Contributors

From Notable Calls

J.P. Morgan is out very positive on Goodyear Tire & Rubber (NYSE: GT) reiterating their Overweight rating and $22 price target ahead of a potentially very good Q4 #'s.

While it is early to make a definitive preview on tire company quarterly earnings, the firm is increasingly seeing the likelihood of an upside surprise at Goodyear for Q4 and advise adding to positions now, while the interest level remains muted. Preliminary US November tire shipment data are not out yet, but various industry sources indicate that the y/y increase in consumer replacement could be midteens. This, coupled with recent pricing developments, reinforces the view that tire industry conditions have turned a corner.

Q4 Volumes Shaping Up Well – If Nov is +15% y/y, that would imply US consumer replacement shipments in Nov are -3.5% m/m, much better than the -9.4% average seasonal decline witnessed between Oct and Nov over the past 10 years, suggesting demand may be genuinely improving off the bottom (not just because of easy year-ago comps). Further, if one estimates December consumer replacement volumes are +13% y/y (implying -5% q/q, reflecting some seasonality but also perhaps some prebuy ahead of GT’s Dec price hike), Q4 US consumer replacement tire shipment could be estimated at 58.4MM units (only -3.5% sequentially from Q3’s 60.5MM). Estimating sequential Q4 volume change in other US end-markets is less difficult, in J.P. Morgan's view: NA consumer OE should be +15% (based on relatively high quality CSM Q4 production schedules), and let’s assume commercial OE and replacement are both sequentially flat (some uptick seems to be happening in CV OE build, but they remain conservative on this segment given advertised excess inventory issues).

Bridgestone Price Hike Comes on Heels of GT’s Hike: Goodyear’s up-to-6% recent price hike (effective Dec 1) was given more sticking power by Bridgestone’s up-to-5% price hike announced two days ago (effective in Jan) (Michelin may not be that far behind such an announcement). The benefits of the price hike may help Q4 NAFTA profits by $15MM, though it is not clear whether or not this was baked into Q4 guidance. Either way, it sets CTB and GT and most global tire makers up well for Q1.

Tire Stock Views: J.P. Morgan remains Overweight in both Goodyear and Cooper. But GT seems more interesting at this juncture, though they continue to be bullish on Cooper as well. GT shares have only modestly recovered from the value lost post Q4 guidance, but firm's view on normalized earnings has not materially changed. Further, macro conditions are improving somewhat faster than expected (volumes, pricing, FX), suggesting beating reduced Q4 expectations may not be that hard.

GT now trades at a nonmeaningful P/E multiple on JPM 2009E EPS and approximately 13.7x revised JPM 2010E EPS. Firm rates GT Overweight as they believe industry volumes have troughed. J.P. Morgan's Dec 10 price target of $22 is based upon 8x their unchanged estimate of normalized EPS of $2.75 (midrange of previously stated $2.50 to $3.00).

Notablecalls: I must say that I like this call from JPM's Tires, Automobile Manufacture team, lead by Himanshu Patel. What I like most about this call is that they are not alone. Unnoticed by many, Keybanc's excellent Auto team had this to say two days ago:

// Within the last several days, several tire manufacturers have announced price increases in North America (to take effect January 1) to cover the cost of rising raw materials. This is positive for the industry and consistent with the note we wrote in early November following our trip to the SEMA show. We expect several other manufacturers, including Cooper and Michelin, to join the others and announce their own price increases within the next several weeks.

The following lists price increases already announced by manufacturers:

Bridgestone – 5% (just announced yesterday)
Continental – 5% (just announced yesterday)
Yokohama – 6% (just announced yesterday)
Nexen – 8% (announced last Friday)
Goodyear – 6% (effective December 1)
Falken – 7% (effective December 1)

Tire demand is improving and manufacturers with whom we have spoken are struggling to keep up with demand. With September inventory levels remaining very low (down 25% from September 2008); it could be 6-9 months before inventory levels return to normal rates. While official data is not yet available as the month just ended, we estimate that consumer replacement tire shipments in November could have been up by as much as 15% year-over-year.

