MOST NOTEWORTHY:

• Credit Suisse upgraded Lam Research (NASDAQ:LRCX) to Outperform from Neutral citing margin expansion and valuation. Lam was named the firm's top pick in SCE names for 2H08.
  
• JP Morgan upgraded shares of Deutsche Telekom (NYSE:DT) to Overweight from Neutral as they expect a stronger second half of the year for the industry.
  
• France Telecom (NYSE:FTE) was upgraded to Buy from Neutral at Merrill and to Buy from Hold at Societe Generale after the company walked away without bidding for Sweden's TeliaSonera.

• UBS upgraded American Express (NYSE:AXP), Capital One (NYSE:COF) and Discover (NYSE:DFS) to Neutral from Sell.
  
• New York Times(NYSE:NYT) was raised to Hold from Sell at Deutsche Bank.
  
• RBC Capital raised Sanmina (NASDAQ:SANM) to Sector Perform from Underperform.
  
• Merrill upgraded Sirius Satellite (NASDAQ:SIRI) to Buy from Neutral.

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Minyanville's top dog, Todd Harrison, dares to ask in public what Wall Street types quietly consider in private. For more insight and ideas, visit www.minyanville.com.

Lot's going on today as I juggle the end of June. With time constraints on both sides of this screen in mind, I humbly offer the following thoughts:

• I covered the incremental "fade" exposure in Google (NASDAQ: GOOG) (put out near the opening) and I'm now in watch mode.
  
  
• It's tough to tell how much of the big beta action is quarter-end proppage and how much is legitimate demand. As I covered my American Express (NYSE: AXP) earlier--and continue to have exposure in Wachovia (NYSE: WB)--I'm leaving it on for the time being (and yes, subject to change).
  
  
• And yeah, I'm trading around that ugly duckling--nibbling under $15 and trading the swings. There's no putting lipstick on that pig--using it as my vehicle of choice has thus far been wrong. It ain't over till our interns sing, however, so I'm fighting the good fight.
  
  
• That sorta brings up the question du jour: Are we gonna see quarterly inflows... or quarterly outflows?
  
  
• The upside seems begrudging. Of course, after the decline we've seen, you'd be grudging too if you were Hoofy.
  
  
• Somebody call Armond Goldman! l I'm starting the South Beach Diet on Monday, lest anyone wonders what is happening to my sense of humor.
  
  
• The scariest thing on my screen? The VXO is down 6% today. I repeat, the VXO is down 6% today. Ruh roh...

R.P.

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For a bullish hedged play on this stock, I would consider an October bull-put credit spread below the $195 range. A bull-put credit spread is an options position that combines the purchase and sale of put 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 months as long as MA is above $195 at October expiration. Mastercard would have to fall by more than 33% before we would start to lose money. Learn more about this type of trade here.

MA hasn't been below $195 since March and has shown support around $280 recently. This trade could be risky if the company's earnings (due out in early August) disappoint, but even if that happens, this position could be protected by the support the stock might find at its 200 day moving average, which is currently around $210 and rising.

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 MA or AXP.

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MasterCard (NYSE: MA) is recently trading at $290 in pre-open trading, above its close of $280.37.

American Express (NYSE: AXP) reached a $1.8 billion settlement with MA over the card issuer's lawsuit with the payment processor over allegations MA and some other banks prohibited financial firms from issuing credit cards through AXP.

MA July option implied volatility of 42 is near its 26-week average according to Track Data, indicating non-directional price movement.

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

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I love the long-term prospects of Visa (NYSE: V) and MasterCard (NYSE: MA), but I do have to concede that a pesky lawsuit by Discover (NYSE: DFS) is the one big fly in this story's soup. According to the following article, Discover wants both credit-card companies to pay $6 billion for perceived violations of antitrust regulations. Unfortunately, these damages could be tripled if Visa and MasterCard lose. One of the big problems here is that American Express (NYSE: AXP) already won a settlement of $2.1 billion from Visa late last year and the company established an escrow fund worth $3 billion for litigation payments.

