CME Group (CME) has lost more than half of its market value over the past three months and the stock price has cratered by nearly three-quarters in the past year. As illustrated in the accompanying three-month chart and table of valuation parameters [click to enlarge] for the major U.S.-listed exchanges, CME is extremely oversold and trades at less than two-thirds of book value (0.66) despite its position as the world's largest futures exchange with a major new source of revenue in the form of central counterparty clearing for credit default swaps [CDS] – which represents an estimated $45-$60 trillion market. I have initiated a long position in CME around 183 ...

Jabil Circuit, Inc. (JBL) has been struggling to meet expectations in a slowing macroeconomic environment, and tight credit market. The company is experiencing falling demand, lower booking levels and declining margins.

Jabil's second-quarter revenue and earnings forecast are below Wall Street's expectations. Moreover, the near term risks of slowing end markets remain. Despite economic weakness, Jabil's strength in Mobility, and the Telecommunication helps improve its financial metrics. With flat revenue and profitability, we expect JBL to at least trade in-line with its peer group.

The company is currently trading at a P/E ratio of 6.5x our 2009 EPS estimate of $0.97, a discount to its industry mean, median, and S&P 500. We maintain our Hold rating on the stock with a reduced target price of $6.50, which reflects a multiple of 6.7x our reduced 2009 EPS.

Priyanka Poddar contributed to the report.

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Royal Dutch Shell, Plc (RDS.A) does not compare favorably with its peer group in terms of upstream growth prospects, returns, and costs. The group also remains exposed to production problems, continued instability in Nigeria, and political interference in Russia.While the super majors as a group should hold up better in the current challenging macro backdrop, given their relatively diversified business structures, strong balance sheets, and attractive dividends, we see better investment ideas in this space.Our preferred plays among the super majors remain Exxon (XOM), Chevron (CVX) and ConocoPhillips (COP). As such, we maintain our Hold recommendation on Shell.Read the full analyst report on RDS.ARead the full analyst report on XOMRead the full analyst report on CVXRead the full analyst report on COP ...

A favorable macro backdrop helped Exxon Mobil Corp. (XOM) achieve impressive year-over-year earnings growth in the third quarter, offsetting the effects of production declines and hurricanes.

Upstream income jumped 48% to $9.35 billion on the back of high realized crude oil and natural gas prices. We believe that despite recent volatility in the commodity and credit markets, the fundamentals of Exxon's business remain strong. As such, our Buy recommendation remains unchanged, though we have lowered our estimates to reflect a lower commodity-price deck.

Exxon Mobil shares have outperformed the peer group as well as the broader equity markets in the current market turmoil owing to its status as a defensive play in turbulent times. Historically, the stock has traded at a premium to its super-major peers, reflecting its industry-leading returns, financial strength, and a highly regarded management team. Our new $100 price objective, reduced from $105 before, reflects a 2009

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Deutsche Bank is out with a groovy downgrade on Southern Copper (NYSE:PCU) to Sell from Hold. According to the firm, the downgrade is based mainly on valuation and the stock's impressive rally - PCU has gained 70% in 6 trading days since hitting a low of US$9.84/share on October 27th compared with a gain of 18% for the S&P500 (and a 39% rally for competitor Freeport-McMoRan and a 14% move in LME copper prices). DB's Price Target of US$10/share continues to be based on 9x 2009E EPS of US$1.08 and, with PCU's stock at US$16.77/share, PCU trades at a rich 2009E PE of 15.5x, or ~2x the multiple of its peer group (7.3x).Notablecalls: PCU has had a nice run since that Actionable call from Citigroup last week. I feel the stock needs a breather and DB's downgrade will bring just that. I see it coming back towards sub-$15 ...

Dallas-based ENSCO International, Inc. (ESV) is a leading supplier of offshore contract drilling services to the oil and gas industry. The company's drilling fleet consists of 44 jackup rigs, two ultra-deepwater semi-submersible rigs (ENSCO 7500 and ENSCO 8500), and one barge rig. Additionally, the company has six ultra-deepwater semi-submersible rigs (ENSCO 8500 series) under construction.

