hot

Analyst upgrades:

• Piper Jaffray upgraded Viacom (NYSE:VIA) to Overweight from Neutral to reflect the improving ad market and better ratings at key cable networks. The firm raised its target on shares to $35 from $29.
  
• Baird upgraded Research in Motion (NASDAQ:RIMM) to Outperform from Neutral on valuation as it views the recent weakness as a buying opportunity. The firm keeps an $84 price target on shares.
  
• Jefferies upgraded Usana (NASDAQ:USNA) to Buy from Hold as it believes direct selling companies have been gaining momentum. The firm raised its target on shares to $44 from $37.
• AK Steel (NYSE:AKS) was upgraded to Buy from Hold at Deutsche Bank.
  
• First Merit (NASDAQ:FMER) was upgraded to Perform from Underperform at Oppenheimer.
  
• Spectra Energy (NYSE:SE) was upgraded to Conviction Buy from Neutral at Goldman.

Timeshares, that wonderful relic from the 1970s, are about as popular as disco and excessive chest hair this year. Thanks to the recession, timeshare sales are forecasted to suffer their worst fall since this vacation option came on the scene more than 30 years ago. The plunge could reach 30 percent, according to Howard Nusbaum, president and CEO of the American Resort Development Association, a trade group, and the next year and a half could be tough, as well.

In the United States, timeshare sales fell 8.5% last year to $9.7 billion. They reached their peak the year before, when sales hit $10.6 billion, according to a study by Ernst & Young. The 2008 decline was the first sustained by the industry since it started keeping score in 1975.

In another sign of how companies have been forced to adapt to changing economic times, the average price for an American hotel room dropped 17% (year-over-year) during the first six months of 2009.

The average traveler booking a room in the U.S. can now expect to pay $115 a night, down from $139 during the first half of 2008. New York City and Washington D.C. were the priciest destinations on the list, although Las Vegas is the most popular destination. Gaming fans can grab a room in Sin City for an average of $82 per night.

Starwood Property Trust (NYSE: STWD), which is a real estate investment trust, struck gold last night. The company issued 40.5 million shares for its public offering, raising a cool $810 million (this was 35% more than expected). The offering price came to $20.

Why the excitement? Basically, Starwood wants to capitalize on the low valuations in the commercial real estate markets. The main approach will be to purchase debt securities -- and perhaps wind up owning some choice properties.

Analyst upgrades:

• Goldman upgraded SanDisk (NASDAQ: SNDK) to Buy from Neutral and raised their target to $22 from $16 citing the renegotiated royalty agreement with Samsung.
• Goldman also upgraded Starwood Hotels (NYSE: HOT) to Buy from Sell and raised their target to $27 from $11 citing strong operating leverage as RevPAR recovers.
• KeyBanc upgraded Werner Enterprises (NASDAQ: WERN) to Hold from Underweight citing a recent improvement in freight demand.
• J.C. Penney (NYSE: JCP) was upgraded to buy from Underperform at Banc of America/Merrill.
• Savvis (NASDAQ: SVVS) was raised to Outperform from Perform at Oppenheimer.
• Sanofi-Aventis (NYSE: SNY) was upgraded at Citigroup to Buy from Hold.

Analyst upgrades:

• Jefferies upgraded Abercrombie & Fitch (NYSE: ANF) to Buy from Hold on a favorable risk/reward profile. The firm thinks sentiment is negative, estimate revisions have troughed, and compares ease in the second half of 2009. Jefferies upped its target price to $35 from $22.
• Citigroup upgraded Home Depot (NYSE: HD) to Buy from Hold on expectations for positive earnings surprises in 2009. The firm thinks home merchandise sales are picking up and consensus estimates could prove conservative. Citi raised its target price on the stock to $32 from $26.
• Bernstein upgraded Starwood Hotels (NYSE: HOT) to Market Perform from Underperform and raised their price target to $23 from $10 based on its credit agreement amendment and valuation.
• SunTrust (NYSE: STI) was upgraded to Neutral from Sell at Goldman. Fiat (OTC: FIATY) was upgraded to Buy from Neutral at UBS.
• Lincoln National (NYSE: LNC) was raised to Outperform from Market Perform at Wachovia.

Analyst upgrades:

• Citigroup upgraded Expedia (NASDAQ: EXPE) to Buy from Hold as they believe the company's fee elimination coupled with 2009 industry trends could lead to market share gains and that the valuation is compelling at current levels. Citigroup raised its price target to $14 from $9 on EXPE shares.
  