Given these positive trends, we remain bullish on the tire industry. Our ratings on Goodyear Tire, Cooper Tire (NYSE: CTB) and Cabot (NYSE: CBT) remain BUY. //

Goodyear (GT) is down 5 pts from the $18+ level it was trading before the Q3 #'s and we have two very good firms calling for surprisingly good numbers. I can understand people not noticing Keybanc's commentary but I think JPM will get attention.

While it's kind of tough to make a call here, I suspect GT may see some buy interest in the n-t, possibly even today.

I want to see a slight gap-up in the shares this morning which may ignite a larger upside move. Could trade above $14.00 in a hurry and continue higher throughout the day. If they get this one going, it can trade up 6-8%.

For more calls go to http://notablecalls.blogspot.com/

Good morning. Although there were an awful lot of green numbers spread amongst the indices by the time the closing bell rang (in fact, only the Dow finished slightly in the red yesterday), we’re going to have to call the day a “no decision.” In short, while the bulls looked like they had a shot in the early going, they were once again unable to “break on through to the other side.” And then on the other side of the aisle, the bears have to have been disappointed that they weren’t able to turn the failed breakout into a key reversal.

So, for those of you keeping score at home, it is now Resistance: 8, Bulls 0. To hear the technicians tell it, if the bulls don’t get their act together soon and find a way to punch through the resistance, we could easily see a return trip to the low end of the recent range. And the bears would then be entitled to take their shot at breaking on through.

Stocks seemed to get a lift in the early going from the ADP Employment report, which actually came in below expectations as the private sector lost another 169K jobs in November; below the estimates for a decline of 150K. However, traders seemed to focus more on the idea that job loss totals have now declined for eight months in a row.

So armed with the concept that the jobs market is indeed getting better (or at least, ‘less bad’) traders pushed stocks higher at the open and for a while it looked like Santa might be arriving ahead of schedule this year. However, the numbers from the Department of Energy on oil inventories put a damper on the rally as larger supplies meant selling in oil and buying of the dollar – and we all know what buying in the dollar means to stock prices.

Once the rally appeared to be failing, it is a safe bet that some sell stops may have kicked in as every trader worth their salt was watching for another ‘breakout fakeout.’ And although the sellers were able to take the indices well into the red zone, the Fed’s Beige Book report seemed to save the day.

While Fed watchers will admit that the FOMC really doesn’t put much credence on the Beige Book, the report did help keep the bulls from getting TKO’d yesterday. The report showed that economic activity was improving in 8 of the Fed’s 12 districts and the overall impression was that the economy continues to improve modestly. And although this wasn’t exactly breaking news, it was enough to turn things around into the end of the day.

So, while neither team was able to come away with much of an advantage yesterday, you can’t really blame traders for not wanting to take a big stand in front of today’s same-store sales results and Friday’s big jobs report. In addition, with a financial reform bill getting closer and debate on health care about to begin, you can’t really blame anyone for wanting to take a wait-and-see attitude in the near term.

Turning to this morning, we’ve got same-store sales numbers coming in and another batch of economic data to sift through. For starters, Jobless claims for the week ending November 28th were reported at 457K; below the consensus estimates for 480K. The prior week was revised lower to 462K from 466K. Continuing claims for unemployment insurance for the week ending November 21 came in at 5.465M vs. consensus 5.400M.

Next up, Final Nonfarm Productivity for the third quarter was reported up 8.1%; below the consensus for 8.5% and the preliminary reading of 9.5%. Finally, Unit Labor Costs for the quarter fell by -2.5%, which was also below the consensus for a decline of -4.1% and the previous reading of -5.2% .

Running through the rest of the pre-game indicators, overseas markets were mostly higher on news that BAC will repay the TARP money in full. Crude futures are higher with the latest quote showing oil trading up by $0.55 to $77.15. On the interest rate front, we’ve got the yield on the 10-yr trading at 3.38%, while the yield on the 3-month T-Bill is currently at 0.05%. In addition, gold is up another $2.50 and the dollar is weaker against the Yen, Euro, but down against the Pound. Finally, with about 45 minutes before the bell, stock futures in the U.S. are pointing to a modestly higher open. The Dow futures are currently ahead by about 20 points; the S&P’s are up about 3 points, while the NASDAQ looks to be about 3.5 points above fair value at the moment.

