lmt

With international sales of its new F-35 fighter jet coming, Lockheed (NYSE: LMT) is maneuvering Boeing Co. (NYSE: BA) and Saab AB out of the hostile skies.

The program manager of this particular jet believes that there will be fewer prime manufacturers in the future. This won't impact lower-level suppliers substantially, though, as they will have an ample role with the F-35 and continue to service existing aircraft from other manufacturers. These suppliers contributed more than 70% of the work to the F-35.

Analyst upgrades:

• Jefferies upgraded MDS Inc. (NYSE: MDZ) to Buy from Hold on valuation as it believes shares are pricing in a "worst case" scenario at current levels. The firm keeps a $6.50 target on the stock.
  
• JP Morgan upgraded Continental (NYSE: CAL) to Overweight from Neutral on valuation as it believes the recent sell-off is overdone. The firm keeps a $13 price target on the stock.
• Thomas Weisel is positive on Allergan's (NYSE: AGN) diverse product portfolio, global infrastructure, vertical integration, and deep pipeline. The firm upgraded shares to Overweight from Market Weight and has a $54 target on the stock.
• NetLogic (NASDAQ: NETL) was upgraded to Buy from Neutral at Piper.
  
• Dover (NYSE: DOV) was raised to Buy from Neutral at Banc of America/Merrill.
  
• Map Pharmaceuticals (NASDAQ: MAPP) was upgraded at Argus to Hold from Sell.

Late last Friday, The Wall Street Journal reported that the Defense Department has ordered Lockheed Martin Corporation (NYSE: LMT) to cease work on a $13 billion contract to build helicopters for the White House.

The move was widely expected, since the Obama administration has previously pointed to the revamped copters as an example of excessive defense spending. However, the contract's cancellation will no doubt bring fresh job losses to Owego, NY, where the Marine One copter is being designed.

Analyst upgrades:

• Merriman upgraded Dendreon (NASDAQ: DNDN) to Buy from Neutral on expectations shares will react positively to the full IMPACT data release on April 28. The firm thinks Provenge could represent the first cancer immunotherapy approved in the U.S. and raised its valuation range on the stock to $33-$34 from $18-$19.
• Piper Jaffray upgraded Andersons (NASDAQ: ANDE) as it believes the valuation is attractive, investor expectations are low, and the company's fertilizer and rail segments could recovery in FY10. The firm has a $19 target on shares. Goldman upgraded the auto sector to Neutral from Cautious and added Ford (NYSE: F) to its Conviction Buy list. The analyst does not believe Ford will have to declare bankruptcy and sees the company benefiting from Chrysler share declines and GM's (NYSE: GM) reduced product offerings. Ford's price target is $6
• Banc of America/Merrill upgraded U.S. Airways (NYSE: LCC) to Buy from Underperform.
• Broadcom (NASDAQ: BRCM) was upgraded to Equal Weight from Underweight at Morgan Stanley.
• Caterpillar (NYSE: CAT) was raised to Overweight from Neutral at JP Morgan.

Analyst Douglas Harned of Sanford C. Bernstein chopped his price targets on several defense stocks today, including Lockheed Martin Corp. (NYSE: LMT). "Trends in the defense budget remain the most important driver of defense stocks, and the cash flow outlook is strong for the defense businesses," said Harned in a note to clients.

Harned cut LMT's price target from $104 to $96, but he reiterated an "outperform" rating on the stock. Lockheed Martin remains the analyst's top pick in the defense sector, thanks to its strong overall growth potential and support from its F-35 Joint Strike Fighter program. Despite his forecast for a reduction in supplemental defense budgets, Harned expects the F-35 program will remain fully funded.