I'll admit, this lawsuit does give me and my credit-card investment thesis a little case of the shivers. After all, tripling $6 billion to $18 billion means that a huge amount of money is in play here, and a successful outcome for Discover would hamper the stocks of the two big card entities. When you read through the litigation risks in Visa's SEC filings (out of MasterCard and Visa, the latter is my favorite since it is still relatively fresh off its IPO and MasterCard has already had a big run), they are pretty scary. And the fact that the $6 billion figure just came to light this week has probably soured the perception of some investors and analysts. Nevertheless, all the previous litigation talk didn't stop Visa's stock from taking off after its IPO earlier this year.

.

I still think both companies are worth putting on a watch list, considering the fact that their futures are extremely bright. As time goes on, debit and credit cards will be increasingly used for transactions, and both of these big brand names will capture a lot of fees related to cashless payments. Recently, I discussed growth in prepaid cards. And you've got to love the fact that credit risk is basically a non-issue with Visa and MasterCard.

I've been thinking about buying Visa lately, and I'm glad I didn't pull the trigger just yet. What I'm going to do is watch the price action over the next several days to see what guidance its trading might give me. Do I personally think the lawsuit is going to sink Visa and MasterCard? No. But if I can wait and get in at a price that more properly discounts the outcome, then I might be better off.

Disclosure: I don't own any company mentioned, but I am watching Visa for a potential buy; positions can change at any time.

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Perini Corporation (NYSE: PCR) is a leading construction services company offering diversified general contracting, construction management and design/build services to private clients and public agencies in the U.S. and selected overseas locations. The firm is well know for its casino and hotel projects, but is also active in the design and construction of schools, health care facilities, entertainment facilities and sports complexes. Its civil division builds and maintains highways, subways, and airports. Clients include Marriott International (NYSE: MAR), Honeywell International (NYSE: HON) and American Express (NYSE: AXP).

The company surprised the Street earlier in the month, when it reported Q1 EPS of 91 cents and revenues of $1.26 billion. Analysts had been expecting 87 cents and $1.27 billion. The COO cited strong contributions from the building and management services segments. Management also guided FY08 EPS to $3.50-$3.75 ($3.73 consensus), FY08 revenues to $5.5-$5.9 million ($5.16B consensus), FY09 EPS to $4.00-$4.20 ($3.85 consensus) and FY09 revenues to $7.3-$7.8 billion ($5.46B consensus).

The PCR share price popped on the news and has since been defining a bullish "flag" consolidation pattern. Prices frequently exit flags moving in the same direction they were traveling on entry. In this case, that would be to the upside.

Brokers recommend the issue with one "strong buy", one "buy" and two "holds". The PCR P/E ratio (11.48), PEG ratio (0.92), Price to Sales ratio (0.23), Price to Book ratio (2.84), Price to Cash Flow ratio (10.42), Price to Free Cash Flow ratio (4.77), Return on Investment (25.69%) and Revenue per Employee ($1.18M) compare favorably with industry, sector and S&P 500 averages. Institutional investors hold about 95% of the outstanding shares. Over the past 52 weeks, the stock has traded between $25.08 and $75.43. A stop-loss of $34.80 looks good here.

Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com. He does not hold positions in any of the stocks mentioned above.

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This week's Barron's [subscription required] reverses itself -- after panning Berkshire Hathaway Inc (NYSE: BRK.A) in December 2007 it has now reversed course -- with a hedge from a short seller. Since panning Berkshire in December -- when it traded for $143,000 a share, the stock has lost 14% so Barron's was right then. Is it right to bet on a rise in Berkshire now? I really don't know because I don't find either the bear or the bull case persuasive.

Why did Barron's pan Berkshire back in December? As I posted, Barron's bear case on Berkshire was simply that it was overvalued on the basis of its book value and earnings growth. Berkshire's ratio of market value to book value was then at 1.8 times its September 30 book value, of $77,800 a share. That was above its average of 1.6 in the past five years.