Wall Street Research Summary

Upgrades:
# Weyerhaeuser (WY) – BofA/Merrill
# Vornado Realty Trust (VNO) – Estimates and target increased at Barclays
# Texas Instruments (TXN) – Estimates and target increased at Barclays
# Ternium (TX) – Credit Suisse
# Mobile TeleSystems (MBT) – Target increased at Credit Suisse
# Bank of America (BAC) – FBR Capital
# AvalonBay (AVB) – Goldman
# FedEx (FDX) – Estimates increased at RBC Capital
# Cubist Pharmaceuticals (CBST) – RBC Capital
# DreamWorks Animation (DWA) – Target increased at Thomas Weisel
# Goldcorp (GG) – UBS
# Assured Guaranty (AGO) – UBS

Downgrades:
# Genzyme (GENZ) – Collins Stewart
# Kimco Realty (KIM) – Goldman
# Teck Resources (TCK) – RBC Capital
# MBIA (MBI) – Target reduced at UBS

Long positions in stocks mentioned: none

Make the decision to have a great day and until next time, “may the bulls be with you!”

David D. Moenning
Founder TopStockPortfolios.com

For more "top stock" portfolios and research, visit www.TopStockPortfolios.com

The opinions and forecasts expressed are those of David Moenning, founder of TopStockPortfolios.com and may not actually come to pass. Mr. Moenning’s opinions and viewpoints regarding the future of the markets should not be construed as recommendations. The analysis and information in this report and on our website is for informational purposes only. No part of the material presented in this report or on our websites is intended as an investment recommendation or investment advice. Neither the information nor any opinion expressed nor any Portfolio constitutes a solicitation to purchase or sell securities or any investment program. The opinions and forecasts expressed are those of the editors of TopStockPortfolios and may not actually come to pass. The opinions and viewpoints regarding the future of the markets should not be construed as recommendations of any specific security nor specific investment advice. Stocks should always consult an investment professional before making any investment.

Any investment decisions must in all cases be made by the reader or by his or her investment adviser. Do NOT ever purchase any security without doing sufficient research. There is no guarantee that the investment objectives outlined will actually come to pass. All opinions expressed herein are subject to change without notice. Neither the editor, employees, nor any of their affiliates shall have any liability for any loss sustained by anyone who has relied on the information provided.

The analysis provided is based on both technical and fundamental research and is provided “as is” without warranty of any kind, either expressed or implied. Although the information contained is derived from sources which are believed to be reliable, they cannot be guaranteed.

The information contained in our websites and TopStockPortfolios publications is provided by Ridge Publishing Co. Inc. (Ridge). One of the principals of Ridge, Mr. David Moenning, is also President and majority shareholder of Heritage Capital Management, Inc. (HCM) a Chicago-based money management firm. HCM is registered with the U.S. Securities and Exchange Commission as an investment adviser. HCM also serves as a sub-advisor to other investment advisory firms. Ridge is a publisher and has not registered as an investment adviser. Neither HCM nor Ridge is registered as a broker-dealer.

Employees and affiliates of HCM and Ridge may at times have positions in the securities referred to and may make purchases or sales of these securities while publications are in circulation. Editors will indicate whether they or HCM has a position in stocks or other securities mentioned in any publication. The disclosures will be accurate as of the time of publication and may change thereafter without notice.

Investments in equities carry an inherent element of risk including the potential for significant loss of principal. Past performance is not an indication of future results.

Good morning. Yes, it is true that the stocks appear to be picking up where they left off before the market mugging in Dubai. Yes, it is true that the indices got the final month of the year started off on the right foot with a triple-digit gain yesterday. And yes, it is true that it was economic data both here and overseas that put the bounce back in the bulls’ step on Tuesday.

However, our furry friends are quick to point out that after yesterday’s fun, the S&P 500 is once again right back where it stood on November 16th, 17th, 18th, 23rd, 24th, and 25th. And this, dear readers, is a splendid example of something chart technicians call ‘resistance.’ What’s more, unless the bulls can find a way to “break on through to the other side” in the very near future, the bears contend that the line in the sand the bulls currently face will quickly turn into something more on the order of the Berlin Wall.

