-week low of $25.20 early this morning. The networking company warned on earnings last night. We have more coverage here.

Life Partners Holdings Inc. (NASDAQ: LPHI) is down more than -15% at $5.38. The life insurance company has been accused of accounting fraud by the US Securities and Exchange Commission.

Stay tuned for Thursday. Here are the noteworthy events on the schedule (all times Eastern):

• 7:30 a.m. – Challenger Gray & Christmas job-cut report
• 8:15 a.m. – ADP employment report
• 8:30 a.m. – Weekly initial unemployment benefits claims report
• 10:00 a.m. – ISM non-manufacturing index
• 10:30 a.m. – EIA weekly natural gas report
• 11:00 a.m. – EIA weekly petroleum status report
• 4:30 a.m. – Federal Reserve balance sheet and money supply reports

Your email address

subscribe

terms and conditions

Paul Ausick

Acme Packet, Inc. (NASDAQ: APKT) Cut to Neutral at Wedbush; estimates and targets lowered after revenue warnings from Morgan Keegan and Wells Fargo.
Affymetrix Inc. (NASDAQ: AFFX) Raised to Neutral from Underweight at JPMorgan.
AK Steel Holding Corporation (NYSE: AKS) Raised to Neutral at Bank of America Merrill Lynch.
Apple Inc. (NASDAQ: AAPL) Reiterated Outperform with $500 target and raised estimates at Credit Suisse.
Crown Castle International Corp. (NYSE: CCI) Started as Buy at Stifel Nicolaus.
EMC Corporation (NYSE: EMC) added to the U.S. Focus List at Credit Suisse.
General Dynamics Corporation (NYSE: GD) Raised to Overweight at JPMorgan.
Green Mountain Coffee Roasters Inc. (NASDAQ: GMCR) Reiterated Buy with $94 target at Canaccord Genuity.
Lockheed Martin Corporation (NYSE: LMT) Cut to Underperform by RBC Capital Markets.
Mosaic Co. (NYSE: MOS) Cut to Neutral at Citigroup.
NetApp Inc. (NASDAQ: NTAP) Cut to Neutral from Outperform at Credit Suisse.
Potash Corp. of Saskatchewan, Inc. (NYSE: POT) Started as Underperform at National Bank.
Steel Dynamics Inc. (NASDAQ: STLD) Raised to Buy at Bank of America Merrill Lynch.
TiVo Inc. (NASDAQ: TIVO) Raised to Overweight at Evercore Partners.

Your email address

subscribe

terms and conditions

JON C. OGG

In the age of austerity and military budgets being slashed to deal with deficits, Iran has a chance of turning 2012 accidentally into the year of defense stocks. Alliant Techsystems Inc. (NYSE: ATK), General Dynamics Corp. (NYSE: GD), L-3 Communications Holdings Inc. (NYSE: LLL), Lockheed Martin Corporation (NYSE: LMT) and Raytheon Co. (NYSE: RTN) could all hang in the balance. With operations all but gone in Iraq and with the trend in Afghanistan being one of leaving, Iran is the obvious wild card.

If anything real ever comes out of Iran’s religious political leadership other than how neat it is to stone people over adultery, how it denies that alternative lifestyles exist in Iran, or about how it wants nuclear power for peace, this may end up making the sell-off seen in defense stocks a bargain of the century. If (or when) Iran ever announces that it has built a nuclear bomb, it likely is going to be difficult for Western nations to slash and burn too far on the defense spending. Before running out and loading up on warfare stocks, please remember … this is all “If, Then.”

Alliant Techsystems Inc. (NYSE: ATK) trades at $56.15 and the 52-week trading range is $51.26 to $78.17. Thomson Reuters has a consensus price target of $71.70, implying upside of roughly 28%. Alliant Tech currently has a lower dividend yield against peers with only a payout rate of about 1.4% and shares are up about 4% since the Thanksgiving break. Alliant is highly dependent on the business of selling bullets and it no longer has the booster-rocket business from Space Shuttle launches.

General Dynamics Corp. (NYSE: GD) trades at $66.15 and the 52-week trading range is $53.95 to $78.27. Thomson Reuters has a consensus price target of $76.16, implying upside of about 15%. General Dynamics currently yields about 2.9%.

L-3 Communications Holdings Inc. (NYSE: LLL) trades at $66.85 and the 52-week trading range is $58.30 to $88.55. Thomson Reuters has a consensus price target of $71.64, implying upside of only about 7%. L-3 yields about 2.7% in its dividend and shares are up about 5% from the Thanksgiving break.