It was also valued at 23 times estimated 2007 operating profits of $6,300 a share. 2008's profits were then expected to be similar to 2007's. If Berkshire were then valued at 1.7 times book value, a premium to its five-year average, Barron's estimated that stock would trade at $132,000.

But that December analysis is ancient history to Barron's. Now it's going with the bullish cash of hedge fund T2 Partners which concludes that Berkshire is 20% undervalued. Its argument relies on the notion that the past predicts the future. Here are the key past performance indicators it uses:

• Investments per share + 72%. Investments per share based on T2's highlighting its growth to $90,343 in 2007 from $52,507 in 2002.
• Pretax income + 300%. T2 also observes that Berkshire pretax earnings per share, excluding investment income, has quadrupled from the $1,479 posted in 2002.
• Intrinsic value + 100+%. Berkshire's intrinsic value -- which T2 calculates as investments per share, plus 12 times earnings per share excluding investment income -- at the end of 2007 ranged between $156,300 and $158,700 a share -- more than double 2002's $70,000.

T2 concludes Berkshire is 20% undervalued. Assuming 10% growth in the intrinsic value of the business and a cash buildup of $6,000 per share over the next 12 months, T2 expects total intrinsic value of $178,700 per share, or a 46% premium to today's price of the stock. And using the same assumptions, T2 thinks the number could rise to over $200,000.

But Barron's hedges itself by including the bearish case from short-seller Douglass Kass. Kass's bearish case is based on Buffett's exposure to risk in derivatives, insurance, housing, and consumer finance. He cites the following:

• Derivatives losses. Berkshire took an unrealized $1.6 billion pretax loss in the first quarter due to derivatives.
• Insurance in decline. Berkshire is heavily exposed to insurance, which Kass believes has seen its best days.
• Safe haven effect is over. Berkshire's premium valuation seemingly has been a byproduct of the credit crisis, and the perception of the company as a safe haven. As deflated financial companies regain their footing, Kass thinks people will sell Berkshire since they won't need a safe haven any longer.
• Substantial exposure to financials and housing. And Buffett is substantially exposed not only to financials -- he owns large positions in Wells Fargo (NYSE: WFC), Bank of America (NYSE: BAC) and American Express (NYSE: AXP) -- but also to a weakening housing market through his ownership of Clayton Homes.

I don't know why T2 assumed the 10% intrinsic value growth or why it thinks cash per share will rise to $6,000. Its calculations do not seem to be beyond the capability of most Wall Streeters so it would seem that a 46% gap between intrinsic value and current market value would not last long if it were real.

But Kass's argument for shorting does not make sense to me either. I would not short a stock unless I thought it had a good chance of going bankrupt. And he did not persuade me that Berkshire was going to have trouble meeting its debt obligations.

So I would avoid Berkshire altogether. What do you think?

Peter Cohan is president of Peter S. Cohan & Associates, a management consulting and venture capital firm. He also teaches management at Babson College and edits The Cohan Letter. He owns Wells Fargo shares and has no financial interest in the other securities mentioned.

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This post is part of our Battle of the Brands feature. Let us know which brand you prefer, and check out other Battle of the Brands posts.

In the battle for "cool history," American Express (NYSE: AXP) wins this one hands down. The company was started in 1850 as an express delivery service. At the time, the U.S. Postal Service was slow and unreliable, and sending anything important or valuable was ill-advised. The American Express Company was known for its "expressmen," who delivered valuable packages all over the country, usually on horseback or with stagecoaches.

After establishing a strong reputation for delivery service, the company later decided to phase out deliveries and move into financial services. They had delivered countless documents for banks, and the money business was appealing. American Express first offered money orders in 1882, followed by travelers cheques in 1891. The travelers cheque business was the main focus of the company for many years.

