However, over the next few quarters, Rockwell's architecture & software business should face several headwinds. Life Sciences and Big Pharma are cutting back on spending in response to slower sales growth and patent expirations. The U.S automotive sector got hit with rapid gas price increases, which has forced the industry to shift away from large vehicles and trucks and close plants. This led to a halt in projects and in MRO replacement markets.

BSkyB Trades at Fair Value

We are maintaining a Hold recommendation on British Sky Broadcasting Group, better known as BSkyB (BSY) prior to the Q4 results due on July 30. The recent UK Competition report is likely to be unfavorable to BSY as it recommended that BSY cut its stake in the country's largest commercial broadcaster, ITV. The stock has come down to trade in line with the market. But compared to its peers, it is trading at a similar valuation. Our six-month price target is $39.00

BSY is the operator of the UK's largest digital pay television platform, Sky digital and as such it has dominant market share in this segment. The company has over 8 million pay-TV subscribers, approximately 40% of British households. As such it has pricing power and is far ahead of rivals such as Virgin Media (VMED).

Media companies suffer from audience fragmentation and limited near-term reinvestment opportunities. To retain share, large media companies are forced to reinvest in additional media outlets. However, growth is limited by government regulations on media ownership.

Even if BSY is not forced to reduce its market share, there is risk of limited future growth in the U.K. Moreover, there is a dispute with Virgin Media that stopped airing BSkyB's basic channels in March after the companies failed to agree on price. BSY said operating profit will be down by about $31 million every quarter as long as its channels are not carried by Virgin Media.

Physicians Formula Makes a Hold

Physicians Formula Holdings, Inc.'s (FACE) management continues to implement the growth strategy of focusing on the company's niche in the cosmetics industry and generating sales growth through new product introductions, increased distribution, and international expansion. However, the recent strategy to generate sales by increasing trade spending is concerning. The Hold rating is maintained.

The trend towards retail consolidation and the company's increasing dependence upon a few leading retailers, namely Wal-Mart (WMT), CVS (CVS), Walgreens (WAG) and Target (TGT), are increasing the bargaining power of the retailers.