In the firm’s equity income allocations, the firm is selling 100% of its allocation in American Electric Power Co. (NYSE: AEP) at $41.14 and is adding in Williams Companies Inc. (NYSE: WMB) at $28.22.

As far as growth and income, Argus is recommending to buy CSX Corp. (NYSE: CSX) at $23.32 and Monsanto Co. (NYSE: MON) at $79.00; and it is recommending that the model portfolio sell all of its positions in Occidental Petroleum Corp. (NYSE: OXY) at $97.17 and Weyerhaeuser Co. (NYSE: WY) at $19.18.

Finally, in mid-cap growth the firm’s model portfolio is buying VeriFone Systems Inc. (NYSE: PAY) at $37.12 and buying MDU Resources Group Inc. (NYSE: MDU) at $21.50.  It is selling 100% of its position in IntercontinentalExchange Inc. (NYSE: ICE) at $113.13.  Another selling stock, but only by 20% of its allocation is Hain Celestial Group Inc. (NASDAQ: HAIN).

Speaking of model portfolios, here were the 5 most undervalued DJIA stocks and the 5 least attractive DJIA stocks based upon consensus targets.  Here are the top 4 DJIA stock picks from Jim Cramer for 2012.

Also, we made a lot of changes this year to the 24/7 Wall St. 2012 Model Dividend Portfolio.

JON C. OGG

The unofficial closing bells put the DJIA down nearly 72 points to 11,504.70, the NASDAQ fell more than 53 points (2.01%) to2,604.04, and the S&P 500 fell 1.26% or more than 15 points to 1,209.89.

Today’s top analyst upgrade and downgrade calls were numerous and included Wal-Mart Stores Inc. (NYSE: WMT) and Whole Foods Markets Inc. (NASDAQ: WFM), and about a dozen other companies.

Morgan Stanley (NYSE: MS) reported better than expected earnings for the quarter, following  yesterday’s positive report from Bank of America Corp. (NYSE: BAC).  Morgan Stanley got a big lift from an accounting gain that lowered the value of its debt by $3.4 billion, thus boosting the bank’s revenue to $9.9 billion. Even without the gain, MS posted EPS of $0.02, There has been a turnaround from the indicated loss in Bank of America Corporation (NYSE: BAC) after its earnings showed that book value managed to actually grow and the stock was up almost 10% at $6.63 late in the session.

As far as the other big earnings report reactions today (prices within 20 minutes of the closing bell): Apple is down more than -5.5%, at $398.78; Morgan Stanley up 0.3%, at $16.68; Intel Corp. (NASDAQ: INTC) is up about 3.5%, at $24.22; Yahoo is up 2.78%, at $15.90.

Several other standouts from today are as follows…

Williams Companies, Inc. (NYSE: WMB) rose again by another 1.7%, to $29.55, after investors are considering it a cheap merger alternative to the El Paso buyout by Kinder Morgan this week.

Human Genome Sciences, Inc. (NASDAQ: HGSI) had another big day on merger speculation up, up nearly 8%, at $13.83, and here is how it ranks with analysts other price targets for biotechs ahead of the biotech earnings floodgates.

Abbot Laboratories (NYSE: ABT) rose 1.62%, to $53.29, following the announcement of the company’s intention to split its branded drug business from its other product lines.

Oxigene, Inc. (NASDAQ: OXGN)  got a nice boost of about 12.55%, to $1.59, following good data on the survival benefits of its anti-thyroid cancer drug.

Powerwave Technologies, Inc. (NASDAQ: PWAV) warned of a revenue shortfall of more than 50% for its third quarter. The shares lost nearly -42% of their value, to fall to $0.85, after posting a new 52-week low of $0.68 earlier in the day.

Agnico-Eagle Mines Ltd. (NYSE: AEM) has suspended operations indefinitely at its mine in Val d’Or, Quebec, due to unstable ground and inflows of water. The stock has fallen by -19%, to $46.21.

