The unofficial closing bells put the DJIA up about 74 points to 13,001.56 (0.58%), the NASDAQ fell nearly 9 points (-0.30%) to 2,961.60, and the S&P 500 rose 0.37% or about 5 points to 1,371.97.

There were several analyst upgrades and downgrades today, including Xerox Corp. (NYSE: XRX) reiterated ‘buy’ with a target price of $13 at Argus; General Electric Co. (NYSE: GE) reiterated ‘buy’ with a target price of $22 at Argus; LinkedIn Corp. (NYSE: LNKD) started as ‘overweight’ at Piper Jaffray; Big Lots Inc. (NYSE: BIG) cut to ‘hold’ at Deutsche Bank; and AutoZone Inc. (NYSE: AZO) raised to ‘overweight’ at JPMorgan.

Earnings reports since markets closed last night have led to some price changes as of the last half hour of trading today: AT&T is up 3.9% at $31.81; Air Products and Chemicals Inc. (NYSE: APD) is down -4.3% at $84.91; Baker Hughes Inc. (NYSE: BHI) is up 5.3% at $43.23 (more coverage here); Coach Inc. (NYSE: COH) is down -4% at $72.10 (more coverage here); Illinois Tool Works Inc. (NYSE: ITW) is up 2.7% at $56.71; McGraw-Hill Companies Inc. (NYSE: MHP) is down -3% at $47.65; RadioShack Corp. (NYSE: RSH) is down -10.3% at $5.36 after posting a new 52-week intraday low of $5.27; Regions Financial Corp. (NYSE: RF) is up 5.4% at $6.42; The Hershey Co. (NYSE: HSY) is up 5.7% at $65.86 after posting a new 52-week intraday high of $66.94; and Netflix Inc. (NASDAQ: NFLX) is down -14.6% at $87.01.

Other standouts from today include the following stocks:

International Business Machines Corp. (NYSE: IBM) is up .0.8% at $200.24. The tech giant raised its dividend today. More coverage here.

North American Tankers Ltd. (NYSE: NAT) is up 1.5% at $14.01. Shipping rates for dry bulk shippers are rising and tanker rates, especially for the smaller (1 million barrels) crude carriers of the Suezmax class. Many other shippers are also getting a boost today, including Eagle Bulk Shipping Inc. (NASDAQ: EGLE), which is up 6.8% at $1.88.

Stay tuned for Wednesday. The Federal Reserve Open Market Committee wraps up its two-day meeting and Chairman Ben Bernanke will hold a press conference this afternoon. We have noted the following events on the schedule (all times Eastern):

• 7:00 a.m. – Mortgage Bankers Association purchase applications
• 8:30 a.m. – Durable goods orders
• 10:30 a.m. – EIA weekly petroleum status report
• 11:30 a.m. – 5-yr note auction
• 2:00 p.m. – FOMC forecasts

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Paul Ausick

Saying that Frontline is “seeing an incredible amount” of contracts from the Persian Gulf, day rates have risen to $25,000-$30,000. That’s better than a doubling in just over a week.

The sudden jump in cargoes could be due to escalating tensions between Europe and Iran, with China taking Iranian crude at a lower price and adding to its inventories before the full effect of the sanctions hits Iran later this year.

Frontline’s shares are up nearly 7.5% at $5.90 in a 52-week range of $2.52-$25.09. Nordic American shares have jumped more than 5% to $14.41 in a 52-week range of $11.58-$25.89, and Teekay shares are up just over 1% at $30.62 in a 52-week range of $20.67-$37.93.

Paul Ausick

Fortunately there are no shipping stocks included in the average or it could have been even more thrilling. The Baltic Dry Index has fallen by -44% in the past 12 months as new ships have flooded the market and cargoes have dwindled due to a slower economy.

We’ve looked at eight companies in the transportation business to see if there is any value to be gained here: airlines United Continental Holdings Inc. (NYSE: UAL) and Southwest Airlines Co. (NYSE: LUV); railroads CSX Corp. (NYSE: CSX), Norfolk Southern Corp. (NYSE: NSC); truckers JB Hunt Transport Services Inc. (NASDAQ: JBHT) and Landstar System Inc. (NASDAQ: LSTR); and shipping companies North American Tankers Ltd. (NYSE: NAT) and Frontline Ltd. (NYSE: FRO).

Over the past 12 months, only truckers JB Hunt and Landstar and rail carrier Norfolk Southern have been able to post share price gains. Hunt is up more than 28%, Landstar is up 27%, and Norfolk Southern is up about 7%.

