TWST: More recently, I believe the company has focused on strengthening its liquidity and its financial standing in what is clearly a challenging environment for all airlines. Talk a bit about those initiatives.

Ms. Goulet: As you said, it has been a very challenging environment in which to raise liquidity, but year-to-date, we have been very successful. We have raised substantially more than $5 billion year-to-date. Even during the first half of the year, when conditions were about as bad as they could get, we were able to arrange financing both for new delivery aircraft as well as for aircraft already in our fleet. And I think all of this is frankly testament to the fact that we have met our obligations as they have come due, as opposed to resorting to the bankruptcy courts as a number of our competitors have.

Things really got cranking early in the third quarter as the capital markets did begin to reopen. We raised about $800 million of financing in both public and private transactions secured by aircraft, again, already in our fleet or new aircraft that we will be taking delivery of. But the cornerstone of our efforts was laid in September, when we arranged $2.9 billion of financing with two of our long-time key business partners. The first of those is Citigroup (C). We did a $1 billion advance sale of AAdvantage miles with Citi. And then we did two transactions with General Electric (GE) - a $282 million loan facility secured by owned aircraft, and then we put in place with GE a $1.6 billion sale-leaseback commitment that will finance aircraft that we will take delivery of in 2010 and 2011. So those three transactions, the Citi transaction and the two GE transactions, totaled just about $2.9 billion.

In our Recent Online And Direct To Consumer Retailing, Frederick Moran Managing Director of The Benchmark Company, LLC  compares online retailers’ performance to that of traditional brick-and-mortar retailers, noting that the former group better withstood the economic recession as a result of being younger, less burdened by inventory and generally more efficient. However, he goes on to clarify that the secular market shift toward online retailers continued but did not accelerate during the downturn. Mr. Moran had four buy recommendations below is one to get the other three read the full Online And Direct To Consumer Retailing Report ;

Mr. Moran: Maybe I will just mention my specific thesis on each of my buy recommendations. I have four “buy”-rated stocks right now. The first one is GSI Commerce, ticker GSIC, a $19 stock with a $25 price target. GSIC is a $1 billion company, both in terms of revenue and market cap, and it is an extremely unique e-commerce operator. They don’t actually brand anything or sell any of their own products, all they do is facilitate the Internet service for other retailers. They basically produce the Web site, control the warehouse, take the orders and do the deliveries for 100 different partners from Dick’s Sporting Goods to Sports Author­ity to the professional sports leagues and others. This year GSI is growing new partners at a record pace and seeing positive growth out of their existing partners. The company has never lost a partner to taking the service in-house or to a competitor. The only time they’ve lost a partner is because that partner went bankrupt for company-specific reasons. So I think GSI has the ability to grow cash flow 15% to 20% a year, including this year during the down­turn. And we could possibly see an acceleration from that level if the economy allows for it.

As part of our Online And Direct To Consumer Retailing Report we spoke with Hamed Khorsand Analyst BWS Financial Inc. where he talked about E-commerce Investment Themes and his decision to downgrade Amazon to a sell;

Mr. Khorsand: From a business perspective, they (Amazon:AMZN) are doing everything right, and they’ve always done everything right. They have the best brand, they’ve always maintained the best pric­ing and the customer is always happy. Our “sell” rating has nothing to do with what management is doing, our “sell” rating has to do with what the market is doing, and the market is putting the astro­nomical valuation on the stock. And the fundamentals are starting to deteriorate compared to what expectations are

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In our recent 57-page Education Report  we spoke to Robert L. Craig and Jerry R. Herman of Stifel Nicolaus focusing on the OUTLOOK FOR EDUCATION & E-LEARNING and what Investors should be looking at;

Mr. Craig: We continue to be positive on the group. We don’t follow every company in the sector, we follow most of them and most of those quite frankly are rated buy and have been rated buy for some time. We think these valuations are attractive and there are various ways you can play this group. If you take a longer-term perspective, then in our opinion, the best attributes to look for are relative nascency or small size, quality as measured by student outcomes and satisfaction and value proposition for the student. Valuation is of secondary importance. On a nearterm basis, if valuation is what drives your investment decision, then there is an awful lot to work with here because, in our opinion, PE’s are very attractive relative to sustainable rates of growth.