Stay tuned for Thursday.  We have speeches to watch from Lockhart and Kocherlakota on the docket as well as a 30-year TIPS auction.  Here are some economic releases due in the morning and throughout the day:

• 8:30 Unemployment Benefits Claims for last week
• 8:30 Existing Home Sales
• 10:00 Conference Board’s Index of Leading Economic Indicators
• 10:30 Natural Gas Report
• 4:30 PM Federal Reserve Balance Sheet

Paul Ausick

It also highlights outfits like Williams Companies, Inc. (NYSE: WMB) and other hard asset outfits which many may consider to be under the universe of partnerships or MLPs.  Some of the entities which investors may focus on in MLPs ar Plains All American Pipeline, L.P. (NYSE: PAA), Magellan Midstream Partners LP (NYSE: MMP), and Buckeye Partners LP (NYSE: BPL).

Plains All American Pipeline, L.P. (NYSE: PAA) is worth some $9.2 billion now and at $61.75 it has a 52-week range of $54.90 to $65.96.  Plains All American is in many aspects of transporting and storage, but one stat at the end of 2010 was that it had some 16,000 miles of active crude oil and refined products pipelines, as well as a fleet of trucks, trailers, and tugs various aspects of oil and natural gas.

Magellan Midstream Partners LP (NYSE: MMP) is worth some $7 billion and at $62.37 its 52-week range is $51.00 to $63.14.  Magellan has more than this, but as of the first quarter it operated roughly 9,600 miles of petroleum products pipeline system, 51 terminals, 6 marine petroleum terminals, 1 crude oil storage, 27 petroleum products inland terminals, and a 1,100-mile ammonia pipeline system and 6 associated terminals.

Buckeye Partners LP (NYSE: BPL) is now worth almost $6.1 billion and at $65.45 its 52-week range is $54.51 to $71.67.  Buckeye owns and operates approximately 5,400 miles of pipeline systems and has more than 60 liquid petroleum products terminals on last look. Another segment operates approximately 2,700 miles of third-party pipeline and terminals.

The merger also highlights the ETF (actually an ETN) of JPMorgan Alerian MLP Index ETN (NYSE: AMJ) and the closed-end fund of Kayne Anderson MLP Investment Company (NYSE: KYN).

So, as far as this concerns Williams Companies, Inc. (NYSE: WMB), the company is worth $16.5 billion.  At $28.05, its 52-week range is $20.20 to $33.47.  Williams has an exploration and production outfit like El Paso and it also has midstream assets and gas pipelines, although the company’s site notes that its MLP of by Williams Partners L.P. (NYSE: WPZ) owns and operates most of the company’s interstate gas pipeline assets.  Williams owns approximately 75 percent of Williams Partners, including the controlling general partner interest.  Its  pipelines deliver approximately 14% of the natural gas consumed in the United States.

Williams Companies has earnings estimates of $1.51 EPS for 2011 and $1.78 EPS for 2012, so its $28.05 share price generates a blended forward earnings multiple of about 17-times earnings.  The company has a 2.9% dividend yield and it trades at more than 2-times book value.  As far as how that compares to El Paso Corporation, El Paso’s blended estimates at the current price generates a forward multiple of close to 21-times earnings and more than 4-times its stated book value.

Not all pipeline assets will be acquired.  The value is just too high on a nominal basis for every deal that makes sense on the surface to make sense in raw dollars.  Some players also have provisions which might make a change of control less attractive for a buyer and these are just some of the other companies to consider in the sector.

JON C. OGG

What’s interesting about this deal, from an alternative energy standpoint, is that it shines a light on efforts to allow alt-energy companies to adopt the MLP structure as a way to attract private investment into the sector. This could be a very interesting way to get government out of the business of financing clean energy projects.

A report issued last November by the Center for American Progress and the Coalition for Green Capital recommended that allowing renewable energy to form partnerships similar to MLPs and REITs.  By law, MLPs must derive at least 90% of their income from eligible investments in natural resources, commodities, or real estate. The report argues that renewable energy sources such as wind and sunshine are among the natural resources that should be considered for inclusion.

