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Why Akamai Technologies Deserved the Downgrade

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What's the big catalyst that's going to take the stock to the next level at this point?

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Asian stocks were mixed overnight. The Hang Seng closed down 2.05% while the Nikkei rose 0.75%. European stocks however, were in negative territory in early trading. And here in the US, we're currently trading lower.

Here's what I'm seeing this fine Monday morning:

Akamai Technologies
(AKAM):
Citi lowered its rating to Hold as Justin Sharon points out in his article.

The Massachusetts-based company's stock has been on fire. And to tell you the truth, I missed the move.

Some thoughts:

1. I agree with Citi's move. What's the big catalyst that's going to take the stock to the next level at this point? I'm not seeing it, and at 24.5 times this year's estimate, I can't justify bellying up now. By the way -- I think the shares get a haircut on the heels of this news.

2. Notice that insiders were cozying up to the shares in the teens last year. Some buying now might change my tune a bit.

3. If it gets down to the mid $20s (although to be clear, Akamai bulls, I'm not saying it will) I'll reevaluate.

Boeing (BA):
Justin Sharon points out in Upgrades & Downgrades: Boeing Ready to Soar that Oppenheimer upgraded the high-flier to Outperform, and I wanted to weigh in.

1. Not too long ago, the company wasn't receiving much love due to delays associated with its 787 project. But now it seems that some are starting to warm to the story. Don't hate me, Boeing bulls, but at 17.5 times this year's estimate, I'd probably use any bump up the shares get as a result of the upgrade to book some profits. While I remain excited about the company's longer-term chances as demand for air travel heats up (not to mention its foothold in military wares), I feel the stock is getting a little pricey here.

2. In the mid $60s though, I may change my mind. I'd also want to see how the first quarter shakes out and what management does or doesn't say regarding its outlook for the rest of the year.

Hasbro
(HAS):
The legendary toy company clearly isn't playing around. Did you happen to see the rosy write-up the company received in Barron's this past weekend?

Some thoughts about the Rhode Island-based company:

1. Hasbro seems to be doing something right. Estimates have been on the rise, its whooped Street expectations three quarters straight, and now there's the ink in Barron's. I have to think a new high could well be in the cards.

2. Let's not forget the recent bump up in the dividend rate -- a good sign.

3. I now think it's a better deal than Mattel (MAT). (See Should Investors Be Playing in Hasbro or Mattel?) While Mattel sports a more-than-3% dividend yield, Hasbro is expected to generate $2.53 a share this year and $2.99 a share in 2011, which implies an expected growth rate of more than 18%. That's not child's play.

Tiffany
(TIF):
The high-end jeweler was out with its fourth-quarter numbers at the crack of dawn this morning.

Excluding items, it put $1.09 a share on the scoreboard. Not too sparkly given the $1.13 a share the Street was looking for.

However, it offered up a solid outlook. Specifically, the company indicated it's looking for $2.45 to $2.50 from continuing ops in 2010. That seems good. The estimate I'm seeing for 2010 is $2.43.

Tiffany is a wonderful company, no doubt. But I think the shares have had their run. And at around 19.4 times this year's estimate, it's hardly a bargain, either. If I were interested in playing the jewelry space, I might try bellying up to Macy's (M) at this point. They sell lots of sparkly stuff at reasonable prices, and offer a good deal of other merchandise that's attractive to both men and women. I actually think there's a fair chance we could see a new high in Macy's in the near run.

Williams Sonoma (WSM):
The retailer looks like it could get a lift in early trading.

But why should I be checking it out when I can buy into Target (TGT) or Bed Bath & Beyond (BBY), two awesome companies with deep pockets that sell pretty much the same stuff?

Have a great day!
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No positions in stocks mentioned.

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