Currently, shares of Sonic Automotive, Inc. are trading at 6.5x our 2008 EPS estimate of $2.49. However, owing to a slow sales environment and falling margins, we rate the stock a Sell. The six-month target price for Sonic is $13, which is 5.2x 2008 EPS.

New Name for Web.com, Same Buy

Web.com (WWWW), formerly known as Website Pros (ticker: WSPI), is a leading provider of Web services for Small and Medium Businesses (SMBs). The company uses a factory approach that it can leverage over thousands of customers.

In spite of some top-line pressures during the first quarter, the integration of Web.com appears to be going well and improving operating leverage should drive profits. According to studies conducted by IDC, Jupiter Research, and Forrester Research, the market for services provided by Web.com is expected to grow at a compound annual growth rate (CAGR) of 9.7% from $22.1 billion in 2006 to $32.0 billion in 2010.

Government spending also has been supportive to the software industry. With several important software categories reaching maturity, top-line growth for the industry is likely to remain below historical levels, even after the industry recovers. Nevertheless, long-term growth prospects are still modestly above average.

Web.com has generally traded at a fairly attractive valuation, including its current multiple of 12.8x 2008 EPS and 1.7x 2008 sales, a discount to the industry mean. Although this may have been justified in the past, the company has successfully diversified its revenue stream.

Moreover, continued expansion of gross margin and increase in operating leverage will result in higher profitability. We therefore reiterate our Buy rating at a target price of $15.00, which represent a multiple of 23.4x our 2008 EPS estimate of $0.64 and 3.1x our 2008 revenue estimate of $4.79.

Amgen: Value or Value Trap?

Amgen, Inc. (AMGN) shares have been greatly punished recently on negative events surrounding lead anemia drug Aranesp. (A new, more restrictive label is now to be issued for Aranesp with more cautionary wording; Aranesp sales dropped 25% year-over-year). Results over the past few quarters demonstrate the challenging erythropoiesis-stimulating agent (ESA) market.

Nevertheless, we still feel as though the pipeline is significantly undervalued, and we continue to recommend the name as a long-term Hold within the biotechnology sector. The ESA trends are stabilizing, but it will still take a few more quarters to see exactly how the recent Oncologic Drugs Advisory Committee meeting will affect sales. In the meantime, investors should focus their time on just how big experimental drugs denosumab (for osteoporosis) and motesanib (for cancer) can be, because they are the next wave of potential growth.

In our view, investors have over-reacted to the Aranesp news. Amgen is still an enormously profitable company generating significant cash flow over $2 billion in 2007. Our Discounted Cash Flow (DCF) analysis shows fair value in the high $50's. However, noting that perception takes precedence over reality, the stock will probably not achieve full DCF value.

Amgen's stock can begin to move up after another one or two quarters of ESA stabilization. Finally, as pipeline product, specifically denosumab, offer data, the market should begin to assign more value to the future value. We see fair value at $48 or 11.5x our 2008 EPS of $4.17. We encourage long-term investors to purchase the shares as we view Amgen as a core holding within the sector.

Discount on Methanex Shares

Methanex Corp. (MEOH) is the world's largest producer and marketer of methanol. The company is benefiting from improving fundamentals and lower costs.