Lockheed Martin Corp. (NYSE: LMT) trades at $81.25 and the 52-week trading range is $66.36 to $82.43. Thomson Reuters has a consensus price target of $80.12, implying that the stock is above a full-value price. Its dividend yield is quite high at about 5% and shares are up almost 5% since its $1.00 dividend was reflected in the stock in late November.

Raytheon Co. (NYSE: RTN) trades at $48.50 and the 52-week trading range is $38.35 to $53.12. Thomson Reuters has a consensus price target of $49.53, implying upside of only about 2%. Its dividend yield is currently about 3.7% and shares are up about 14% since the Thanksgiving break.

Unless something new comes out of North Korea, or unless there is more unrest in the Middle East, Iran is the big worry for the country today. With such high payouts from some defense contractors, it is worth wondering just how high some of the payouts can rise during the proliferation of austerity.

JON C. OGG

LinkedIn executives to sell shares. LinkedIn (NYSE: LNKD) executives want to sell a relatively large portion of their shares. This adds to the pressure on the stock . The company has already said it will offer more shares to the public. It also is clear that venture capitalists who invested in the LinkedIn over the years would like to make money on their positions too. Bain says it plans to sell a portion of its position along with LinkedIn executives. It is only natural that management would act similarly in its self-interest. That will not keep other investors from concern about dilution. And, why would executives sell shares now, if LinkedIn’s prospects are so bright? Expect LinkedIn’s stock to suffer because of the announcement.

The headline news about Warren Buffett was that he bought $10.6 billion in IBM (NYSE: IBM) shares. Just as important were other additions and dilutions he made to his portfolio. These became public as Berkshire Hathaway (NYSE: BRK.A, BRK.B), the company Buffett runs, released at list of its third-quarter holdings. Buffett increased his holdings in Wells Fargo (NYSE: WFC), a sign he is not as concerned about a new banking crisis as many bank analysts are. He moved even further into the financial sector with a new investment in Visa (NYSE: V). He also took new positions in military hardware provider General Dynamics (NYSE: GD), DirecTV (NYSE: DTV) and Intel (NYSE: INTC). All of these seem very conservative. Yet, Buffett has usually invested that way.

Occupy Wall Street forced out. For some reason, the financial headlines were dominated by the decision of New York City to use police to remove Occupy Wall Street protestors from the city’s Zuccotti Park. The story was the top headline in the Wall Street Journal and the New York Times. There is a great deal of evidence that the mass of people in their tents had disrupted that sales of businesses in the area. The large number of people in the park presented a public health hazard. Perhaps most important, the protestors were not successful enough for their removal by police to cause a ground swell of support. “Occupy” protestors are being moved out of their quarters by police in other cities. The movement ended almost before it began.

Douglas A. McIntyre

The US House-Senate budget reduction committee, or the ‘super committee’, that is charged with recommending $1.5 trillion in budget cuts over the next 10 years has just another 10 days to deliver its recommendations before automatic cuts of $1.2 trillion kick in. If the committee fails to agree on cuts, the automatic cuts fall equally among defense spending and a variety of programs that are together lumped under the heading discretionary spending.The discretionary spending cuts would likely come from federal programs that aid the poor, education, and the elderly.

No specific cuts have been identified in the legislation that created the super committee, but to achieve $600 billion in cuts over ten years is sure to cause some pain to a variety of constituencies. That amount is increased by the $350 billion in cuts already approved by Congress over the next ten years. Trying to discern where a publicly traded company might get hurt by impending cuts is, at this point, pretty much guesswork.

On the defense end, cuts are far more likely to have an effect on publicly traded companies that have significant federal defense contracts for everything from fighter planes to software. The following chart shows the top ten defense contractors in 2011, together with the total amount of their contracts, as derived from 2010 contract levels:

Privately held DynCorp International Inc. falls just above H-P, at $2.4 billion. Excluding DynCorp, the top ten contractors are slated to post sales of $47.6 billion in federal contracts in 2011. The top ten in 2010 posted sales of $68.2 billion. So far in 2011, a total of more than $196 billion in defense contracts have been awarded. The total in 2010 reached $247 billion, and that number is almost surely out of reach for this year.

Cuts to defense spending have already begun, as the US winds down its presence in Iraq and prepares to do the same in Afghanistan. Not including the wars in Iraq and Afghanistan, the Pentagon budget for 2011 reached nearly $550 billion.

One of our leading candidates for a buyback announcement is Cisco Systems, Inc. (NASDAQ: CSCO), which announces quarterly earnings tomorrow and is expected to post EPS of $0.38 on revenue of $10.98 billion. Cisco just initiated its first dividend, a paltry $0.12/share, and has spent more than $50 billion since 2004 on buybacks. These billions have not helped the share price, but buybacks appear to be Cisco’s weapon of choice against falling share prices. Don’t be surprised if tomorrow’s earnings announcement includes another stock repurchase.