Here are some highlights from this past week's earnings coverage from BloggingStocks:

• Advanced Micro Devices Inc. (NYSE: AMD) reported dismal Q4 results due to lower demand.
• AMR Corp. (NYSE: AMR) reported a bigger-than-expected Q4 loss, sending shares lower.
• Check Point Software Technologies Ltd. (NASDAQ: CHKP) earnings prospects led to an upgrade.
• eBay Inc. (NASDAQ: EBAY) posted Q4 and full-year results with increased revenue due to a stronger dollar.
• Google Inc. (NASDAQ: GOOG) reported strong Q4 numbers that beat analysts' expectations.
• International Business Machines Corp. (NYSE: IBM) reported better-than-expected Q4 and 2008 earnings.
• Lockheed Martin Corp. (NYSE: LMT) posted strong Q4 results but lowered its 2009 guidance.
• Northern Trust Corp. (NASDAQ: NTRS) shares surged after posting better-than-expected earnings.
• Regions Financial Corp. (NYSE: RF) reported a huge loss due to write-downs and offered a bleak outlook.
• Societe Generale said that it expects to have broken even in the final quarter of 2008.
• Southwest Airlines Co. (NYSE: LUV) posted its second straight quarterly loss due to fuel hedging costs.
• UAL Corp. (NASDAQ: UAUA) reported a huge loss on the erosion in value of oil hedges as prices dropped.
• Usana Health Sciences Inc. (NASDAQ: USNA) posted record Q4 results despite one-time charges.

For more highlights from this week, see Apple, Microsoft, GE, Johnson & Johnson, Harley Davidson and others

Shares of Lockheed Martin Corporation (NYSE: LMT) have moved strongly higher in today's action after the defense contractor put up better than expected numbers for its fourth quarter this morning.

Going into today's earnings release, analysts had been expecting to see the company show $1.92 per share, but the company came in well above those estimates, with a reported $2.05 a share for its quarter ending December 31.

This morning's good news was slightly balanced by the company's announcement that its upcoming full year 2009 profit was probably going to be lower than it had previously forecast, a result of increasing pension expenses. The market was tough on the company's pension plan in 2008, and drove the plan's value down by 28%. The resulting increase in pension expenses forced Lockheed Martin to lower its full year 2009 profit guidance down to between $7.05 and $7.25 from a previous estimate of between $7.65 and $7.90 per share.

Analyst upgrades:

• Baird upgraded Regal-Beloit (NYSE: RBC) to Outperform from Neutral based on valuation and growth expectations.
• Black & Decker (NYSE: BDK) and Lennar (NYSE: LEN) were upgraded to Buy from Neutral at UBS based on valuation.
• Kroger (NYSE: KR) and Public Storage (NYSE: PSA) were added to Goldman's Conviction Buy List.
• CIBC upgraded Biovail (NYSE: BVF) to Sector Performer from Sector Underperformer.
• Abercrombie & Fitch (NYSE: ANF) was raised to Neutral from Underperform at Cowen.

Analyst downgrades:

• Merrill downgraded Campbell Soup (NYSE: CPB) to Neutral from Buy and expects marketing and promotional spending to limit earnings growth in 2009 and 2010. The firm lowered their target to $35 from $42.
• Mechel Steel (NYSE: MTL) was cut to Underweight from Equal Weight at Morgan Stanley to reflect declining coal demand.
  
• Friedman Billings downgraded shares of Legg Mason (NYSE: LM) to Underperform from Market Perform on liquidity concerns given the Legg Mason's leveraged balance sheet and falling EBITDA. The firm lowered their target to $7 from $11.

To say that the past week has been an eventful one would be a great understatement. On November 4th, the American people elected a new president, Barack Obama. Leading up to this historic event, markets rallied, but then lost some 10% in the following two days as the economic drama was relentless. On Friday, despite Ford and GM posting massive losses, and despite the jobs report showing numbers not seen in 14 years, markets are rallying (by noon).