Also the impact of the current Administration on the Industry is discussed;

Mr. Herman: Given the backdrop and the vision of this Administration, there are certain companies clearly positioned to be part of the solution to the problem of the shortage of post-secondary education capacity. Companies that we believe are positioned to help solve that problem and also have good student outcomes and academic performance include the likes of DeVry and Strayer and Capella, and even Apollo. Those companies have generally very solid metrics.

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As part of our recent Specialty Retail report we spoke with Christine Chen Principal & Senior Research Analyst Needham & Company, LLC  had this to say about True Religion (TRLG);

Ms. Chen: Their jeans are the brand that’s extremely, extremely hot with teenagers, older customers, international cus­tomers. But I think the most important thing is they continue to in­novate their product, meaning they look different from any other premium denim brand out there. I have mentioned consolidation. Premium denim is one of the areas where there probably will be a lot of consolidation and True Religion continues to take market share in this environment because the product looks better than the competition. The product also looks different from what they tried to sell you last year. That’s a very important point because in this environment, if you try to sell the customer something at $260 or at $10 that she already has in her closet, she is just not going to buy it. It has to be something new. A lot of the other premium denim brands out there that are selling more basic merchandise that looks too similar to what they tried to sell you last year - even if it’s only $160 - she is just not buying it. She already has it.

Ms. Chen expects to see increased stability in the specialty retail sector as companies enter into the second half of 2009. Inventories should fall in line with demand and previous cost-cutting measures should have left retailers with lower fixed leverage points, which could lead to margin improvement in 2010.

Companies mentioned: Urban Outfitters Inc. (URBN); True Religion Apparel Inc. (TRLG); GUESS? Inc. (GES); American Eagle Outfitters (AEO); VF Corp. (VFC); Aeropostale Inc. (ARO) and Abercrombie & Fitch Co. (ANF).

As part of our exclusive 57 page education report we conducted a roundtable forum with BRANDON DOBELL of  William Blair & Company, LLC  and COREY GREENDALE of First Analysis Securities Corporation . Mr Greendale gave this advice to investors;

Mr. Greendale: Overall, we think the valuations in the sector are still suppressed by regulatory concerns that we think are overblown. We think there are a lot of things going for the sector. The community colleges are underfunded, all the economic factors we talked about that are driving people back to school, funding sources are increasing, like the Pell Grant and the new GI bill. So we think it’s a good time to be investing in the education sector. While there are some variations by company, the valuations are still attractive by historical standards because of all these potential regulatory concerns that we think are overblown.

Both believe postsecondary companies will continue to grow even as the economy begins to recover, emphasizing that many who have lost their jobs in the last two or three years were in positions that may take a long time to come back, thus accelerating or exacerbating the need for re-skilling. Both also underline the need for for-profit education companies to be more transparent and forthcoming with data regarding outcomes. Given a secular trend towards more education and today’s knowledge- and information-based economy, Mr. Dobell and Mr. Greendale are both very positive on this sector and believe this group will see increasing numbers over the next 12 months.

Companies mentioned: SkillSoft plc (SKIL); Rosetta Stone Inc. (RST); American Public Education Inc. (APEI); Apollo Group Inc. (APOL); Bridgepoint Education Inc. (BPI); Career Education Corp. (CECO); Capella Education Co. (CPLA); DeVry Inc. (DV); ITT Education Services Inc. (ESI); Grand Canyon Education Inc. (LOPE); Strayer Education Inc. (STRA); Blackboard Inc. (BBBB) and Universal Technical Institute Inc. (UTI).