While I don’t want to spend too much time this morning on what CNBC has dubbed ‘chartology,’ the glass-is-half-empty crowd has also been crowing a lot lately about the change in leadership, the negative divergences, and the overall decline in volume seen lately. And although all of the problems noted above could be easily rectified with a rip-roaring move to the upside accompanied by solid breadth and volume, we need to soberly recognize that the ‘issues’ presently being pointed to by the bear camp are usually present at important market tops.

Before you start throwing things or hurling insults at the very suggestion that this record breaking run for the roses might come to an end at some point, please allow me to clarify my point. We do not want to imply that the bulls are done and I can confirm that no one in our office has been seen printing up “the end is near” signs. No, we recognize that market moves usually go much farther than imaginable and in short, we fully expect this bull run to continue to impress – especially if the economy can perk up a bit and maybe produce a couple new jobs along the way.

However, we have also been around long enough to know what the telltale signs of trouble are. So, if you are looking for reasons to be worried, check out a chart of Goldman Sachs (GS), GE (GE), Bank of America (BAC), and the Russell 2000. All of the above were poster-children for the rebound that began on March 10th and all have been noticeably absent during the latest move the upside. Add to that the less than robust readings from some of our momentum models, and well, let’s just say that we’ll be watching things rather closely as the year draws to a close.

Before we got sidetracked, we mentioned that yesterday’s romp to the upside was sponsored by some solid economic data. And as has been the case throughout much of this year’s rally, the manufacturing data both here at home and in China was a key driver. Overnight we learned that China’s manufacturing sector expanded for the ninth straight month. And then the U.S. PMI confirmed a fourth straight month of growth in the sector. Add to that a sigh of relief over Dubai, improving overseas markets, and much better-than-expected report on Pending Home Sales and you have a recipe for success.

But, of course, the key question from here is if the bulls will stay stuck in the mud below resistance or find a way to break on through to the other side?

Turning to this morning, ADP reported that the private sector lost 169,000 jobs in November, which was 19K more than the consensus estimate for 150K. However, ADP notes that the trend continues to improve as November was the 8th straight month in which job losses were less than the month prior.

Running through the rest of the pre-game indicators, Asian markets were higher while European bourses are hovering around breakeven. Crude futures are lower with the latest quote showing oil trading down by $0.41 to $77.96. On the interest rate front, we’ve got the yield on the 10-yr trading at 3.30%, while the yield on the 3-month T-Bill is currently at 0.05%. In addition, gold is up another $12.20 and the dollar is weaker against the Yen, Euro, and Pound. Finally, with about 45 minutes before the bell, stock futures in the U.S. are pointing to a relatively flat open. The Dow futures are currently off by about 8 points; the S&P’s are down a fraction, while the NASDAQ looks to be about within a point of fair value at the moment.

Wall Street Research Summary

Upgrades:
# Sysco (SYY) – BB&T Capital Markets
# SunTrust Banks (STI) – Credit Suisse
# BB&T Corp (BBT) – Credit Suisse
# KB Home (KBH) – Credit Suisse
# MDC Holdings (MDC) – Credit Suisse
# Express Scripts (ESRX) – JP Morgan
# AMR Corp (AMR) – Morgan Stanley
# UAL Corp (UAUA) – Morgan Stanley
# Morgan Stanley (MS) – Estimates reduced at UBS
# JP Morgan (JPM) – Estimates reduced at UBS
# Citi (C) – Estimates reduced at UBS
# RF Micro Devices (RFMD) – USB

Downgrades:
# Mechel Steel (MTL) – Credit Suisse
# Constellation Brands (STZ) – Goldman
# Alaska Air (ALK) – Morgan Stanley

Long positions in stocks mentioned: ESRX, ALK

Best wishes for a pleasant day and until next time, “may the bulls be with you!”

David D. Moenning
Founder TopStockPortfolios.com

For more "top stock" portfolios and research, visit www.TopStockPortfolios.com

The opinions and forecasts expressed are those of David Moenning, founder of TopStockPortfolios.com and may not actually come to pass. Mr. Moenning’s opinions and viewpoints regarding the future of the markets should not be construed as recommendations. The analysis and information in this report and on our website is for informational purposes only. No part of the material presented in this report or on our websites is intended as an investment recommendation or investment advice. Neither the information nor any opinion expressed nor any Portfolio constitutes a solicitation to purchase or sell securities or any investment program. The opinions and forecasts expressed are those of the editors of TopStockPortfolios and may not actually come to pass. The opinions and viewpoints regarding the future of the markets should not be construed as recommendations of any specific security nor specific investment advice. Stocks should always consult an investment professional before making any investment.

