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Monday’s Upgrades / Downgrades

UPGRADES

Harley-Davidson HOG Soleil Sell » Buy
RADVision RVSN Ferris Baker Watts Neutral » Buy
Northwest Airlines NWA Calyon Securities Add » Buy
U.S. Steel X Citigroup Hold » Buy
Fifth Third FITB Bernstein Underperform » Mkt Perform
Stone Energy SGY Friedman Billings Mkt Perform » Outperform
Tempur-Pedic TPX CIBC Wrld Mkts Sector Perform » Sector Outperform
Occidental Petro OXY Deutsche Securities Hold » Buy

DOWNGRADES

American Software AMSWA Davenport Buy » Neutral
Cascade CAE DA Davidson Neutral » Underperform
Techne TECH Leerink Swann Outperform » Mkt Perform
US Airways LCC Calyon Securities Buy » Add
Continental Air CAL Calyon Securities Buy » Add
Alaska Air ALK Calyon Securities Buy » Add CMC Citigroup Hold » Buy

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"Fast Money" for Monday

MONDAY’S PICKS

Jeff Macke said The New York Times (NYT) is a raging sell. OPEN $21.26

For the 2nd day in a row, Guy Adami recommended the Short Dow30 ProShares (DOG). OPEN $60.67

Pete Najarian liked Oilsands Quest (BQI). OPEN $4.92

FRIDAY’S RESULTS

Guy Adami told the panel to short The Dow with Short Dow30 ProShares (DOG). Open $59.67 CLOSE $60.67 GAIN $1.00

Karen Finerman liked Under Armour (UA). open $63.38 CLOSE $63.85 GAIN $.47

Pete Najarian preferred Dick’s Sporting Goods (DKS). Open $67.27 CLOSE $65.26 LOSS $2.01

Since my tracking began on 6/21 (1-1 means one up pick and one down pick and no results from my vacation weeks)

Guy Adami= 21-13 Gain $40.24
Eric Bolling= 10-11 Loss $14.01
John Najarian= 13-3 Gain $15.54
Jeff Macke= 22-19 Gain $4.05
Pete Najarian= 14-11 Gain $23.50
Tim Seymore= 3-2 Loss $.49
Karen Finerman= 5-3 Gain $2.06
Stacey Briere-Gilbert= 2-0 Gain $1.61
Constance Hunter= 1-0 Gain $1.84

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Dow Expects India Business To Grow 50% Annually

I cannot think of anything to date that the Andrew Liveras lead Dow Chemical (DOW) has alluded to that has not happened. No reason to start doubting now.

“We expect our business in India to touch $1 billion by 2010 from the present $300 million. Dow looks at the proposed chemical hubs as an opportunity to scale up its manufacturing capabilities in the country,” Peter G Halloran, director-supply chain, Mumbai service center, Dow Chemical International, said last week. DOW also expects to see 50% of its R&D initiatives coming from India in the next 3-4 years, according to Halloran.

Dow Chemical (DOW), is betting big on the proposed Petroleum, Chemicals and Petrochemicals Investment Regions (PCPIR) in the country to scale up its manufacturing capabilities in line with upcoming business opportunities much like they are doing in China, Russia, Iraq and Saudi Arabia.

Halloran said DOW was in talks with various government agencies to set up manufacturing facilities here.

India’s Commerce Minister Kamal Nath recently said that since DOW did not have a direct link to the Bhopal gas tragedy (it bought Union Carbide several years after the tragedy), its investments in India would not be adversely affected.

DOW is making huge bets overseas where inputs will be cheap for both raw materials and skilled labor. If you go back and review most of their releases, these project are scheduled to all come online around 2010. What about between now and then? DOW is becoming a cash producing machine and these new projects are being paid for with produced funds, not cash pout of pocket and that point cannot be emphasized enough. It means DOW can keep these projects coming, adding to earnings without any balance sheet weakening, risk to it’s near 4% (and growing) dividend or reduction in it’s stock repurchase plans. All these are very good things for investors.

The next big event, (aside from any additional almost weekly expansion plans) will be the upcoming “white paper” this fall. In it they will detail the expected results from Liveras’s strategy. I think shares are treading water currently because Wall St. is having trouble determining the value of all the recent joint ventures DOW has entered into. Without a clear understanding of their impact to earnings, people are not able to value DOW.

Personally I think the value of these in a year will be multiples of what they now the paper, when release will illustrate this. What it will also show is DOW is becoming less dependent on the US market and even more of a worldwide player is areas other that cyclical chemicals that their fortunes have been predominately tied to until as recently as last year.

