We upgraded shares to Buy from Hold last week following the stock?s roughly 35% pullback since mid-June. We believe that the recent weakness has made valuation very compelling for this niche exploration and production (E&P) name. The stock currently trades at a deep discount to our conservative net asset value (NAV) estimate, offering meaningful upside from current levels.

Denbury?s focus on crude oil extraction from mature fields using CO2 flooding techniques offers sustainable and cost effective production and reserve growth for many years to come. The company?s competitive edge in acquiring mature properties due to its ownership of CO2 reserves, is particularly valuable.

Production during the quarter averaged 46.3 MBOE/d (million barrels of oil equivalent per day) (oil 68%), up approximately 10.5% year-over-year (an increase of 25% after adjusting for production from the company?s sold Louisiana gas properties) and more than 3% sequentially, driven by increases in the company s tertiary oil production and Barnett Shale natural gas production.

The company has set its 2008 capital budget at approximately $1 billion, of which approximately 75% is related to tertiary operations, 15% to the Barnett Shale area and the balance in other regions. Denbury expects to spend an additional $500 million to build the 314 mile Green Pipeline during 2009, making its current anticipated total cost for this line to be approximately $700 million.

Aegon Well-Positioned in Life Insrc

Aegon N.V. (AEG) provides a multitude of insurance and pension-based saving and investment solutions. It is one of the world's ten largest life insurance companies ranked by assets, profits and market capitalization. We are maintaining our Buy recommendation on Aegon after its second quarter results.

As Aegon is focusing mostly on life insurance, its position in the market is more favorable compared to non-life insurance companies as mentioned above. The company has also further strengthened its distribution channel in Spain and is entering new growth areas such as Mexico and India and China.

The stock has declined significantly along with the recent market sell-off. At current multiple of 6.0x our current 2008 EPS and 1.1x Book, the stock is trading at a multiple substantially below the average of that of its peers. As such, fundamentally we think that there will be potential gain for stock in the near term. Our six-month target price is $17.00. Full-year dividend has been increased by 13 percent.

Biogen Idec Augmented by Risk

Biogen Idec, Inc. (BIIB) posted solid results in the first half of 2008, driven by solid sales of both multiple sclerosis drugs Avonex and Tysabri. Yet, just when things were looking solid from a fundamental standpoint, two cases of progressive multifocal leukoencephalopathy (PML) popped up in Europe.?

As a result, we have adjusted down our Tysabri over the next several quarters by approximately 15 percent.? Visibility is low, and fears of more PML cases to come are creating significant angst.

Yet, Tysabri PML aside, Biogen's pipeline may be the best in biotech. The name would truly be an excellent take-out candidate for a large-cap pharma name. That is, if the Tysabri-PML risk can be quantified. Or, if the stock gets so cheap that even with the Tysabri-PML risk, it's worth a takeout.

The near $20 point drop in stock price has created an attractive long-term entry price. Unfortunately, however, over the near-term, the stock will probably be stuck in sideways trading range while the market digests the resurgence of PML risk.

Biogen's stock is currently trading at 15x 2008 EPS, a premium to most large-cap pharmas, but a discount to the biotech peer-group. Still, the pipeline and manufacturing capacity certainly make the name look intriguing. We expect data on several of these pipeline candidates in 2008 and 2009.? This may be the catalyst that investors, or a large-cap pharmaceutical company, are waiting for.? In the meantime, we see $56 as fair value; or 16x our 2008 EPS of $3.54.

Gen'l Dynamics Strong in Defense

General Dynamics Corporation (GD) continues to benefit from strong defense outlays. Revenue growth, margin expansion, growing backlog, an under-leveraged balance sheet and cash generation are the driving factors.

The company is also witnessing strong demand for its new Gulfstream G650 business jets. Increased Navy spending on Virginia class submarines and Zumwalt class destroyers boosted the Marine segment. The management believes that there is ample near-term upside potential for the Combat Systems segment due to Abrams tank modernization and Stryker production, and a boost in earnings at the IS&T segment despite a steady ramp-down of the Bowman program due to expansion of customer base through acquisitions.

Accordingly, we maintain a Buy recommendation on GD with a six-month target price of $105. Price appreciation to our near-term valuation target, coupled with a secure $0.35 per share quarterly dividend represents annualized total return potential of 25.8%.

General Dynamics improved performance during recent quarters is an indication of better times ahead. The company continues to benefit from increased spending on the modernization of the U.S. Armed Forces.

Looking ahead, defense spending is likely to increase at a moderate rate, providing manufacturers such as General Dynamics with opportunities to grow their top lines. The defense budget is being driven by the modernization of Reagan-era weapons platforms, the transformation to network-centric warfare, and post-Cold War instability. Despite budget deficits, all of these factors will help drive increased spending.