To stay ahead of the market is impossible these days, and all one can do is hope we're nearing a bottom and current picks could only benefit. Following the different events this week and the still ongoing earnings season, here are some stock picks and pans from BloggingStocks contributors:

Obama Picks:

General Electric Co. (NYSE: GE) was Amey Stone's Obama pick due to near-term catalysts as well as long term solid fundamentals -- not to mention the 6% yield.

Ford Motor Co. (NYSE: F) was Michael Rainey's Obama pick. Since Ford is the strongest of the Big Three, Obama will likely choose to save it ... and perhaps GM. Ford had just reported earnings Friday, posting a loss.

That rumbling you heard this morning was the mad, frantic shuffling of papers and budget proposals inside the offices of defense contractors around the Washington Beltway, as they prepare to justify their appropriations amid a political shift in the nation's capital.

The Democrats, led by U.S. President-elect Barack Obama, are taking over the town. And while the security needs of the post-September 11 era and two wars mean major U.S. defense spending cuts are unlikely, changes in priorities and the demands of the financial crisis could create "a dramatically different defense spending landscape" for defense contractors like Lockheed Martin (NYSE: LMT) and Northrop Grumman (NYSE: NOC)," says economist Peter Dawson.

More support for troops on ground?

"What we may see from President-elect Obama is a shift toward increased U.S. Army troop strength and the basic armor and weapon systems that support them, to take stress off our forces in Iraq and Afghanistan, and to improve results in the wars, and less emphasis on costly, high-tech weapon systems," Dawson said. "If that's the case, an Obama Administration could seek to delay production of the Navy's DDG-1000 Zumwalt class destroyer, additional purchases of the new F-22 fighter jets, and other programs."

The DDG-1000 destroyer is jointly built by Northrop Grumman and General Dynamics (NYSE: GD). The F-22 is built by Lockheed Martin. Northrop's shares rose 44 cents to $48.50, Lockheed's gained 62 cents to $86.53, and General Dynamics fell $1.30 to $62.47 in mid-day Wednesday trading.

"Investors should be well rewarded in the coming years by buying with major U.S. defense companies at current prices," says Gregory Dorsey.

The contributing editor to Stephen Leeb's Income Performance Letter explains, "The U.S. has more than doubled our sales of armaments to foreign nations over the past three years. And regardless of who wins the election, we expect this to continue."

"We're adding one for growth and income to our portfolio now. Lockheed Martin (NYSE: LMT) is a premier defense contractor. It's best known for its fighter jets.

"For example, Lockheed is now developing the F-35, also known as the Joint Strike Fighter, the replacement for the current generation of front-line fighters.

"But the company is actually engaged in four broad business areas, each of which should enjoy strong growth for years to come.

As October -- what has been one of the spookiest ever -- comes to an end today, many will go home this evening to face the ultimate challenge: Trick or Treat.

In the market in the past month, heck, in the past year, it seems that no matter what we did we always ended with a trickster. Even some of the most stable, beloved stocks found it fitting to lose half their value. If it was market darling Apple, or whole sectors like oil and commodities, stocks in general sank, often setting new 52-week lows, multi-year lows, or even all-time lows during October.

So now, with so many stocks beaten down so much, we have to find which could be the next treat, and which the tricks.

Wal-Mart Stores Inc. (NYSE: WMT) is the only Dow Jones Industrial company that is actually up this year. Investors have assumed that as the recession hits harder shoppers will turn to lower-cost venues such as Wal-Mart -- a trend that has already started. WMT shares are up 15% year-to-date and 21% over the past year, after tumbling 8% during the tough month of October. Wal-Mart -- definitely a treat.

General Electric (NYSE: GE) has exposure to the financial crisis through its financial arm and has been punished accordingly with shares down 20% over the past month alone. But is it time to buy GE? The big conglomerate is cutting costs and keeps reiterating guidance and has also maintained its triple-A rating. Could there be losses hidden in its operations? Maybe, but if it could continue growing as it did, it seems pretty cheap at under $20. Mind you, this one has never been a high-flying stock, and the uptick in the share price could take some time. Still, I'd categorize it a treat now.