In 1958, the company gave in to market pressures and issued its first charge card. For almost 30 years, though, the card was not to be used as a "credit" card. All balances were to be paid in full each month. In 1987, that changed as American Express finally issued a card that allowed revolving balances.

Visa is the most widely-used credit card brand around the world, but its history is not nearly as colorful as American Express. It all started when Bank of America created the BankAmericard in 1958, a revolving credit card. In 1970, National BankAmericard Inc. was incorporated, but the company name was changed to Visa six years later. It does tons of credit card, debit card, and ATM transaction business, and Visa Inc. (NYSE: V) went public earlier this year. The end.

Vote in our poll for American Express or Visa as your preferred brand, and let us know in the comments why you love it.

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Ericsson (NASDAQ: ERIC) is up 21% on strong earnings.

Ambac (NYSE: ABK) is up almost 8% on an upgrade from Moody's.

American Express (NYSE:A XP) is up 4% on good Q1 numbers.

Microsoft (NASDAQ: MSFT) is down over 4% after reporting a weak quarter.

Chemed (NYSE: CHE) is trading down 15% on a poor Q1.

Stocks may trade differently in the pre-market than the do in the regular session.

Douglas A. McIntyre is an editor at 247wallst.com.

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Fort Worth-based AMR Corp. (NYSE: AMR), parent of American Airlines, was the first major U.S. airline company to report first-quarter results, and it posted a loss of $1.32 per share. Revenue rose 5% to $5.7 billion. Analysts surveyed by Thomson Financial had expected a loss of $1.34 per share on revenue of $5.73 billion.

Filling seats wasn't American's problem -- average occupancy hit a record 79.1% percent in the quarter. Average fares paid rose 5.1%, as airlines raised ticket prices. But executives said they were concerned about the weakening economy and even more worried about skyrocketing fuel costs. American's fuel spending jumped 45%, offsetting further increases in revenue.

American announced that it will be cutting U.S. capacity by 3.6% this year and selling 90% of its investment arm, American Beacon Advisors. The company also expects to sell or spin off its American Eagle regional airline this year to raise additional cash.

American is also speeding the replacement of its fleet with more fuel-efficient Boeing (NYSE: BA) 737-800s, taking delivery of 30 new planes in 2009 and 2010 instead of the previously planned 23.

AMR shares rose 35 cents, or 4.1%, to $8.92 in trading Wednesday.

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MOST NOTEWORTHY:

• Goldman upgraded the Brokers and Asset Management sector to Attractive from Neutral as they believe an inflection point has been reached for stocks with minimal credit exposure, or where exposure is marked to market. Goldman expects the problem to shift to regional banks and specialty finance from brokers. As such, Goldman upgraded American Express (NYSE: AXP), Metlife (NYSE: MET), Bank of New York Mellon (NYSE: BK), Franklin Resources (NYSE: BEN), Janus Capital (NYSE: JNS) and NYSE Euronext (NYSE: NYX) to Buy from Neutral.
  
• Wachovia upgraded Pacific Sunwear (NASDAQ: PSUN) to Outperform from Market Perform based on valuation, merchandising improvements, operating efficiencies, favorable product mix, and reductions in underperforming categories.
  
• Rodman & Renshaw raised Metabasis (NASDAQ: MBRX) to Outperform from Market Perform on valuation given the potential for MB07803.

• HSBC raised Novartis (NYSE: NVS) to Neutral from Underweight.
  
• UBS (NYSE: UBS) was upgraded at Morgan Stanley to Equal Weight from Underweight.

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Goldman Sachs upgraded MetLife (NYSE:MET) and American Express (NYSE:AXP) to "buy" and cut Wells Fargo (NYSE:WFC) to "sell", according to MarketWatch.

Morgan Stanley upgraded UBS (NYSE:UBS) from "underweight" to "equal weight" according to Briefing.com. The financial news service also reports that Morgan Keegan downgraded Apple (NASDAQ:AAPL) to "under perform" from "market perform".

Douglas A. McIntyre is an editor at 247wallst.com.

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