Wal-Mart Stores Inc. (NYSE: WMT) has seen its share price fall by more than -6% since Friday. The company announced a $15 billion share repurchase plan in June that puts the company on track to return control to the Walton family any day now. The current opportunity to buy back even more shares at an even lower price may be too good to pass up.

Kohl’s Corp. (NYSE: KSS) authorized an increase in its repurchase plan to $3.5 billion last February. The company’s market cap at the time was $15.7 billion. Shares posted a new 52-week low yesterday and Kohl’s market cap has dropped to $12.15 billion.

Home Depot Inc. (NYSE: HD) announced in June a total repurchase plan worth $22.5 billion. At the time, the company’s shares had lost more than -3.5% year-to-date. Shares are down more than -15% year-to-date after yesterday’s debacle, and Home Depot is likely to speed up repurchases rather than commit more cash to its buyback plan.

Lowe’s Companies Inc. (NYSE: LOW) has had a difficult time closing its valuation gap with Home Depot. The company authorized a $5 billion share repurchase plan in February, when shares traded at around $23.00. Shares hit a new 52-week low yesterday. Lowe’s, like Home Depot, is unlikely to add more to its buyback plan, but it could speed up repurchases.

GameStop Corp. (NYSE: GME) has a $500 million share repurchase plan in place. The company reports earnings on August 18th and an additional $500 million addition to the buyback pool is not out of the question. Video game stocks have had a rough time recently, and GameStop’s price/book ratio is less than 1, making now a good time for the company to try to boost its valuation, given that it offers no dividend.

Dell Inc. (NASDAQ: DELL) has spent $1.6 billion of its authorized $2 billion buyback program. The company’s market cap has dropped by about -$4 billion since the end of June. Boosting its repurchase program doesn’t cost Dell much and looks good at the same time.

ConocoPhillips Corp. (NYSE: COP) boosted its dividend and announced a $10 billion buyback program in February. Faced with collapsing crude oil prices, a boost to the repurchase plan is not out of the question.

General Dynamics Corp. (NYSE: GD) authorized a share repurchase program for 10 million shares of stock in June. At the time, the program was estimated to be in the range of $750 million. At today’s share price it amounts to less than $600 million. Adding a few million more shares is essentially free and could give the company a PR boost.

General Electric Co. (NYSE: GE) still has more than $11 billion remaining in its stock repurchase authorization that was suspended in 2008 and restarted late last month. The company could decide to boost that figure back to its original authorization of $15 billion. That would just about cover the year-to-date drop in the stock.

For an ETF that focuses on companies buying back large amounts of stocks, there is the PowerShares Buyback Achievers (NYSE: PKW) ETF.  Its top holdings differ greatly from our list of companies here because it calculates its holdings based on the Mergent Buyback Achievers Index.

Paul Ausick

Lockheed Martin Corporation (NYSE: LMT) is the leading dividend payer on this list with almost 3.9% dividend payout and a payout ratio of 37.5%. Lockheed boasts a whopping return on equity of 68%, easily the highest on this list per our screening criteria.  With shares currently trading around $77.50, the 52-week range is $67.68 to $82.43.

Emerson Electric Co. (NYSE: EMR) pays a dividend of 2.7%.  Emerson’s quarter-over-quarter earnings growth is 36.25%, second only to Honeywell (HON) in this group of companies that were screened.  With shares trading near $51.50, the 52-week range is $42.69 to $62.24.

General Dynamics Corp. (NYSE: GD) pays a 2.6% dividend. With a payout ratio of 24.5%, the company boasts the best dividend coverage in this group. Its year-over-year earnings growth of 9.9% is the lowest among these five companies.  Its forward P/E of about 9.2 is also near the lowest. With shares currently trading around $71, the 52-week range is $55.46 to $78.27.

3M Co. (NYSE: MMM) pays a dividend of 2.4% and the company’s return on equity is above 28%.  Its year-over-year earnings growth is 24.6%. With shares trading around $91.50, the 52-week range is $72.72 to $97.95.

Honeywell International Inc. (NYSE: HON) pays a dividend of 2.3%. Honeywell’s  annual earnings growth is 26.4% and quarterly earnings growth of almost 39.5% leads this group of companies.  With shares currently near $57, the 52-week range is $37.68 to $62.28.

Investors generally tend to migrate to dividend stocks and there is good news on all of these.  These companies have all raised dividends recently or are anticipated to raise their dividends this year or next.

Jim Berdou