"As my high school football coach always quipped, 'Offense may win fans, but defense wins games,'" says leading growth stock expert Louis Basenese.

Here, the Oxford Club associate investment director takes a look at his three favorite defense stocks, noting, "When it comes to investing in the current environment, I'm convinced that you can't go wrong with this trio of companies."

"In my view, this sector willl never fall out of favor. The recent development with Russia serves to underscore another point I've been making for years. We always have to be prepared.

"Or, put another way, there will never be a good time for defense cuts, lest we want to leave our country vulnerable.Add it all up, and we can expect defense companies to enjoy steady demand. Even in the face of a recession.

"As the CEO of Rockwell notes, there has been absolutely no fallout in the defense industry as a result of the worldwide credit meltdown or other economic woes. So here's a quick run-down on the three defense companies we prefer for investors.

If you break the cycle of short-and-no-cover, you can win.

I know that wasn't the purpose of the Anglo-French plan that we were dragged into, but it will be the effect, and the effect will be electric.

Let's just take an obvious example: State Street (NYSE:STT). This is a longtime conservative trust bank that is an important custodian for life savings and for mutual funds. For a year now it has been under assault as an institution that has too much leverage in hard-to-value asset-backed instruments. The idea that a custodian could fall apart is something that shakes every money manager to his core and causes him to take his money out of cash and put it in T-bills. That's been going on for ages now, and I know money managers who are scared to death to keep their money "in the system," which is State Street, something that instills panic across the board.

When you hear that and you are a short-seller you know what to do: You plunk down $25 million to buy credit default swaps to wager against the firm's debt, then you buy position limit puts and then you short the stock along with all of the other like-minded souls you talk to every day. You get the stock rolling downhill, then you buy a second set of swaps, paying double the price -- doesn't matter what the vig is when you know you are going to win -- and then you call the media and you tell them that everyone's pulling their money out of State Street and the credit default swaps are spiking huge and then the media goes out and reports on it. The company is helpless to refute it as the problem is being caused by the sellers because it is pretty much business as usual in a very tough time, and the stock gets hit again. Other hedge funds get wind, they short it down further, longs panic and then the credit agencies put the company on notice because where there is smoke there must be fire. Then the clients pull as much money out as possible and voila, the end of State Street.

We have seen this run several times. Frankly, I don't know how State Street stayed in business.

Until this morning, the only policy that had been put in place to stop this destruction of capital by the shorts -- and I fully concede that State Street may have made mistakes, but I will not concede that those mistakes should have made it be wiped out -- was an out-and-out short-selling ban. That was ludicrous, but what do you expect from this SEC that eliminated the uptick rule right in the teeth of the greatest bull market and allowed naked shorting to go on illegally?

If John McCain wants my vote he must dump Sarah Palin and fast. Judging by the latest polls showing Barack Obama moving ahead and gaining traction, I'm not the only one that feels this way. The outcome of the election is key to investors worried about a range of issues including the $700 billion federal bailout of Wall Street.

Obama may lack the experience I would hope to see in a presidential candidate but to quote a friend and fellow McCain supporter "Sarah Palin is an idiot and the only way she should be allowed in the White House is if she buys a tour ticket." This is not a unique sentiment given the Sarah Palin must go stance taken by conservative columnist Kathleen Parker of the Los Angeles Times. She says her cringe reflex is being exhausted.

I do not like Obama's proposals on capital gains taxes, a windfall oil profits tax, new government programs and several other issues, but the idea of Palin being second-in-command is a joke. And speaking of jokes, if I have misjudged, and McCain and Palin win the election, then Oprah will be surpassed as the wealthiest female in the entertainment industry. The new titan will be 30 Rock and former Saturday Night Live star Tina Fey who will be racking up fat paychecks based on the never ending material supplied by Palin.