Any investment decisions must in all cases be made by the reader or by his or her investment adviser. Do NOT ever purchase any security without doing sufficient research. There is no guarantee that the investment objectives outlined will actually come to pass. All opinions expressed herein are subject to change without notice. Neither the editor, employees, nor any of their affiliates shall have any liability for any loss sustained by anyone who has relied on the information provided.

The analysis provided is based on both technical and fundamental research and is provided “as is” without warranty of any kind, either expressed or implied. Although the information contained is derived from sources which are believed to be reliable, they cannot be guaranteed.

The information contained in our websites and TopStockPortfolios publications is provided by Ridge Publishing Co. Inc. (Ridge). One of the principals of Ridge, Mr. David Moenning, is also President and majority shareholder of Heritage Capital Management, Inc. (HCM) a Chicago-based money management firm. HCM is registered with the U.S. Securities and Exchange Commission as an investment adviser. HCM also serves as a sub-advisor to other investment advisory firms. Ridge is a publisher and has not registered as an investment adviser. Neither HCM nor Ridge is registered as a broker-dealer.

Employees and affiliates of HCM and Ridge may at times have positions in the securities referred to and may make purchases or sales of these securities while publications are in circulation. Editors will indicate whether they or HCM has a position in stocks or other securities mentioned in any publication. The disclosures will be accurate as of the time of publication and may change thereafter without notice.

Investments in equities carry an inherent element of risk including the potential for significant loss of principal. Past performance is not an indication of future results.

From Notable Calls:

Morgan Stanley is out upgrading the Airline sector to Attractive, upgrading AMR Corp (NYSE: AMR) and Ual Corp. (NASDAQ: UAUA) to Overweight from Equal-Weight.

Upgrading Industry View to Attractive on improving risk/reward of the airline “cycle call.” Morgan Stanley notes they have updated their estimates and liquidity projections for 2010 to account for recent trends/news events. Additionally, they are moving their valuation levels to YE10 from YE09 and raising base case valuations across all airlines.

Importantly, the firm expects investors’ liquidity concerns to dissipate in the coming months as investors incorporate the full implications of US Airways’ (NYSE: LCC) recent liquidity improvements. Now that 1) previously exuberant expectations have normalized as evidenced by price action in the last 1-2 months vs. improving trends and 2) the risk of a liquidity squeeze at a major carrier in 2010 has fallen; firm believes investors will become increasingly willing to bet on the cycle.

Unlikely to get a markedly better entry point in the coming months. Though they believed that airline profitability is improving, they were reluctant to make the “airline cycle call” ahead of 3Q09 earnings like many of their sell-side peers on the belief that investors would be able to get a significantly better entry-point near-term. Since the firm reiterated their In-line Industry View (see Staying on the Sidelines for Now 11/2/09), many of the five indicators they noted they were watching to become more constructive on the space have turned more favorable. Moreover, Morgan Stanley also believes that they are on the cusp of a stream of positive catalysts for the group that will showcase substantial 2nd derivative improvement in revenue and only subsequently will they see evidence of the anemic rebound that has concerned us. Therefore, they believe investors will be hard-pressed to identify a better entry-point for the cycle call in the coming months.

Re-orienting Airline Ratings. Consistent with Morgan Stanley's evolving industry view, they are adding risk to their recommendations. As such, they are upgrading both AMR and UAUA from EW to OW and downgrading shares of (Nasdaq: ALGT) (OW to EW) and (NYSE: ALK) (EW to UW).

Upgrading AMR to OW from EW. AMR's recent liquidity-enhancing transactions have placed the company more firmly in the "Survivor" basket, particularly considering industry trends are broadly improving. Though their projected headline EPS losses and difficult union negotiations are risks, the firm believes investor willingness to bet on the cycle using this highly leveraged airline equity is likely to overcome these marginal negatives.

Why Now? As a carrier formerly not included in firm's “Survivor Basket”, AMR is still perceived to have more liquidity risk than they think is appropriate. Furthermore, we believe that the industry is on the cusp of a multi-month series of positive catalysts. Given AMR’s leverage to the cycle, they believe this is a setup for a likely move higher.

