Sunday, March 23, 2008

Trading Alerts: March 24, 2008

The U.S. Justice Department began a criminal investigation into whether aluminum maker Alcoa Inc (AA-$34.68) participated in bribery in the Persian Gulf state of Bahrain.

Shares in Bankrate, Inc (RATE-$45.08), a leading online source for consumer banking information, have been hurt recently by fears about demand prospects for its Internet-based offerings. Barring a deep recession, some analysts believe that its
traffic outlook remains strong. Bulls see the stock price gaining 25 percent—or more—in the coming year.

Are investors just in denial, or do the speculators bidding up the share price of The Bear Stearns Companies (BSC-$5.96)
know something?

The latest victim of the credit squeeze, Borders Group Inc (BGP-$5.07), announced Thursday its inability to remodel stores and pay for new technology. The bookstore chain has hired J.P. Morgan Securities Inc and Merrill Lynch & Co to look into future strategies, including possible
sale of the company.

Is billionaire investor, Warren Buffet, stalking lender CIT Group (CIT-$9.64)? Sources tell that the commercial finance shop has essentially been in
search of a buyer or partner for the past several months.

As a key deadline approaches next week,
confusion surrounds the buyout of Clear Channel Communications (CCU-$34.64) due to tensions between the private equity companies behind the deal and the banks that have agreed to finance it.

Zacks Equity Research cuts the price target of CRA International (CRAI-$29.22) to $27.00 a share, blaming the
downgrade on the consultancy's inability to execute successfully its business plan in recent quarters.

Even with prices at the pump near all-time highs, producing
incremental barrels of oil just to ease prices for consumers is not part of Exxon Mobil Corp.'s (XOM-$85.00) calculations.

Standard & Poor's Corp, in a continuing sign of loss of confidence in investment banks' eroding profitability, put Goldman Sachs Group, Inc (GS-$179.63) and Lehman Brothers Holdings Inc (LEH-$48.65) on
negative outlook on Friday.

"Times like these call for caution," said Jim Cramer. "And there may be no better defense than a dividend." That’s why the
Mad Money host recommends HCP, Inc (HCP-$31.74) the largest healthcare-focused real estate investment trust, which is paying out 5.8 percent.

Moody's Investors Service on Friday lowered Hillenbrand Industries' (HB-$48.46) debt ratings to Baa3 from A3 ahead of the planned
spin-off of its casket division. The rating outlook is negative.

Numerous issues continue to plague H&R Block (HRB-$21.09), including concerns related to liquidity and regulatory probes into
alleged discriminatory loan practices. Nonetheless, Chairman Richard Breeden spent almost $50 million to increase his holdings in the tax preparation company by 40 percent. From Tuesday through Thursday, Chairman Breeden purchased 2.4 million shares for $47.8 million, at an average of $19.82 a share. The purchases were made indirectly through Breeden Capital Partners LLC, which now owns 8.43 million shares, or 2.6% of H&R Block's shares outstanding, according to a Securities and Exchange Commission Form 4 filing.

Standard & Poor's Ratings Services
lowered its outlook on National City Corp (NCC-$11.00) to 'negative' from 'stable' Friday, citing risk from the shaky housing and mortgage markets. During the quarter, credit metrics deteriorated significantly and non-interest income fell short of expectations for the Cleveland-based financial services company.

Neurogen Corp (NRGN-$3.08), which recently initiated Phase 2 studies with aplindore in both Restless Legs Syndrome and Parkinson's disease, announced today that in its 2007 financial statements included in the Company's Annual Report on Form 10-K, the auditor's opinion contained a "going concern" qualification (opining that working capital would not be sufficient to fund planned operations in 2008). No surprise—no FDA marketing approval to date for any of its drug candidates and more than $288.0 million in accumulated net losses.

Standard & Poor's said Friday it put the 'B' corporate credit rating and other ratings it holds for Palm Inc (PALM-$4.72) on
CreditWatch with negative implications due to the Treo maker's falling revenue and profitability.

Standard & Poor's said on Friday it may
downgrade FGIC Corp and its insurance arm, citing a decision by the bond insurer's principal owner PMI Group (PMI-$5.92), with a 42 percent stake, not to put more capital into FGIC. Zacks Equity Research is maintaining a "SELL" recommendation on the shares of PMI.

In a research note published Thursday, analyst Robert S Drbul of Lehman Brothers said he expects Phillips-Van Heusen (PVH-$35.13), which markets brands such as Calvin Klein and Izod, to report fourth-quarter earnings of $0.53 a share. Although he maintained his "overweight" rating on the apparel retailer, he
reduced the target price from $50 to $45 a share.
Analysts expect Sonic Corp (SONC-$22.00), which operates drive-in fast-food restaurants, to post second-quarter earnings of $0.15 per share on revenue of $177.47 million, on average. Separately, same-store sales—a key gauge of retailer performance because it measures sales at existing stores rather than newly opened ones—remain within the company's target range of a 2%-to-4% increase, according to management’s previous guidance. Investors will be looking at two key metrics: growth in average check size and growth in traffic (number of transactions per drive-in).

SteelCloud, Inc (SCLD-$0.84), a manufacturer of embedded integrated computing systems for the industrial automation marketplace, reported a 31 percent increase in
first-quarter revenues to approximately $5.8 million, reflecting significant progress in gaining new contracts with longstanding and new customers.

A San Diego judge has ordered coffee giant Starbucks Corp (SBUX-$17.53)
to remunerate more than $100 million in tips and interest owed to staff across outlets in California.

Synopsys Inc (SNPS-$21.78), a maker of software for designing semiconductors, said it agreed
to buy Synplicity Inc (SYNP-$5.32) for about $227 million, or about $8.00 a share in cash, to boost its chip-design software portfolio and enter new markets.

Syniverse Holdings (SVR-$17.01) integrates disparate carriers' systems and networks in order to provide global voice, data communications, and anti-fraud roaming solutions to wireless subscribers. The company is
well positioned to find big profits as wireless technologies expand across the globe.

Investors will be looking to see if international sales can offset weak same-store domestic sales growth at Tiffany & Co (TIF-$38.60). Analysts expect
fourth-quarter earnings of $1.21 per share on revenue of $1.05 billion, on average, from the jewelry and luxury goods retailer.

3Com Corp (COMS-$1.98), whose merger deal with an affiliate of Bain Capital
imploded, should post earnings of 3 cents a share in the third quarter, on sales of $332.82 million, on average, according to analysts polled by Thomson Financial. Given the subdued economic environment and poor competitive position of the networking company, Zacks Research analyst, Steve Biggs, does not believe its shares are worth more than $2.00.

United Airlines parent, UAL Corp (UAUA-$23.17), voluntarily disclosed to the FAA the
unscheduled retesting of altitude indicators on seven of its Boeing 747 jumbo jets after determining that test equipment at a maintenance facility in South Korea needed to be checked for calibration.

Drugstore chain Walgreen Company (WAG-$36.78) expects the downturn in consumer spending to
pose a challenge through its fiscal second quarter ended in February. Zacks consensus estimate is for the retail pharmacy chain to post $0.67 per share on revenue of $15.43 billion. Watch out for front-end store traffic/comps and RX market share growth (vs Wal-Mart Stores Inc and CVS Caremark Corp).

Editor David J. Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.

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