United Continental Holdings Inc. (NYSE: UAL) has a consensus target price is $33.58 and the stock is trading today at around $20.80, for a potential gain of 61%. Airlines are generally the hardest and most immediately hit by increases in fuel costs. Despite that, United’s share price has gained slightly more than 10% since the beginning of the year.

Southwest Airlines Co. (NYSE: LUV) has a consensus target price of $12.46 and a current price of around $9.07, for a potential upside of 37%. Southwest’s share price is up more than 6% since the beginning of the year, though for the past 12 months it’s down more than -22%.

US rail traffic is down 0.3% year-over-year for the first two months of 2012. Container traffic is up 3.2% while truck trailer traffic is down -7.7%. In the last week of February, traffic was down -5%. None of this appears to bode well for either the railroads or the truckers.

CSX Corp. (NYSE: CSX) has a consensus target price of $27.20 and shares are trading today around $21.18, for a potential gain of 28%. CSX shares lost about -12.5% over the past 12 months but are up slightly since January.

Norfolk Southern Corp. (NYSE: NSC) has a consensus target price of $85.68 and a current price of $69.27, for a potential gain of 24%. The target price is virtually unchanged since December, but the share price has fallen by a $5/share. Norfolk Southern, one of our three gainers in the past 12 months, has lost more than -5% of its share price since January.

JB Hunt Transport Services Inc. (NASDAQ: JBHT) has a consensus target price of $54.48, and a current price of around $52.32, for a potential gain of just 4%. In December the target price was around $48, so Hunt’s target has been moving in the right direction and the stock price has kept pace. As fuel costs rise, though, Hunt could face some hard choices.

Landstar System Inc. (NASDAQ: LSTR) has a consensus target price of $56.94 and a current price of $55.41, for a potential upside of just 2.8%. The company’s target price in December was around $52, so, like Hunt, the target keeps moving up as does Landstar’s performance. Fuel costs could start trimming profits here too, though.

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.

North American Tankers Ltd. (NYSE: NAT) has a consensus target price of $13.80 and current price of $14.22, indicating that the stock is fully valued.

Frontline Ltd. (NYSE: FRO) has a consensus target price of $5.83 and a current price of $5.50, for a potential gain of less than 1%. Frontline’s target price is essentially identical with it’s December target, when the stock was trading at less than $3/share.

Of the stocks reviewed here, JB Hunt has performed best for the past 12 months and is the leading performer since the beginning of this year, if you don’t count the shipping stocks. Both shipping stocks have larger gains, but they were down so far that any direction looks like up. Chasing the gains on either Nordic American or Frontline is almost purely speculative. JB Hunt, and to a lesser degree, Landstar, are the best bets here.

Paul Ausick

Charles River Laboratories International Inc. (NYSE: CRL); Chimera Investment Corporation (NYSE: CIM); Nordic American Tankers Ltd. (NYSE: NAT); Rackspace Hosting Inc. (NYSE: RAX); Avon Products, Inc. (NYSE: AVP); Goodyear Tire & Rubber Co. (NYSE: GT); MetLife Inc. (NYSE: MET); Omnicom Group Inc. (NYSE: OMC); Zynga Inc. (NASDAQ: ZNGA); Agilent Technologies, Inc. (NYSE: A); NVIDIA Corporation (NASDAQ: NVDA); PG&E Corp. (NYSE: PCG); Devon Energy Corporation (NYSE: DVN); Deere & Co. (NYSE: DE); NetApp, Inc. (NASDAQ: NTAP); Comcast Corporation (NASDAQ: CMCSA); Apache Corporation (NYSE: APA); DIRECTV, Inc. (NASDAQ: DTV); Waste Management, Inc. (NYSE: WM); Nordstrom Inc. (NYSE: JWN); Applied Materials Inc. (NASDAQ: AMAT); Duke Energy Corporation (NYSE: DUK); H.J. Heinz Company (NYSE: HNZ); and Campbell Soup Company (NYSE: CPB).

Earnings estimates are from Thomson Reuters and the dates may change by the companies.  More detailed previews will be available each day this coming week with much more color and trading information.

MONDAY, FEB 13

Charles River Laboratories International Inc. (NYSE: CRL) $0.56 EPS

Chimera Investment Corporation (NYSE: CIM) $0.11 EPS

Nordic American Tankers Ltd. (NYSE: NAT)  -$0.29 EPS… with losses expected this year, we will be watching for any dividend news after the company sold 5.5 million shares last month.

Rackspace Hosting Inc. (NYSE: RAX) $0.15 on $281 million in sales; this one still trades at close to 60-times 2012 expected earnings of $0.81 EPS.   

TUESDAY, FEB 14

Avon Products, Inc. (NYSE: AVP) $0.51 EPS on $3.11 billion; a serial disappointment in shares, but turnaround investors have hopes that the bar is set extremely low.  Earnings will prove if there is a value story here or just more of a value trap.