• Credit Suisse upgraded Lukoil (OTC: LUKOY) to Outperform from Neutral as it believes lower taxes and the ruble's decline will increase profitability.
  
• Soleil upgraded Jo Ann Stores (NYSE: JAS) to Buy from Hold as it believes the company's sales results in the first half of 2009 could top expectations. The firm raised its target price to $20 from $16.
• Johnson & Johnson (NYSE: JNJ) was upgraded to Buy from Neutral at UBS.
  
• Bayer AG (OTC: BAYRY) was lifted to Buy from Neutral at Banc of America/Merrill.
  
• ManTech (NASDAQ: MANT) was raised at Wachovia to Outperform from Market Perform.

In the News:
Major U.S. Stocks Drop to Decade Lows
As U.S. Stocks continue their downward spiral many of the most well-known name are plunging to decade or more lows. General Motors is almost at a 70-year low. Among the other companies that have fallen and not able to get up include General Electric, Harley Davidson, Alcoa, Macy's, Microsoft, Southwest Airlines, Sara Lee, News Corp. Starwood Hotels, Kodak, Gannett, Intel, Newell Rubbermaid, International Paper and more.
http://www.247wallst.com/2008/11/major-sp-stocks.html

The New Subprime: FHA-Backed Loans
The subprime wolves are back. The same people whose reckless practices triggered the global financial crisis are onto a similar scheme that could cost taxpayers tons more.
http://www.businessweek.com/magazine/content/08_48/b4110036448352.htm?chan=top+news_top+news+index+-+temp_top+story

Analyst upgrades:

• Oppenheimer upgraded shares of National City (NYSE: NCC) to Outperform from Perform on valuation as they believe the bank is not seeing a mass exodus of depositors.
  
• Wachovia upgraded Brookfield Infrastructure (NYSE: BIP) to Outperform from Market Perform due to what the firm sees as the company's solid cash flow growth outlook, strong balance sheet, and discounted valuation.
  
• Baird upgraded Tellabs (NASDAQ: TLAB) to Outperform from Neutral citing valuation and improving 2009 prospects from 8800, 8600, and 7100 products and better Opex management..
• Take-Two (NASDAQ: TTWO) was upgraded to Outperform from Neutral at Cowen.
  
• UBS raised Nortel Networks (NYSE: NT) to Buy from Neutral.
  
• Borg-Warner (NYSE: BWA) was raised to Buy from Hold at Keybanc.

Analyst downgrades:

• Merriman downgraded shares of TheStreet.com (NASDAQ: TSCM) and Bankrate (NASDAQ: RATE) to Neutral from Buy to reflect concerns about display advertising trends and the company's above average exposure to the financial vertical.
  
• Baird downgraded Monaco Coach (NYSE: MNC) to Neutral from Outperform and Thor Industries (NYSE: THO) and Winnebago Industries (NYSE: WGO) to Underperform from Neutral citing valuations and checks that indicate "dreadful" fundamentals.
  
• RBC Capital downgraded Apple (NASDAQ: AAPL) to Sector Perform from Outperform citing weakening consumer spending, reduced visibility, and risks to valuation. The company's target was lowered to $140 from $200.

Analyst upgrades:

• JMP Securities upgraded Vertex Pharma (NASDAQ: VRTX) to Outperform from Market Perform following better-than-expected interim data for telaprevir.
  
• Lazard Capital upgraded shares of Biogen Idec (NASDAQ: BIIB) to Buy from Hold on valuation after their physician survey indicated solid sales growth in the company's MS franchise.
  
• Calyon upgraded Data Domain (NASDAQ: DDUP) to Add from Neutral based on positive channel checks and valuation.
• Goldman added Buckeye GP (NYSE: BGH) to the Conviction Buy List.
  
• Alcatel-Lucent (NYSE: ALU) was upgraded to Hold from Sell and Ericsson (NASDAQ: ERIC) was raised to Hold from Reduce at WestLB.
  
• Keefe Bruyette upgraded Cowen Group (NASDAQ: COWN) to OUtperform from Market Perform.

Analyst downgrades:

• Deutsche Bank downgraded shares of Lloyds TSB Group (NYSE: LYG) to Sell from Hold as they believe loan loss risk will outweigh synergies from the acquisition of HBOS (HBOOY).
  
• Citigroup downgraded shares of National Financial Partners (NYSE: NFP) to Hold from Buy and removed the stock from the Top Picks Live List after the company announced July and August revenues and said pressure continues. The firm lowered their target to $20 from $28.