UAL Corp. (UAUA, OW) Upgrading UAUA to OW from EW. UAUA’s leverage to the industry revenue cycle and underperformance through the downturn is likely to become a relative positive as investors focus on rapidly improving YoY revenue trends over the coming quarters. Furthermore, recent liquidity injections are likely to improve investor willingness to look through the cycle into 2011, when the company generates significant FCF per MSCO's estimates.

Why Now? Similar to AMR, but with even more leverage and suffering from more negative sentiment with respect to liquidity, in firm's view; UAUA is likely to move higher as investors focused on the airlines with the most leverage to the cycle in the face of positive catalysts.

Notablecalls: AMR and UAUA - 5-7% movers today for sure. Maybe even more. Note Goldman Sachs was positive on Airlines yesterday and the stocks have been pushing higher.

Getting a bump from Morgan Stanley is exactly what the doctor ordered for these to take off again.

AMR can trade to $6.75+

UAUA can trade to $8.75+

Let's see how it works out.

For more calls go to http://notablecalls.blogspot.com/

Good morning. While it is tempting to work this morning’s missive around the title of one of the greatest rock albums of my generation – especially since the NFL announced Thursday that Pete Townshend and Roger Daltrey’s little band will be the halftime entertainment at this year’s Super Bowl in Miami on February 7th – we’re actually referring to the big question in the market right now. As in: Who’s next in terms of debt defaults?

If there is such a thing, the Vegas line likely favors the Ukraine at the present time as prior to the Dubai mess, we had been hearing a great deal of talk about a sovereign debt default there. But then again, although the game of “who’s next?” can be fun, we should probably avoid borrowing trouble in this department and stick to the matter at hand: Dubai’s $59 billion debt.

To review briefly, two quasi state-owned companies (Dubai World and Nakheel) from Dubai created somewhat of a global panic last week after they announced Wednesday that they were seeking a six-month time-out on their debt payments.

Based on the concept of “build it and they will come,” Dubai’s rapid growth revolved around the ruler Sheikh Mohammed bin Rashid al-Maktoum, who outlined his big ideas in his book, "My Vision." The book suggested that other Arab countries could replicate Dubai's big success by quickly building big shining cities in the desert through the import of foreign residents, finance and labor. But instead of a big idea whose time had come to the middle east, now the big bet on a big city based on big debt seems to be a big problem .

Stocks around the globe initially dove hard in response to the news. However, after European bourses staged a turnaround on Friday, the losses in the U.S. were a fraction of those seen in Asia, and the WSJ suggested that the panic was overdone, the situation appears to have calmed down a bit.

The bulls will argue that this is not Lehman Brothers revisited and that the problem is localized to Dubai. However, on the other side of the aisle, our friends in fur contend that this is a contagion waiting to happen and there is no telling who’s next in this game.

The good news is Asian markets advanced on Monday after the U.A.E. central bank said Sunday that it had provided additional liquidity facility to banks in the region and announced that it “stands behind” the banks in Dubai. The bad news is there are reports this morning that the Dubai government will not guarantee Dubai World’s debt and a top Dubai official stated creditors will be affected in the short term by the firm’s restructuring.

So, will the markets here at home play “who’s next?” today or brush the problem aside and focus more on the state of the shopping season and the economy. Don’t forget, we’ve got the November Jobs report on Friday and there seem to be minute-to-minute updates on what shoppers are doing. On the shopping front, the bottom line is retailers appear to be seeing mixed results so far as more shoppers hit the stores over the Black Friday weekend but apparently spent a little less.

Turning to this morning, we do not have any economic data due to be released before the bell but we will get reports on the Chicago and Milwaukee PMI at 9:45 and 10:00 am respectively.

Running through the rest of the pre-game indicators, the foreign markets are mixed by region with Asia up nicely while the major European Bourses are not as enthusiastic with France off -0.54%, Germany down -0.85%, and London’s FTSE up +0.28%. Crude futures are basically unchanged with the latest quote showing oil trading up by $0.03 to $76.08. On the interest rate front, we’ve got the yield on the 10-yr trading at 3.24%, while the yield on the 3-month T-Bill is currently at 0.04%. In addition, gold is down $1.50 and the dollar is weaker against the Yen and Pound. Finally, with about 60 minutes before the bell, stock futures in the U.S. are pointing to a modestly higher open. The Dow futures are currently head by about 15 points; the S&P’s are up about 2 points, while the NASDAQ looks to be about a single point below fair value at the moment.