Goodyear Tire & Rubber Co. (NYSE: GT) $0.20 EPS on $5.88 billion in sales; this is still a long-term turnaround story valued at less than 7-times expected earnings.

MetLife Inc. (NYSE: MET) $1.24 EPS on $16.81 billion in revenues; shares are mid-way between the 52-week high and 52-week low.

Omnicom Group Inc. (NYSE: OMC) $0.95 EPS on $3.8 billion in sales.

Zynga Inc. (NASDAQ: ZNGA) estimates are not yet available for its first quarterly earnings report.  Shares are now back over $13.00 due to the Facebook-effect on anything tied to social media.

Don’t forget about Valentine’s Day….

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

Here is a link to each summary with much more detail from the wire:

Ares Secondary (ARCC) hits shares
Spirit Airlines (SAVE) insiders unloading stock
A123 (AONE) has a direct share sale
Sequenom (SQNM) needs capital
Boardwalk Pipeline (BWP) Raising Capital
Hercules (HTGC) raising new investment capital
Martin Midstream Partners (MMLP) buying analyst coverage
ZIOPHARM (ZIOP) raising cash
Francesca’s (FRAN) shares held up
Nordic American Tankers (NAT) sells shares for more boat buying

What is funny is that this list is ten companies and it still leaves a few fresh filings out.

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JON C. OGG

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

The unofficial closing bells put the DJIA up more than 85 points to 12,068.39 (0.71%), the NASDAQ rose more than 9 points (0.34%) to 2,695.25, and the S&P 500 rose 0.63% or nearly 8 points to 1,261.12.

There were several analyst upgrades and downgrades today, including Kellogg Co. (NYSE: K) cut to ‘market perform’ at William Blair. Other changes included Alcatel-Lucent SA cut to ‘sell’ at Citigroup; Toll Brothers, Inc. (NYSE: TOL) raised to ‘buy’ at Citigroup; VeriFone Systems Inc. (NYSE: PAY) started at ‘buy’ at Citigroupl; YRC Worldwide, Inc. (NASDAQ: YRCW) maintained at ‘underperform’ with a price target of $0.05 at Credit Suisse; and Groupon Inc. (NASDAQ: GRPN) started at ‘buy’ at Benchmark.

Here are today’s big post-earnings news reactions with prices during the last half-hour of trading: Tesco Corp. (NASDAQ: TESO) is down about -18%, at $13.34; BroadSoft, Inc. (NASDAQ: BSFT) is down less than -0.5%%, at $36.28; Cameco Corp. (NYSE: CCJ) is down nearly -7%, at $20.00; Coeur d’Alene Mines Corp. (NYSE: CDE) is up nearly 8%, at $29.42; Quicksilver Resources Inc. (NYSE: KWK) is down more than -9%, at $7.62; and Nordic American Tankers Ltd. (NYSE: NAT) is down nearly -4%, at $13.64.

Several other standouts from today are as follows…

Force Protection, Inc. (NASDAQ: FRPT) is up more than 30%, at $5.50. The armored truck maker is being acquired by General Dynamics Corp. (NYSE: GD for $5.52/share in a deal worth $360 million.

American Dental Partners, Inc. (NASDAQ: ADPI) is up nearly 79%, to $18.57. The company is being acquired by a private equity firm for $317 million, or $19/share, an 83% premium to Friday’s closing price.

Tekelec (NASDAQ: TKLC) is up more than 13%, at $11.20. The telecom equipment maker is being acquired by a private equity firm for about $760 million.

OmniVision Technologies, Inc. (NASDAQ: OVTI) is down nearly -18%, at $14.23. The company revised its outlook to include a sharp drop in fourth-quarter revenues. Shares are down about -50% since the beginning of the calendar year.

Diamond Foods, Inc. (NASDAQ: DMND) is down about -15.5%, at $39.21, after posting a new 52-week low of $38.45 earlier in the day. The company’s stock continues to get beaten up due to a delay in its acquisition of the Pringles business from Proctor & Gamble (NYSE: PG) and an investigation into payments to walnut growers.

Stay tuned for Tuesday. Philadelphia Federal Reserve president Charles Plosser is giving a speech in the morning and Minneapolis Federal Reserve president Narayana Kocherlakota gives a speech in the afternoon. We have noted the following events (all times Eastern):

• 7:45 a.m. – International Council of Shopping Centers-Goldman Sachs same-store sales
• 8:55 a.m. – Redbook weekly report on retail sales
• 1:00 p.m. – US Treasury 3-year note auction

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Oil carrier General Maritime Corp. (NYSE: GMR) recently received a debt rating from Moody’s that puts the company’s debt at just one notch above default. Omega Navigation (OTC: ONAVQ) has already filed for bankruptcy, as have several other smaller tanker operators. The big problem is over-supply of vessels. Other tanker outfits that will be affected include Teekay Tankers Ltd. (NYSE: TNK), Overseas Shipholding Group Inc. (NYSE: OSG), Nordic American Tanker Shipping Ltd. (NYSE: NAT), and Frontline Ltd. (NYSE: FRO).