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Our recently published Gaming and Leisure Report, featured an interview with Hayley Beth Wolff of Rochdale Securities who pointed to Cedar Fair as a bright spot in this horrible environment;

Ms. Wolff: The only bright spot that I’ve seen in this space has been with Cedar Fair (FUN), the theme park company, which supports the staycation trend. They actually grew their business in a horrible environment, particularly since they are very Midwest-centric. So they are in an area where employment was most challenged, but 22.7 million guests visited, 3% more than the prior year.

Americans still want to enjoy recreation activities they just want to do it at a lower price point and companies that realize that will capitalize in this roller coaster economy.

In a recent interview with Adam Krejcik of Roth Capital Partners, LLC, for our Gaming & Leisure Report, we discussed the growth opportunity for the Online Gaming Industry in China.

Mr. Krejcik: The industry has been growing at a pretty staggering rate. I think the five-year CAGR through 2008 was 60%. Going forward we expect the industry to grow at an annual rate of 20%-30%, which is still very impressive. The two main drivers of the industry are, one, a growing Internet population and two, an increase in consumer disposable income. The number of Internet users has been growing at a rapid pace in China and now exceeds that of the US despite a penetration rate well below ours. We see no real slowdown in Internet growth in the next five years. Number two, GDP growth is leading to a rise in the standard of living, which should translate into to greater levels of disposable discretionary income. This will eventually lead to higher price points and user spending within online games. So we think the macro trends are pretty favorable, and while you could argue that the spending levels may slow down here in the near term depending on how severe this economic downturn is, we believe the longer-term trends are very promising.

Valuations are very depressed right now but the companies have a significant amount of cash on their balance sheets and no debt, so for investors trying to avoid companies that are overlevered or facing financing issues, this sector fits that profile.

Our second focus in the latest issue of TWST is on Gaming & Leisure. Analyst Edward S. Williams of BMO Capital talked to us a little bit about this space, specifically the interactive entertainment area of it. His picks in this area are Gamestop (GME) and Activision Blizzard (NASDAQ: ATVI). Here’s why:

• Gamestop- “One of the reasons why we like GameStop, which is the retailer, is that they stand to benefit from the continued success of the Nintendo platform simply by selling the Nintendo product. In addition, they have a strong and vibrant used video game business that I imagine will experience some growth in the current economic environment as you get a more price-sensitive consumer. And then thirdly, they’ve made some strategic acquisitions, specifically at the end of last year, to move into the French market, which should dramatically increase their presence in the European market. Over time my guess is that the European market will become a material and significant contributor to the company’s top and bottom lines.”
• Activision Blizzard- “One of the key advantages that Activision Blizzard has is their heavy reliance on a product called World of Warcraft, which is a subscription-based game that has about 11.5 million people who play the game on a monthly basis. About 45% of those 11.5 million people are playing the game in the western markets, the North American and European markets, and they are paying somewhere around $15 or 15 euros a month to play the game. That game is a material contributor to the top and, more important, the operating income lines for Activision Blizzard. Besides World of Warcraft, they also rely heavily on the Call of Duty and Guitar Hero franchises, which have been tremendously successful of late and have helped to produce operating margins for Activision Blizzard that are in the mid-20% area, which is slightly higher than what we’ve seen historically from publishers in the category.”

For the complete Gaming & Leisure report, including a full interview with Mr. Williams, as well as a roundtable discussion of the space and more stock picks, click here.

Steve West of Stifel, Nicolaus & Company, Inc. recently gave us some insight into the Restaurant  Sector . When asked about the recovery of the sector Mr West brought up the fast food segment;

Mr. West:  When you think about a recovery, fast food is already outperforming. They are doing pretty well, and as we get into the back half of 2009, assuming the consumer continues to trade down and eat out at fast food, which I think they will, you will see margins start expanding. They will start reaping the benefits of the cheaper food as well, and then the positive same-store sales should help leverage their fixed cost a little bit better as well. I think fast food will improve more before you see casual dining start to improve at all.

Seems that in this economy the value meal is the key to growth in the sector and your waistline