Wall Street Research Summary

Upgrades:
# HSBC Holdings (HBC) – BofA/Merrill
# Procter & Gamble (PG) – Mentioned positively at Bernstein
# Genzyme (GENZ) – Citi
# AFLAC (AFL) – Credit Suisse
# Abercrombie & Fitch (ANF) – FBR Capital
# Sonic (SONC) – Removed from Conviction Sell list at Goldman
# Banco Bradesco (BBD) - Goldman
# U.S. Steel (X) – Added to Conviction Buy list at Goldman
# Deere & Company (DE) – JP Morgan
# Safeway (SWY) – Morgan Stanley
# Stryker (SYK) – RBC Capital
# US Bancorp (USB) – RW Baird
# DuPont (DD) – Added to Global Top 40 at UBS
# Barrick Gold (ABX) – Added to Global Top 40 at UBS
# Wal-Mart (WMT) – Added to Global Top 40 at UBS
# Microsoft (MSFT) – Added to Global Top 40 at UBS
# Teva Pharmaceuticals (TEVA) – Added to Global Top 40 at UBS

Downgrades:
# Baidu (BIDU) – Bernstein
# Freeport-McMoRan (FCX) – Removed from Conviction Buy list at Goldman
# Supervalu (SVU) – Morgan Stanley
# Franklin Resources (BEN) – Pali Research
# Bristol-Meyers (BMY) – Removed from Global Top 40 at UBS

Long positions in stocks mentioned: GS, MSFT

Be sure to keep everything in perspective and until next time, “may the bulls be with you!”

David D. Moenning
Founder TopStockPortfolios.com

For more "top stock" portfolios and research, visit TopStockPortfolios.com

The opinions and forecasts expressed are those of David Moenning, founder of TopStockPortfolios.com and may not actually come to pass. Mr. Moenning’s opinions and viewpoints regarding the future of the markets should not be construed as recommendations. The analysis and information in this report and on our website is for informational purposes only. No part of the material presented in this report or on our websites is intended as an investment recommendation or investment advice. Neither the information nor any opinion expressed nor any Portfolio constitutes a solicitation to purchase or sell securities or any investment program. The opinions and forecasts expressed are those of the editors of TopStockPortfolios and may not actually come to pass. The opinions and viewpoints regarding the future of the markets should not be construed as recommendations of any specific security nor specific investment advice. Stocks should always consult an investment professional before making any investment.

Any investment decisions must in all cases be made by the reader or by his or her investment adviser. Do NOT ever purchase any security without doing sufficient research. There is no guarantee that the investment objectives outlined will actually come to pass. All opinions expressed herein are subject to change without notice. Neither the editor, employees, nor any of their affiliates shall have any liability for any loss sustained by anyone who has relied on the information provided.

The analysis provided is based on both technical and fundamental research and is provided “as is” without warranty of any kind, either expressed or implied. Although the information contained is derived from sources which are believed to be reliable, they cannot be guaranteed.

The information contained in our websites and TopStockPortfolios publications is provided by Ridge Publishing Co. Inc. (Ridge). One of the principals of Ridge, Mr. David Moenning, is also President and majority shareholder of Heritage Capital Management, Inc. (HCM) a Chicago-based money management firm. HCM is registered with the U.S. Securities and Exchange Commission as an investment adviser. HCM also serves as a sub-advisor to other investment advisory firms. Ridge is a publisher and has not registered as an investment adviser. Neither HCM nor Ridge is registered as a broker-dealer.

Employees and affiliates of HCM and Ridge may at times have positions in the securities referred to and may make purchases or sales of these securities while publications are in circulation. Editors will indicate whether they or HCM has a position in stocks or other securities mentioned in any publication. The disclosures will be accurate as of the time of publication and may change thereafter without notice.

Investments in equities carry an inherent element of risk including the potential for significant loss of principal. Past performance is not an indication of future results.