While we think there is a lot of low-hanging fruit for initial margin improvement, the management?s 500 basis point target will in our opinion take at least two years and necessitate executing on many levels.

CRA Int'l a Wait & Watch Stock

We maintain our Hold rating on shares of CRA International (CRAI ). Despite solid second-quarter results, we remain cautious in light of the magnitude of the first-quarter shortfall, as well as the difficulties in executing its business plan in recent quarters. The seemingly quick turnaround in the second quarter likely went a long way towards moving the company in the right direction.

The company?s growth via acquisition has led to the expansion of new geographic and the introduction of new practice areas. However, this growth has also created additional challenges, and the company has recently struggled with its attempts to maximize the efficiency of its workforce.

CRAI is in the process of undertaking restructuring activities to better align its workforce to reflect the current operating environment. These efforts paid dividends that were reflected in the second-quarter results, and we could become more positive on the shares should this trend continue. We maintain our Hold rating at this time.

Using a P/E ratio, the shares of CRA International are currently trading at a discount to the peer group average. We expect that the shares will continue to trade at a discount to the peer group, until the company is able to deliver signs that the improvement in utilization rates is actually sustainable. Our price target of $38.50 reflects a multiple of 15.5x our 2008 earnings estimate.

Century Alum'nm Growth May Slow

Century Aluminum Co. (CENX), the second-largest primary aluminum producer in the United States, is benefiting from a tight aluminum supply/demand situation and rising prices. The company has expanded its production capacity last year by about 40,000 metric tons per annum to meet projected demand from places such as China, India, Russia and Brazil.

However, high customer concentration exposes CENX to the risk of attrition and a global economic slowdown to a lower realized price. We reiterate our Hold recommendation with a target price of $51 per share.

The company is a pure play aluminum producer leveraged to positive trends. Aluminum prices are rising and could increase to $1.27/lb this year. The global smelting capacity utilization rate is likely to increase to 95% in 2008. The market is likely to be tight through 2009 due to strong Chinese demand.

Consumption, as measured by kilogram per capita, is forecasted to increase from 5kg/capita in India, Brazil, Russia, and China to 20kg/capita as GDP grows in these countries. Overall demand should grow at 7% per annum for the next two years.

The company is positioned to increase production by 40% and reduce cash costs by 10%-20% vs. current output in the coming 10 years. Moreover, to meet strong demand, CENX had entered into a long-term alumina supply agreement with Glencore for the period January 2010 through December 2014.

In April 2008, the company signed a joint venture agreement with Pingguo Qiangqiang Carbon Co., Ltd. to acquire a 40% ownership interest in Baise Haohai Carbon Co., Ltd., a carbon anode and cathode facility located in south China.

Daimler Getting More Smart

Daimler AG (DAI) is benefiting from aggressive efficiency improvement, cost reduction and new model launches. The company is likely to benefit from its focus on the emerging markets of Russia, India and China. Strong earnings give the stock a positive spin.

However, the company is facing many challenges including exchange rate risk, weak auto pricing, rising raw material costs, compliance with CO2 emission reduction standards, as well as a slowing U.S. economy. Sluggish demand has forced the company to bring down production in 2008. DAI has reduced its earnings guidance for the full year 2008. Hence, we rate it a Hold with a six-month target price of $67.

Under the new business plan, the company expects to achieve cost efficiencies through headcount reduction and consolidation of general & administrative (G&A) functions. The G&A costs would be reduced by $1.8 billion per year.

In 2008, the company anticipates higher sales of the C-Class sedan and its station-wagon version as well as the world's most fuel-efficient and lowest CO2 emissions car -- Smart for two -- launched last year. The company plans to start production of its New Electric Smart by 2010.

DAI plans to launch the refreshed M-Class and the new GLK model which are expected to augment sales in 2009. By the end of 2010, the Mercedes Car Group intends to achieve a return on sales of 10% despite increased expenditure for more efficient and alternative drive systems. DAI has also targeted the emerging markets of Russia, India and China to push sales.