We noted last week the over-supply problems for container ships. Shippers ordered new vessels in 2007 and 2008, before the global economy went into paralysis. Now, those ships are being delivered and the added capacity is killing day rates. The container fleet has grown 17% since 2007 and new orders still to be delivered will increase the fleet size by another 28%. The dry bulk carrier fleet that hauls coal and iron ore and similar commodities is set to increase capacity by 36%. The very-large crude carrier fleet could expand by 14% this year alone.

In order to break even, the tankers must charge a day rate of nearly $30,000. The average short-term spot rate from the Persian Gulf to the Far East is now $1,795. Shippers try to make up for that by slow-steaming, which keeps the vessel on the water for a longer time, and by spending more time in port.

Shippers are burning through cash a a ferocious rate as they wait for rates to turn up, but that is not expected to happen for another year or more. Tanker outfit Teekay Tankers had less than half as much cash at the end of 2010 as it did at the end of 2008. Overseas Shipholding burned through nearly half its cash in 2010. Nordic American also saw its cash fall by nearly half in 2010.

Companies with relatively high charter numbers may be better able to weather the storm. Teekay Tankers claims that it has more than half its fleet chartered for the next 12 months, enough to cover all the company’s costs even if the rest of its ships are idled.

The world’s largest tanker operator, Frontline, claims to be on the lookout for buying opportunities as the smaller outfits collapse. With more than $300 million in cash available at the end of last year, the company is positioned to make good on that claim.

The demise of Omega and the possible collapse of General Maritime are a direct consequence of their dependence on the spot tanker market. Spot rates can be much higher than charter rates — and they can also be much lower. These two, and the other small carriers who bet on high spot rates, are headed for some very rough sailing.

Paul Ausick

One type of shipper that could benefit fairly quickly is dry bulk, the massive carriers that haul coal, iron ore, and other raw materials. The carriers include DryShips, Inc. (NASDAQ: DRYS), Diana Shipping Inc. (NYSE: DSX), and Genco Shipping & Trade Ltd. (NYSE: GNK). The Baltic Dry Index, BDI, is recovering slightly from a very low 1,064. As coal is required in Japan to generate electricity no longer available from the damaged nuclear reactors, dry bulk rates from Australia and from the west coast of the US could rise. The rises will be limited by the amount of coal Japan requires and the amount that dry bulk terminals can handle. Terminals and coal shippers on the east coast of the US could also benefit as coal cargoes bound for Europe could be diverted to Japan and additional ships put into service.

Container shippers like A.P. Moeller Maersk (OTC: AMKBF), Danaos Corp.(NYSE: DAC), and Seaspan Corp. (NYSE: SSW) could see a slight slowdown in shipping until Japanese manufacturers get back to work. That process will probably be slower than anticipated.

Crude oil carriers like Frontline Ltd. (NYSE: FRO) and Nordic American Tanker Shipping Ltd. (NYSE: NAT) should see a pick-up as more crude cargoes are sent to Japan to help fuel electricity generation plants. Demand will be a function of how quickly Japan’s refineries can come back on-line, and the length of time the Japanese must depend on crude oil to fuel their generators. Another possibility is that refined products would need to be imported if re-opening the refineries is delayed for long.

Japan’s crude stocks stood at 169 days at the end of December 2010, according to Balkans.com. The country won’t want to run down its stocks and have to replenish them at higher crude prices, but by judiciously calling on its stocks, the country could mitigate some of the expenses from buying and shipping additional supplies of crude.

Liquefied natural gas (LNG) carriers include Teekay Corp. (NYSE: TK), Teekay LNG Partners, L.P. (NYSE: TGP), and Golar LNG Ltd. (NASDAQ: GLNG). Japan is already the world’s largest importer of LNG and it is reasonable to expect the country to receive more in the days ahead. In the longer term, it could be that Japan decides to replace at least some of its nuclear generation with gas-fired generation. But that decision is still months away in all likelihood.

The lightly traded Guggenheim Shipping ETF (NYSE: SEA) is up nearly 2% today, and Teekay LNG Partners and Golar are both up about the same amount. Most of the other shippers are trading slightly up as well, with only Dry Ships down slightly.

Paul Ausick