Following the failed acquisition by Bain, COMS shares have fallen to a price level well below the price they were trading at before the announcement and well below where our Sell recommendation was issued and the corresponding $3.00 price target. The company has since attained profitability on a non-GAAP basis and posted strong growth in China. With improved results and a strong fourth quarter, we believe current holders of COMS shares would be better served by holding the shares for a more attractive exit point.

With COMS recent pre-announcement, we increase our estimates for the first quarter of 2009 we maintain our Hold rating and six-month target price at $2.50. This represents a P/E multiple of 10.9x estimated fiscal 2009 EPS of $0.23.

Gen'l Mills Spending for Pipeline

Productivity initiatives and new product introductions should help General Mills, Inc. (GIS) achieve high single-digit earnings growth in the long term. The management has implemented a strategy to enhance shareholder value. The company has utilized cash flow to reduce debt, repurchase shares and increase the dividend rate.

However, debt was issued in fiscal 2007, raising the company's net debt position. Lastly, higher input commodity costs are impeding meaningful margin expansion. The stock is rated a Hold.

By fiscal 2010, the management expects to increase sales from $11 billion to $14 billion and earnings from continuing operations from $2.67 to more than $4.05 per share. The management has renewed the share repurchase program so that by 2010, shares outstanding should decrease by 10%. In fiscal 2008, the company repurchased approximately 24 million shares at a cost of $13.7 million.

For the same fiscal year, the company has a strong new product pipeline. In fiscal 2009, management plans to introduce approximately 60 new products in the U.S. in the cereal category. Another key driver is the expansion of both domestic retail and international distribution channels.

In fiscal 2008, commodity and fuel inflation increased costs by 7%, which negatively impacted margins. In fiscal 2009, management expects inflation to increase at a 9% rate. In response, the management plans to implement pricing initiatives; however, as a result, volume could decline. The recent popularity of low carbohydrate diets has slowed sales in several product categories, especially in the Bakeries and Foodservice segment. Management responded with new low-carb products, but the company's product portfolio, which is grain-based, will be adversely affected by any consumer preference for low-carbohydrate diets.

URS Long-Term Outlook Good

Of URS Corp.'s (URS) current $17.9 billion backlog, 7.8% is Power, 14% is Infrastructure, 58.1% is Federal and 20.1% is Industrial/Commercial.