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This Week’s Notable Dividend Hikes

Thin Week for hikes….

PSB Holdings (PSBH)= 16%

CBS Corp (CBS) = 13.6%

Verizon (VZE)= 6%

Susquehanna Bancshares (SUSQ)= 4%

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Book Review: The "Little Book" of Value Investing

If you want to get started in value investing but are not sure what it is all about, here is the best book I have read to date on the subject.

CLICK LINK TO BUY BOOK

I honestly feel this book should be read by all those who are interested in value investing but are not sure where to begin to find out about it. It is not full of complicated discounted future cash flow formulas that will have most readers eyes glossing over in confusion. What it does have is a straight forward explanation of the theory of value investing. The author, Tweedy & Browne’s Christopher Browne illustrates how we try to buy everything we buy in life “on sale” (groceries, auto’s, clothing etc..) yet for some reason have the irresistible urge to buy stock in companies when they are priced most expensively. The book is an excellent primer on altering that thought process…

Advanced value investing readers may find the book a little basic but I enjoyed it because it is always good to remind yourself of the basics as without them the details are meaningless…

The best part of the book? Any reader can easily finish it in a weekend and be investing on Monday…

On a side note. I have been inundated with book review requests lately and will get to all of them as soon as I can. Thank you in adavnace for you patience..

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This Week’s Insider Buys

“There is only one reason insider buy shares, they think the stock price is going up” Peter Lynch. Here are the top 5

Mohawk Industries (MWK) $26,190,000

Centerline Holdings (CHC) $2,015,000

Compuware (CPWR) $1,553,000

Stericycle (SRCL) $1,487,000

Accuray (ARAY) $1,382,000

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Harley Davidson: "Below MSRP" Was A Bad Harbinger

“Coming off a negative U.S. retail sales trend in the
first six months of the year, we ran an effective promotion in July that
increased retail sales and reduced inventories of 2007 model motorcycles.
However, our U.S. dealers’ retail sales have fallen sharply during August.” With that, shares of Harley Davidson (HOG) drop 10% today to below $50 a shares, 23% down this year and 28% below their high last year.

HOG now expects a modest decline in revenue for 2007. Diluted earnings per share (EPS) for the full year 2007 are expected to be down 4 to 6 percent, in the range of $3.69 – $3.77, compared to 2006 EPS of $3.93.

Looking ahead to 2008, they anticipate the U.S. retail motorcycle environment will continue to be challenging. It expects moderate revenue growth, lower operating margins and EPS growth of between 4 and 7 percent. They had previously provided guidance for 2009 as well, but will not be providing that guidance at this time.

I mid August in a post I related a conversation I had with a salesperson at a mega dealership Laconia , NH that essentially foreshadowed the above statement. I finished the post by saying “Earlier this year when shares were at $70 I recommended waiting until they reached the mid $50’s to buy. Based on my weekend visit, they may go lower still. This is a great company that makes a one of a kind product, but, people are not buying it now and that will hurt. I think we may see share prices in the $40’s before the year is out.”

We are at the $49 level today (Friday) and I honestly see no reason to jump at shares now. Much like Starbucks (SBUX), I would like to think HOG management was aware of this trend a while ago and hoped it would not come to fruition, all evidence to the contrary. That being said, there very well may be another shoe to drop in the future.

So, what should we do? Just sit back and wait. If you can get shares of this company in the low 40’s, you have a real steal. Be patient and it just may get there. I will go on record and say that anything around $45 or lower will be an no brainer buy.

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Friday’s 52 Week Lows

Add almost every homebuilder to this list today…

WGO Winnebago Industries, Inc 25.03
URGI United Retail Group Inc 7.86
UNFI United Natural Foods Inc 25.08
TLB The Talbots, Inc 19.41
TCMI Triple Crown Media Inc 6.12
SCVL Shoe Carnival Inc 16.60
RYL The Ryland Group, Inc 26.10
RVI Retail Ventures Inc 10.70
PGR The Progressive Corpo 19.66
OXM Oxford Industries, Inc 34.05
OPMR Optimal Group Inc 5.35
ODP Office Depot, Inc 19.84
MGPI Mgp Ingredients Inc 13.76
LM Legg Mason, Inc 81.53
HOG Harley-Davidson, Inc 49.15
CC Circuit City Stores, 9.80
CBOU Caribou Coffee Inc 6.07
BX Blackstone Group L P 21.37
BRN Barnwell Industries, Inc 16.63
BECN Beacon Roofing Supply Inc 10.82
BC Brunswick Corporation 23.16
BBW Build A Bear Workshop 15.87

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Friday’s Links To Visit

check them out

– Why wouldn’t I listen to the guy who beat the market 15 straight years?

