UST's stock has traded in a P/E multiple range of 7 to 18 over the last five years. However, the stock traded below a 9 P/E, due to an adverse anti-trust court decision in March 2000, which ultimately required the payment of $1.26 billion in early 2003. We have expected UST s stock to trade in a P/E multiple range of 13 to 18. Interestingly, Altria Group's announced acquisition values UST at 18.3 times 2008 estimated earnings. The target price of $69.50 is the value of Altria's cash offer.

Cache Guidance Lowered

Cache, Inc. (CACH) is a specialty retailer, which operates stores selling women's apparel and accessories under the names Cache and Cache Luxe. Cache targets women between the ages 25 and 45. Cache Luxe is the company's newest store concept that was rolled out to replace the Lillie Store concept. The company recently decided to close its Lillie Rubin stores by the end of the third quarter.

On September 22, Cache lowered its guidance for the third quarter and full-year 2008, citing tough economic conditions. Specifically, management now expects fiscal 2008 sales of $278-$280 million and continuing EPS is expected to range from $0.24 to $0.31. This is down from its previous guidance of $286-$290 million in sales and continuing EPS of $0.53-$0.56. We lowered our estimates for 2008 and 2009, accordingly.

The stock is now down about 50% since our downgrade on June 9. Admittedly, we are surprised at how far CACH shares have declined in price, especially in the last few days. Given the difficult environment for retailers, we are hard-pressed to find reasons to step up and buy CACH shares here. We maintain our Hold rating.

China Southern in Holding Pattern

We are maintaining our Hold on China Southern Airlines Company Ltd. (ZNH), but cutting our target price to $10. It is China's largest carrier by fleet size, and headquartered in Guangzhou, China. China Southern, together with its subsidiaries, engages in the airline operations in China and internationally.

In its first half report, China Southern posted a sharp increase in net profits to RMB847 million, up 362% from the comparable period in 2007. This primarily reflected a large jump (up 108% year over year) in foreign exchange gains to RMB2.6 billion from RMB1.3 billion a year ago, due to the Chinese currency's appreciation over the US$. High fuel prices and lower operating efficiencies continue to hurt the company's operating performance.

As China's largest carrier, China Southern is well positioned to leverage the growth potential of aviation industry in China. We think its current price fairly reflects most factors. The company pays no dividend.

Du Pont Suffers from Hurricane

Du Pont ( DD) is currently the world's second largest chemical company in terms of market capitalization and the fourth in revenue.