The problems that the recommendation is trying to solve are the lack of certainty in both the tax code and public policy related to renewable energy financing, and the lack of long-term, low-cost financing available to renewable energy businesses. Allowing MLP structures is only a piece of a the report’s overall recommendations for financing renewable energy, but it’s worth a closer look by itself.

One benefit of this approach is that it does not rely on setting a price for carbon. Cap-and-trade proposals have gotten no traction in Congress and proposals for a carbon tax are even less popular. Where the clean energy MLP idea may have the best application is in the transmission and distribution of renewably-generated electricity. In other words, the grid.

The estimated cost to upgrade the US grid ranges from $500 billion on up. Any chance that the federal government will be able to provide that amount of support directly or in the form of loan guarantees is certainly no better than 50-50. More likely is that concern about federal deficits and debt will push renovation and construction of the grid out for years.

Allowing an MLP/REIT-type setup could serve two purposes. First, it is effectively a corporate tax cut. This concept is very popular with some politicians. Second, it is a tax increase on investors, a concept which is quite popular with other politicians. Both sides could claim victory. From a political perspective, what could be finer?

Second, it could lead to a privatization of the national grid. That may not be a universally popular idea, but its merit is that it eliminates the federal government’s responsibility for paying out gobs of money it does not have and it would instill some certainty into renewable energy projects. Federal and state regulation would still exist, of course, but the virtually guaranteed return on investment that comes with MLPs and REITs could be very attractive to investors.

There probably won’t be much action on this idea until after the 2012 elections. But its simplicity and attractiveness to both ends of the political spectrum may give it a chance of being adopted.

If you think that alternative energy financing is dead, let us consider this week’s other big deal.  With a Department of Energy-backed loan, Bank of America Corporation (NYSE: BAC) is financing a massive project that is being undertaken in solar where PV modules are being installed on top of buildings owned and operated by Prologis (NYSE: PLD) and being installed by NRG Energy, Inc. (NYSE: NRG).  The beat goes on.

Paul Ausick

El Paso announced today that it plans to spin off its E&P business into a separate company, much like the recent spin offs at Marathon Oil Corp. (NYSE: MRO) and Williams Companies, Inc. (NYSE: WMB). The company didn’t provide much detail other than to say that the tax-free spinoff is expected to be completed by the end of 2011.

The E&P business generated $1.8 billion in 2010 revenue, about 39% of El Paso’s total sales of $4.6 billion. The new company will own about 3.7 million net acres in the Haynesville Shale play, the Eagle Ford Shale play, the Altamont play in Utah, and the Wolfcamp Shale play in the Permian Basin. Proved reserves of natural gas and oil total about 3.4 trillion cubic feet equivalent and in 2010 daily production averaged approximately 782 million cubic feet equivalent/day. That’s about 133,000 oil equivalent barrels/day.

That’s a pretty small E&P company, but one advantage the new company will have is that it is off the hook for a price-manipulation scheme in 2000-2001 that cost the company $1.7 billion in 2003. Seven cases are still being adjudicated and El Paso could be on the hook for another $140 million if it loses all of them. El Paso’s shares fell to a low of around $6.00 in early 2003, from a high of more than $70 in early 2001. The shares have recovered to a 52-week range of $10.17-$20.43, having set a new 52-week high today and within reach of share price not seen since mid-2002.

In its announcement, El Paso focused on what the spin-off means to holders of the remaining pieces of the company, noting that the planned dividend for 2012 is $0.60/share with a target dividend growth rate in the low double-digits. Shareholders in the spinoff company will be treated to more than 10 years of low-risk drilling inventory. Whoopee.

The so-far-nameless spinoff company should be more attractive to a potential buyer than the same assets were in a segment of the much-larger pipeline company. That’s got to be at least part of the reason for this move.