– Yes, they do

– Another investing icon I cannot argue with on this one

– Here are 5 books every teenager should read to be wealthy when they are old.

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Wal-Mart: Still Going Stong

Wal-Mart (WMT) released sales for both August and the first 30 weeks of the year yesterday and the news was good. I am going to focus on the 30 week financial numbers because they iron out any monthly irregularities that may skew results month to month. So, the 30 week sales increase breakdown looks like this: Wal-Mart stores +6.3%, Sam’s Club +7.0%, International Operations +16% and Total Company up 8.3% YTD. When you consider all the doom and gloom surrounding the stock this year, if one was to look at these numbers, one might wonder what the fuss is all about.

The monthly summary is as such: (Total Company up 9.3% in August)


Wal-Mart Stores +7.8&

Back-to-school categories drove sales during the four-week August period at Wal-Mart Stores U.S. In the general merchandise area, back-to-school categories had solid sales performance, with strength in electronics, school supplies and children’s apparel. Sales of laptops and calculators did well, as families prepared for later school start dates in some states such as Florida and Texas. Back-to-college essentials and “rollback” features helped increase sales in domestics, including bedding, bath towels and plastic storage and organization items.

“We are pleased with our performance during August, because it reflects continuing momentum in grocery and electronics. Home and apparel are expected to continue improving into the fourth quarter,” said Eduardo Castro-Wright, president and chief executive officer of Wal-Mart Stores U.S.

Sam’s Club +6.2%
Sam’s Club’s sales for the four-week period were driven by increases in average ticket with both business and Advantage members. Sales among small business members continued to be strongest. Similar to the prior four-week period, sales in electronics, fresh food and grocery were strengths. Hotter weather positively impacted sales of some seasonal items.

International +15.1%
During the August period, Brazil and the United Kingdom continued their recent positive performance. Brazil sales continued to improve ahead of the market, mainly driven by a stronger price position, assortment that is customized to the local community and a recovery of disposable income. Asda continued to gain market share during August. Macroeconomic factors contributed to a slowdown in sales in Mexico during the period.

Now, much has been said about the economy and retail recently. It appears, based on these results that folks are turning to the more affordable alternative and the first to come to mind is always Wal-Mart. Particularly of interest is the growth yet again in electronics. If Wal-Mart can make serious headway into the electronics market, and it appears they are, this will by default aid other sales items. Becoming a destinations place for electronics is a factor that I think is not being fully realized by the market at this point. This is probably due to Lee Scott still sitting in the CEO chair and as more time goes by I am becoming more convinced that fact is weighing on the stock more than the performance of the company. Wal-Mart seems to be playing catch up way to often lately and this is a very bad thing for a company that essentially re-wrote the retail handbook.

As a shareholder I am very encouraged by Wal-Mart’s results, imagine what it could do if it was run well? Someday it will be.

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Citi Picking Up Mortgage Mess Pieces

First Bank of America (BAC) took a stake in Countrywide (CFC) and now Ameriquest Mortgage Co., once the “Proud Sponsor of the American Dream,” is closing and Citigroup (C) said Friday that it would buy the remnants of the business from ACC Capital Holdings in Orange.

Ameriquest shuttered its 229 retail offices months ago and as recently as 2005, Ameriquest and its sister company, Argent Mortgage, were together the No. 1 sub-prime mortgage lender in the world.

New York-based Citigroup, the nation’s largest bank, obtained an option in February to buy Ameriquest’s loan-servicing arm, which handles collections on $45 billion in loans and distributions of the principal and interest payments to investors in mortgage bonds. It also obtained an option to buy Argent, a lender that makes loans through independent brokers rather than directly to consumers.

Ameriquest’s end mirrors the fortunes of a slew of independent sub-prime lenders that have closed or sold themselves off amid a rising rate of loan defaults. Unlike banks or S&L’s, which have deposits to lend and can hold many loans for investment, the pure sub-prime firms relied on Wall Street to finance their operations and buy their loans, services that are no longer available in the sub-prime market currently.

Citigroup described the deal as a way to acquire “operational and pricing efficiencies” in a line of business that is currently “undergoing significant change.” The terms of the deal weren’t disclosed but Citigroup and Arnall reportedly had poured hundreds of millions of dollars into Argent’s operations in February to beef up its business. Like other sub-prime lenders, Argent has shrunk in volume because investors will no longer buy sub-prime loans or the securities backed by them.