MOST NOTEWORTHY: Blackboard, Starwood Hotels and ACE Ltd were today's noteworthy upgrades:

• Baird upgraded Blackboard (NASDAQ:BBBB) to Outperform from Neutral based on two new state-wide deals with New Mexico and North Carolina, K-12 growth, and up-selling and cross-selling opportunities. The firm raised Blackboard's target to $45 from $38.
  
• Wachovia raised Starwood Hotels (NYSE:HOT) to Outperform from Market Perform citing valuation, high international exposure, and secure capital structure and dividend.
  
• Citigroup upgraded shares of ACE Ltd (NYSE:ACE) to Buy from Neutral on valuation, as they believe additional selling from the company's redomestication to Switzerland will be offset by short covering. They view the recent weakness as an attractive buying opportunity and raised their target to $63 from $58.

OTHER UPGRADES:

• UBS upgraded Microchip (NASDAQ:MCHP) and Linear Tech (NASDAQ:LLTC) to Buy from Neutral.
  
• Marshall & Ilsley (NYSE:MI) was raised to Market Perform from Underperform at Keefe Bruyette.
  
• Comcast (NASDAQ:CMCSA) was upgraded to Buy from Neutral at Goldman.

MOST NOTEWORTHY: Wachovia, Deutsche Bank and Pearson plc were today's noteworthy downgrades:

• UBS believes it is increasingly likely that Wachovia Bank (NYSE: WB) will need to raise capital. The firm said the company may need to raise $5B in equity and cuts its dividend to 1c, which will save $3B annually. UBS cut shares to Neutral from Buy and lowered its 2008 EPS estimate to ($1.98).
  
• Morgan Stanley downgraded shares of Deutsche Bank (NYSE: DB) to Underweight from Equal Weight as they believe DB may have to increase its tier 1 ratio, which could lead to dividend cuts or asset sales.
  
• Deutsche Bank downgraded Pearson (NYSE: PSO) to Sell from Hold as they believe the weak funding environment for Education will slow earnings growth.

OTHER DOWNGRADES:

• UBS lowered Thomson Reuters (NASDAQ: TRIN) to Sell from Neutral.
  
• Starwood Hotels (NYSE: HOT) and Gaylord Entertainment (NYSE: GET) were downgraded to Sell from Neutral at Goldman Sachs.

Starwood (NYSE: HOT) was downgraded to Sell at Goldman Sachs.

Goldman says: "due to valuation and given that we expect fundamentals to start deteriorating in both the higher end segments of the lodging industry as well as international markets."

HOT overall option implied volatility of 55 is above its 26-week average of 45 according to Track Data, suggesting larger price movement.

Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com

How Growth Destroyed Brand Value at Starbucks
Founder and CEO Howard Schultz had a great concept, and it worked for a while. But too many new stores and diverse products changed the experience.
Starbucks: How Growth Destroyed Brand Value - BusinessWeek

How to Make the Most of Your Trip to a Warehouse Club (and Spend the Least)
Here are five ways to whip inflation when you shop at Costco or one of the other warehouse clubs. You won't save much money if you get sidetracked by the bling and the flat-screen TVs. Here is how to really shop at one of these clubs.
Five Ways to Whip Inflation When You Shop at a Warehouse Club - Kiplinger.com

Starwood Hotels & Resorts (NYSE: HOT) shares are falling today after competitor Marriott International (NYSE: MAR) reported Q2 earnings that dropped year-over-year and said it expects weak economic growth and soft U.S. lodging demand to persist into 2009. This could be a bad sign for HOT, which reports earnings in two weeks. If you think this stock won't be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on HOT.

After hitting a one-year high of $75.29 last July, the stock has hit a new one-year low today. This morning, HOT opened at $36.81. So far today the stock has hit a low of $35.23 and a high of $36.82. As of 12:05, HOT is trading at $35.77, down 1.63 (-4.4%). The chart for HOT looks bearish and steady, while S&P gives the stock a neutral 3 STARS (out of 5) hold rating.

For a bearish hedged play on this stock, I would consider a November bear-call credit spread above the $50 range. A bear-call credit spread is an options position that combines the purchase and sale of call options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 6.4% return in four and a half months as long as HOT is below $50 at November expiration. Starwood would have to rise by more than 39% before we would start to lose money. Learn more about this type of trade here.

HOT as been above $50 as recently as late May but has shown resistance around $39.50 recently. This trade could be risky if the company's earnings (due out on 7/24) are a positive surprise, but even if that happens, this position could be protected by resistance HOT might find at its 200-day moving average, which is currently around $50 and falling.

Brent Archer is an options analyst and writer at Investors Observer.

DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in HOT or MAR.