Paul Ausick

Aixtron SE (NASDAQ: AIXG) Cut to Sell at Canaccord Genuity.
Bristol-Myers Squibb Company (NYSE: BMY) Cut to Neutral at Goldman Sachs.
Dick’s Sporting Goods Inc. (NYSE: DKS) Raised to Buy at Goldman Sachs.
Ener1, Inc. (NASDAQ: HEV) Cut to Sell at Wunderlich.
GNC Holdings Inc. (NYSE: GNC) Started as Market Perform at BMO; Started as Neutral at Goldman Sachs; Started as Overweight at Morgan Stanley; Started as Outperform at Credit Suisse; Started as Overweight at JPMorgan.
Harmony Gold Mining Co. Ltd. (NYSE: HMY) Raised to Neutral at HSBC.
Huntington Bancshares Inc. (NASDAQ: HBAN) Started as Outperform at Credit Suisse.
Huntsman Chemicals Corp (NYSE: HUN) Maintained Strong Buy and Value at Zacks.
JA Solar Holdings Co., Ltd. (NASDAQ: JASO) Raised to Neutral at Credit Suisse.
Johnson & Johnson (NYSE: JNJ) Raised to Buy at Goldman Sachs.
NetApp Inc. (NASDAQ: NTAP) Raised to Outperform at RBC.
New York Community Bancorp (NYSE: NYB) Started as Outperform at Credit Suisse.
Qihoo 360 Technology Co. Ltd. A (NYSE: QIHU) Started as Buy at Citigroup (late-Tuesday).
Starbucks Corporation (NASDAQ: SBUX) Reiterated Buy and $42 target at Argus.
Universal Technical Institute (NYSE: UTI) maintained Underperform as Bear of the Day at Zacks.
The Williams Companies (NYSE: WMB) Raised to Outperform as Bull of the Day at Zacks. 

You are invited to join our free daily email distribution list to hear more about analyst upgrades and downgrades, top day trader and active trader alerts, dividend trends, news on Buffett and other investment gurus, IPOs, secondary offerings, private equity, and more.

JON C. OGG

The slide of the dollar has caused concerns about how it may hurt the stability of the credit markets. (Reuters)

Portugal set a bailout with the EU and IMF but it will require support from legislators. (Reuters)

Crude dropped on a belief that the US has continued to build supply and that China’s economy is slowing. (Reuters)

Apple (NASDAQ: AAPL) upgraded its iMac line with new processors from Intel (NASDAQ: INTC) and AMD (NYSE: AMD). (Reuters)

Sony (NYSE: SNE) hire experts to handle the aftermath of hackers breaking into its PlayStation network. (Reuters)

The plans for mobile payments systems have slowed. (Reuters)

The AT&T (NYSE: T) and T-Mobile deal will get further scrutiny from the government. (Reuters)

Alcoa (NYSE: AA) rose on rumors of a Rio Tinto (NYSE: RTP) bid. (Reuters)

The chief of NYSE Euronext (NYSE: NYX) said a deal with Nasdaq (NASDAQ: NDAQ) and ICE would kill jobs. (Reuters)

Offers for Warner Music Group (NYSE: WMG) are now in front of its board. (Reuters)

George Soros and other hedge fund managers have been selling silver and gold. (WSJ)

BMW revenue rose sharply as did earnings. (WSJ)

The sale of Areva helped Siemen’s results. (WSJ)

Gas prices helped the sales of small cars. (WSJ)

The Institute of International Finance says demand for banks loans in emerging markets has risen sharply. (WSJ)

The OECD said that income inequality in developed nations is often the results of expertise in technology. (WSJ)

BP plc (NYSE: BP) will pay a $25 million fine for an Alaska oil spill. (WSJ)

Bain & Co. said sales of luxury goods were on a sharp upswing.  (WSJ)

AOL (NYSE: AOL) and Hearst now market huge ads that spread across much of an online page. (WSJ)

Pfizer (NYSE: PFE) earnings rose but revenue was off partially due to Lipitor sales. (WSJ)

Slow global GDP growth and a flight to safety has helped drive Treasury rates down. (WSJ)

A new study commissioned by the Asia Society in New York and the Woodrow Wilson Center for International Scholars in Washington says the US may not be able to invest outside its borders at a pace with China over the next few years. (NYT)