Although the wholesale lending business in sub-prime currently at a standstill, the purchase of what remains of Argent will position Citigroup to reenter the market when it revives, Citigroup spokeswoman Danielle Romero-Apsilos said. “We will restart the origination business slowly, under new management and a new brand, and do everything in accordance with federal, state and local law,” she said.

Last month I posted, “The past week has seen a slew of mortgage lender close the door or dramatically scale back operations due to tightening credit markets. So, who will benefit? Citigroup (C), Bank of America (BAC) and Wells Fargo (WFC) look to be the best bets.”

The big banks are buying up cheap assets that once mortgage markets settle, and yes the eventually will, will make them tons of money and solidify their dominance in the mortgage industry.

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Friday’s Upgrades / Downgrades

Here are the latest calls..

UPGRADES

DSW DSW Next Generation Neutral » Buy
MasTec MTZ SMH Capital Sell » Buy
Sourcefire FIRE Stifel Nicolaus Hold » Buy
EDO Corp EDO CIBC Wrld Mkts Sector Perform » Sector Outperform
Pactiv Corp PTV Citigroup Hold » Buy
Thornburg Mortg TMA RBC Capital Mkts Underperform » Sector Perform
Valero Energy VLO Bernstein Underperform » Mkt Perform
Sunoco SUN Bernstein Underperform » Mkt Perform
Tesoro Petroleum TSO Bernstein Underperform » Mkt Perform
Marathon Oil MRO Bernstein Underperform » Mkt Perform


DOWNGRADES

Qimonda QI JP Morgan Overweight » Neutral
Zumiez ZUMZ Morgan Keegan Outperform » Mkt Perform
Harte-Hanks HHS Matrix Research Hold » Sell
Time Warner TWX Pali Research Buy » Neutral
SL Green Rlty SLG Lehman Brothers Overweight » Equal-weight
Northeast Utilities NU JP Morgan Overweight » Neutral
Applix APLX Sun Trust Rbsn Humphrey Buy » Neutra

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"Fast Money" for Friday


Friday’s Picks

Guy Adami told the panel to short The Dow with Short Dow30 ProShares (DOG). Open $59.67

Karen Finerman liked Under Armour (UA). open $63.38

Pete Najarian preferred Dick’s Sporting Goods (DKS). Open $67.27

Jeff Macke told folks to short the S&P but since most investors cannot or do not know how to do it, it will not be tracked.

Thursday’s Results

Jeff Macke recommended Short Dow30 ProShares (DOG). Open $59.87 Close $59.67 Loss $.20

Karen Finerman likes Kraft (KFT). Open $32.60 Close $33.39 Gain $.79

Guy Adami preferred Biogen (BIIB). Open $62.87 Close $66.53 Gain $3.66

Pete Najarian said Nokia (NOK) is a buy. Open $33.37 Close $34.21 Gain $.84

Since my tracking began on 6/21 (1-1 means one up pick and one down pick and no results from my vacation weeks)

Guy Adami= 20-13 Gain $39.24
Eric Bolling= 10-11 Loss $14.01
John Najarian= 13-3 Gain $15.54
Jeff Macke= 22-19 Gain $4.05
Pete Najarian= 14-10 Gain $25.51
Tim Seymore= 3-2 Loss $.49
Karen Finerman= 4-3 Gain $1.59
Stacey Briere-Gilbert= 2-0 Gain $1.61
Constance Hunter= 1-0 Gain $1.84

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Thursday’s 52 Week Lows

UNFI United Natural Foods Inc
SIG Signet Group Plc
SHBK Shore Finl Corp
RYL The Ryland Group, Inc
POOL Pool Corporation
NT Nortel Networks Corp New
KUB Kubota Corporation
KFY Korn Ferry Intl
DDS Dillard Department Store
CWTR Coldwater Creek Inc
ARII American Railcar Inds Inc

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Thursday’s Links of Interest

Here are some links worth checking out

– Another Sprint (S) customer service horror story, god they suck, only 2 more years left in my contract…

– I cannot wait to see this movie

– Here are some little know stock picks of some billionaires

– So here is the thing. If corporate insider are buying shares in their companies at a rate not seen since 2003, why aren’t you?

– Mattel handled the initial bad lead paint news great, but, you can’t keep announcing it and expect to survive. These guys I think are on the money here