However, while robust levels of revenues and income are envisioned for HEI over the balance of the decade, we believe that HEI is close to fairly-valued at current levels and therefore have maintained our HOLD opinion.

Canadian Pacific Chugging Along

We are maintaining our Hold on Canadian Pacific Railway Limited (CP), but cutting our target price to $55. CP will report third quarter results on October 28. We are continuing our 2008 diluted EPS estimate at $4.05, in line with management's guidance of C$4.00-4.20 (US$3.95-4.15), as well as our 2009 estimate at $4.75.

Results should benefit from solid growth in revenues (from fuel surcharges) and improved efficiencies, though fuel costs and a slowing economy are hindrances. CP's 2008 second quarter net earnings of C$150 million dropped 14% compared to the prior-year quarter due to declining freight volumes and a 34% jump in fuel costs.

US regulatory approval of the DME acquisition was received on September 30, effective October 30, 2008. CP recently increased its dividend 10%.

AutoNation Shares Rate a Sell

AutoNation, Inc. (AN) is the largest automotive retailer in the U.S., and is about twice the size of its nearest competitor. As of December 2007, the company owns and operates 322 new vehicle franchises from 244 dealerships located in major metropolitan markets in 16 states, with about 75% of sales being focused in the Sunbelt region of the U.S.

We expect AutoNation to be hurt by a continuing weak new car market. The company is disproportionately exposed to Florida and California, states that will be hit the most by a slowing car market. Moreover, the credit crisis in the US led to a 12% fall in AutoNation's sales in the second quarter of 2008.

Tight credit is expected to continue affecting sales and thereby margins in the near term. As a result, we rate the shares a Sell with a target of $9.

Oscient Pharma Outlook Lowers

Oscient Pharmaceuticals Corp. (OSCI) focuses on cardiovascular /metabolic and respiratory diseases.? The Waltham, Massachusetts-based biopharmaceutical company currently has two marketed products in its portfolio - Antara and Factive. While the sales force has done a commendable job driving growth for both products in 2007, first half 2008 results have been disappointing.

The company recently reduced its revenue guidance for the year by 4%. Oscient?s dependence on Antara for top-line growth is a matter of major concern - Antara is competing in a highly crowded cholesterol market and a slowdown in its growth rate would have a major impact on the company?s growth prospects.

Moreover, Oscient HAs yet to bring a third product on board and sign an agreement for pipeline candidate Ramoplanin. The signing of an out-licensing/ co-development agreement for Ramoplanin would be a major positive for the company. Given the disappointing performance in the first half of the year and the lack of significant growth prospects, we are maintaining our Hold rating with a $1.50 price target.

Equity Residential Positioned Well

Equity Residential (EQR), based in Chicago, Illinois, is a fully integrated real estate investment trust (REIT). It is the largest publicly traded, self-administered, and self-managed multi-family real estate operator in the U.S.

The housing market has not yet reached a bottom; thus there is a larger pool of renters. EQR continues to raise rents in most markets, although Florida continues to be a problem. With the national economic slowdown, rental rate growth will slow over the next couple of quarters.

Despite this slowdown, we still rate EQR a Buy. We think multifamily will continue to be one of the best-performing REIT sectors in 2008. The company has a strong balance sheet and plenty of liquidity to be active in acquisitions and development. There could be some attractive acquisition opportunities coming in the next couple of quarters as smaller developers cannot find financing and could be forced to sell.

Supertex Risks Accounted For

Supertex (SUPX) designs and sells high-voltage analog and mixed signal integrated circuits. The company targets the telecommunications, imaging, and medical electronic markets. In fiscal 2008, Motorola Inc. (MOT) and General Electric Company (GE) accounted for 13% of total sales each.

The company reported revenues of $22.8 million in Q1 of fiscal 2009, up 9.6% from a year ago and up 16.0% sequentially, mainly due to growth in shipments of medical ultra sound products which achieved record sales of $9.5 million. Operating margin also improved to 21.6% from 11.6% recorded in the previous quarter.

However, because of its small size and niche market strategy, the company's revenue is susceptible to greater fluctuations than other stronger rivals. The company also has significant customer concentration. The loss of a few customers could threaten the company's ability to meet financial guidance.? We currently have a Hold recommendation on the shares.