Google (NASDAQ: GOOG) is marketing use of its Chrome browser as a way to increase its search traffic. (NYT)

The UN said the world will have a population of more than 10 billion people by the end of the century. (NYT)

A key Greek official said the nation will not seek a restructuring of its loans, (Bloomberg)

Douglas A. McIntyre

Adobe Systems Inc. (NASDAQ: ADBE) Reiterated Buy and Raised target to $40 at BofA/ML.
Altera Corp. (NASDAQ: ALTR) Reiterated Buy and $52 target at Gleacher & Co.
Anheuser-Busch InBev (NYSE: BUD) Raised to Buy at Goldman Sachs.
Ciena Corporation (NASDAQ: CIEN) Reiterated Buy and Raised 12-mo. target to $30 at Argus.
Dover Corporation (NYSE: DOV) Started as Neutral with $70 target at Credit Suisse.
Human Genome Sciences, Inc. (NASDAQ: HGSI) Maintained Outperform and Raised target to $34 at Credit Suisse.
Intuitive Surgical, Inc. (NASDAQ: ISRG) Started as Buy at Collins Stewart (late-yesterday call).
NetApp, Inc. (NASDAQ: NTAP) Cut to Neutral at Susquehanna.
Netflix, Inc. (NASDAQ: NFLX) Reiterated Buy and $275 target at BofA/ML.
Peet’s Coffee & Tea Inc. (NASDAQ: PEET) Cut to Sell at Janney.
Polo Ralph Lauren Corp. (NYSE: RL) named as Bull of the Day at Zacks Investment Research.
Semtech Corporation (NASDAQ: SMTC) Reiterated Buy and raised target to $29 at Gleacher & Co.
Suntech Power Holdings Co. Ltd. (NYSE: STP) Cut to Underweight at HSBC.
United Parcel Service, Inc. (NYSE: UPS) Reiterated Buy and $82 target at Bof/ML.
Williams Companies Inc. (NYSE: WMB) Reiterated Buy and raised target to $36 at Argus.

You can join our free daily email distribution list to hear more about analyst upgrades and downgrades, top day trader and active trader alerts, dividend trends, news on Buffett and other investment gurus, IPOs, secondary offerings, private equity, and more.

JON C. OGG

Calpine Corp. (NYSE: CPN) Raised to Overweight at Barclays.
Kirby Corporation (NYSE: KEX)  Raised to Buy and $60 target at BofA/ML.
3M Co. (NYSE: MMM) Raised to Neutral at BofA/ML.
Molycorp, Inc. (NYSE: MCP) Raised to Overweight at JPMorgan.
Nokia Corporation (NYSE: NOK) Cut to Sell at RBS.
Novatel Wireless, Inc. (NASDAQ: NVTL) Cut to Underperform as Bear of the Day at Zacks.  Omnivision Technologies Inc. (NASDAQ: OVTI) Maintained Buy and $39 target at Gleacher & Co.
Textron Inc. (NYSE: TXT) Raised to Buy at UBS.
Whole Foods Market, Inc. (NASDAQ: WFMI) noted as Bull of the Day with Outperform and $65 target at Zacks.
Williams Companies, Inc. (NYSE: WMB) Raised to Conviction Buy List at Goldman Sachs.

You can join our free daily email distribution list to hear more about analyst upgrades and downgrades, top day trader and active trader alerts, dividend trends, news on Buffett and other investment gurus, IPOs, secondary offerings, private equity, and more.

JON C. OGG

Nelson Peltz offered to buy Family Dollar Stores (NYSE: FDO), which drove the stock nearly 20% higher last week. Several class actions suits were filed by investors who believed the price was too low. That did little to cap FDO’s rise.

AMD (NYSE: AMD) was the subject of takeover rumors, which several analysts said were far fetched. That did not keep Wall St. from pushing shares higher.

Dell (NASDAQ) rose due to strong earnings and chip company NVIDIA (NASDAQ: NVDA) moved up on investor excitement over the firm’s renewed efforts to gain market share in the portable device market

Douglas A. McIntyre