ENSCO shares have been beaten down in recent days, broadly inline with its peer group, in response to the commodity-price weakness and overall market turmoil. The stock is down roughly 20% in the last four weeks alone, only modestly better than the 22% drop for offshore drillers (the S&P 500 pulled back roughly 15% during the same time period.

While we have liked this name all along, we think that valuation has become even more compelling following the recent sell off. ENSCO is a premier jackup driller in the Gulf of Mexico (GoM) with a

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We are maintaining our Buy recommendation on Plains Exploration & Production Co. (PXP) and increasing our target price from $84 to $91 per share. The company is poised for solid growth over the next several years with Piceance, Panhandle and Gulf Basin assets helping to drive production in a meaningful way.

However, the recent 20% acquisition of Chesapeake Energy Corp.’s (CHK) Haynesville Shale play will likely be the cornerstone of the company’s long-term growth story, as there are more than 20 Tcfe of reserves in place on its gross acreage. Additionally, the company has hedged a meaningful portion of its oil and gas production for '09 at favorable pricing, thus mitigating the risk of volatile prices.

We estimate that even if crude prices fell to $85/Bbl and natural gas prices fell to $6.50/Mcf, PXP would still realize oil and gas prices around $100 per barrel and $8 per Mcf in

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CME Group (CME), formed in 2007 by the merger of the Chicago Mercantile Exchange (CME) and the Chicago Board of Trade (CBOT), is the largest futures exchange in the world in terms of trading volume as well as notional value traded. Some weeks ago, CME reported 2nd-quarter earnings eight cents ahead of the consensus estimate.

Though relative valuation now looks expensive and current concerns for the sector continue to weigh on the shares, we remain optimistic about the continued growth prospects, especially with the recent acquisitions and the global expansion initiatives, resulting in increased market dominance. We also expect CME to continue to benefit from ongoing market volatility.

Relative pricing continues to look expensive on a P/E-to-growth (PEG) basis, using the consensus forward estimate and the consensus long-term growth rate. CME's PEG ratio is 0.80, a 19% premium to the 0.67 median for the peer group (versus a 32%

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We are retaining our Buy on United Parcel Service, Inc. (UPS), as the stock continues undervalued, as well as our $75 target price. UPS will report third quarter results on October 23. We are maintaining our EPS estimates for 2008 at $3.60, the midpoint of company EPS guidance of $3.50-3.70 and at $4.15 for 2009.

UPS reported second quarter diluted EPS of $0.85, in line with earnings guidance provided on June 23. While the weaker U.S. economy, slowing U.S. volume growth, the shift away from premium products, increased fuel costs and higher interest expense related to a $6.1 billion pension payment will be earnings drags, rate hikes, expansion into China, recent acquisitions and share repurchases should propel EPS growth. In January, UPS instituted a two-year, $10 billion share repurchase plan and announced a 7% increase in the dividend.

At its current price, UPS is trading at a 13% premium to

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We reiterate our Hold rating on Telecom Argentina SA (TEO), the leading provider of communications in Buenos Aires, Northern Argentina and Paraguay. The company's recent operating results are being driven by the growing domestic cellular telephony market, the largest in Latin America in terms of mobile penetration.

Although Telecom Argentina's wireless and Internet subscriber base continues to increase at a respectable pace, frozen fixed-line tariff and inflationary conditions impacting the cost structure may limit profitability levels for the remainder of 2008. Additionally, the uncertain economic outlook and challenging competitive environment are considerations that we believe may limit valuation levels. Moreover, capital spending for the full year 2008 is expected to increase on a year-over-year basis due to cellular and broadband infrastructure requirements.

Telecom Argentina is trading at 6.6x estimated earnings for fiscal year 2008, which represents a significant discount to the forward P/E ratio of the peer group and S&P

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