Monday Stocks to Watch

The market is trading mixed in the afternoon with the recent big gain digestions. It is a healthy move by the market. This should be well suited for future advances. Here are big gainers and decliners to worth or avoid from Market Watch:

Advancers

ABN Amro (ABN) shares rallied Monday as a consortium led by Royal Bank of Scotland said it will raise the cash component of its 71.1 billion euro ($98 billion) bid for the Dutch bank. See full story.

Alcon Inc. (ACL) said it has agreed to buy WaveLight AG of Germany, a maker of refractive laser and diagnostic systems, in a move to bolster the eye-care company's refractive surgery capabilities. See full story.

Affymax Inc. (AFFY) said it plans to initiate Phase III clinical studies with Hematide in chronic renal failure patients following recent discussions with the Food and Drug Administration on the design of the program. Hematide is the company's lead drug in development for the treatment of anemia.

Amrep Corp. (AXR) said fourth-quarter net income fell to $6.3 million, or 95 cents a share, from $10.4 million, or $1.56 a share in the year-ago period. Income from continuing operations amounted to $1.19 a share. Revenue rose to $48.3 million from $47.8 million. Amrep also set a special cash dividend of $1 a share, and said it plans repurchase up to 500,000 shares of its outstanding common stock.

Art's-Way Manufacturing Co. (ARTW) reported second-quarter net earnings of $938,000, or 47 cents a share, up from $425,000, or 21 cents a share.

Atheros Communications (ATHR) was upgraded to overweight from equal-weight at Lehman Brothers, with the broker citing the company's design win for the Nintendo DS, which should generate $72 million to $96 million in incremental revenue in calendar year 2008.

Shares of Charles Schwab (SCHW) led financial stocks higher after Citigroup analysts said that the firm's client assets should surpass current market leader Merrill Lynch (MER) within 3 years.

Con-way Inc. (CNW) said it'll pay $750 million to acquire Contract Freighters Inc., a privately held North American truckload carrier based in Joplin, Mo. The deal is expected to close in the third quarter.

DJO Inc.'s (DJO) shares surged after ReAble Therapeutics, a company controlled by The Blackstone Group, said it has agreed to buy the company for $1.6 billion, or $50.25 a share in cash.

Dynacq Healthcare Inc. (DYII) shares leapt after the company reported fiscal third-quarter net earnings of $2.6 million, or 17 cents a share, versus a year-ago net loss of $800,000, or 5 cents a share.

Enterprise GP Holdings L.P. (EPE) said it'll sell 20.1 million units representing limited partner interests to investors, led by affiliates of Swank Capital, LLC; GPS Partners LLC; funds managed by Zimmer Lucas Capital, LLC; and Kayne Anderson Capital Advisors, L.P.. The purchase price is about $750 million at a unit price of $37.25 each.

Eaton said its second-quarter net income slipped 2.8% to $246 million, while earnings per share were flat at $1.64 after a dip in the number of shares outstanding. Revenue for the quarter rose 3.9% to $3.25 billion. Analysts polled by Thomson Financial were expecting earnings of $1.47 a share on revenue of $3.19 billion. The company raised its net income guidance fore the year by 30 cents a share to a range of $6.50 to $6.70. For the third quarter it sees earnings of $1.50 to $1.60 a share. See full story.

GlaxoSmithKline plc (GSK) gained after being upgraded to neutral by J.P. Morgan.

IBM Corp. (IBM) said it would acquire Canadian data-technology company DataMirror Corp. for $161 million, and signed a seven-year, $1.4 billion technology services deal with AstraZeneca Plc.

IHOP Corp. (IHP) has agreed to acquire Applebee's International Inc. (APPB) for about $2.1 billion in cash, the companies said. See full story.

Mattel said its second-quarter net income rose 15.2% to $43.5 million, or 11 cents a share, from $37.4 million, or 10 cents a share. Revenue grew 6.5% to $1.02 billion. Analysts polled by Thomson Financial had been expecting Mattel to earn 11 cents a share on revenue of $1.03 billion. See full story.

McDonald's Corp. (MCD) said sales of breakfast items in the U.S. and "robust" results in France, the U.K. and Germany helped produce its best quarterly same-store sales in three years and better-than-expected second-quarter earnings, before charges. See full story.

Sensient Technologies Corp. (SXT) said second-quarter net income rose to $21.2 million, or 45 cents a share, from $18.5 million, or 40 cents a share a year ago. Revenue rose to $304.3 million from $282.2 million. The company raised its earning forecast for the year to between $1.56 and $1.59 a share from $1.54 and $1.56 a share.

Syntax-Brillian Corp. (BRLC) raised its revenue outlook for the calendar year ending Dec. 31 to a range of $1.1 billion to $1.3 billion, up from $950 million to $1.1 billion previously. Syntax-Brillian also reaffirmed expectations for revenue of $190 million to $210 million in the fourth quarter ended June 30; Wall Street's average view stands at $196 million, according to estimates compiled by Thomson Financial.

Shares of Verizon Communications Inc. (VZ) rose amid a news report that U.K.-based Vodafone Group plc (VOD) was considering a buyout offer worth up to $160 billion. Vodafone quickly denied the report. The two companies jointly own Verizon Wireless. See full story.

Decliners

Cemex (CX) said securities representing roughly 855.8 million Rinker Group Ltd. (RIN)shares, or 95.6% of its outstanding stock, were validly tendered and accepted for payment in the tender offer that expired Monday.

Countrywide Financial Corp. (CFC) said its total loan fundings in June rose, but that the housing market continues to soften, resulting in rising defaults. See full story.

Hudson Highland Group (HHGP) forecast second-quarter revenue of $348 million to $350 million, below its prior guidance of $355 million to $370 million

McKesson Corp. (MCK) said it has agreed to buy privately held Awarix Inc., maker of a color-coded, electronic patient care management system for hospitals. See full story.

Royal Dutch Shell (RDSA) was downgraded to underweight from neutral by HSBC, which cited valuation.

Spartech Corp. (SEH) cut its earnings guidance for its 2007 fiscal year, citing foreign currency losses and weakness in the transportation and residential construction markets. The St. Louis producer of thermoplastic sheet materials said it now expects fiscal 2007 earnings of $1.45 to $1.50 a share, down from its previous guidance of $1.55 to $1.62 a share. Spartech said the guidance excludes severance payments to President and Chief Executive George Abd, who resigned Monday for personal reasons.

W.W. Grainger Inc. said second-quarter net income rose 12% to $104.8 million, or $1.21 a share, from $93.7 million, or $1.02 a share, a year earlier. A Thomson Financial survey of analysts, on average, had predicted earnings of $1.19 a share. Analysts' estimates usually exclude items. The Chicago facilities maintenance products provider said sales rose 8% to $1.6 billion from $1.48 billion. W.W. Grainger is now forecasting 2007 earnings of $4.75 to $4.90 a share. The company had previously expected earnings of $4.70 to $4.85 a share for the year. Wall Street is calling for 2007 earnings of $4.85 a share.