Novartis (NVS) has entered into a definitive agreement for the acquisition of Genoptix (GXDX) for $25 per share in cash. Genoptix overall option implied volatility of 62 is above its 26-week average of 47, according to Track Data, suggesting larger price movement.

RockTenn (RKT) and Smurfit-Stone Container (SSCC) announced that the boards of directors of both companies have approved a definitive agreement under which Smurfit-Stone will become a wholly owned subsidiary of RockTenn. The aggregate consideration, consisting of 50% cash and 50% RockTenn stock, is valued at $35 per share of Smurfit-Stone common stock. Smurfit-Stone Container overall option implied volatility of 44 was near its 26-week average, according to Track Data.

Options Update is by Stock Specialist Paul Foster of theflyonthewall.com.

Could a stock that you made 1,100% on still have room to run? Yes, it is possible. In particular if it had a near death experience as a penny stock for a while.

That is the case with Newcastle Investments (NCT), the CMBS lender and real estate investment company that reached a recent high of $7.10 and has settled back down, most recently hovering between $6.70 to $7.00. It closed Thursday December 23 at $6.71.

To paraphrase Mark Twain "The reports of our death are greatly exaggerated". The world economy has been in shambles for a few years now, and our nation has much work ahead of it. 2010 was an improvement over 2009 and I believe 2011 will show further improvement.

There are lots of ideas running through my mind as I consider where the economy might be heading in 2011. What opportunities lay in front of us waiting to be picked up or passed over? Just five trading days left, and market activity will slow down except among fund managers making adjustments for tax purposes or window dressing. You should examine your tax situation, too.

U.S. stock futures are trading lower Wednesday morning as investors are awaiting inflation and manufacturing data. Futures on the Dow Jones Industrial Average dropped 43 points to 11,378.00 and S&P 500 futures lost 5.50 points to 1,231.30. Nasdaq 100 futures dipped 9.50 points to 2,204.50.

U.S. stocks closed higher yesterday, with the blue-chip Dow index rising 0.42%.

Analyst Upgrades

• Tyco Electronics (TEL) and Weight Watchers (WTW) to buy from neutral, and Smithfield Foods (SFD) to buy from underperform, at BofA/Merrill.
• Red Hat (RHT) to overweight from equal weight at Morgan Stanley.
• Gold Fields (GFI) to overweight from neutral at HSBC.
• Novartis (NVS) to outperform from neutral and GlaxoSmithKline (GSK) to neutral from underperform at Credit Suisse.
• Dollar General (DG) to buy from hold at ThinkEquity.
• Eagle Rock Energy (EROC) to outperform from sector perform at RBC Capital.

It's that time of year when I start thinking about my 2011 stock picks, and enough folks have been nudging me that I might as well get on with it. The list will not be finalized until the end of the month. During the interim time I will take readers through a number of possibilities, explaining the rational for my suggestions along the way and adding and subtracting until I get the list down to ten.

Today I will start by reviewing opportunities discussed in another post and determine which of these stocks might provide the best value. The list was originally cast as a globally diversified, large cap, dividend paying and relatively stable group of companies that would likely weather any storm. See: Chasing Value: Bonds, Gold, Stocks and Capital Flight

It certainly is presumptuous, perhaps even self serving of me to assume the market is going higher in the face of so much uncertainty.

The reason I hold this belief is that so much money is sitting on the sidelines and much of it is getting restless. It's one thing for those on a fixed income to suffer because the Federal Reserve is keeping interest rates so low, but it is quite another thing to expect $2 trillion dollars of corporate cash to want to live like senior citizens. That cash is a bigger drag on earnings with each passing day.

Analyst Upgrades

• Advance Auto Parts (AAP) was upgraded to Perform from Underperform at Oppenheimer.
• Macquarie upgraded Gen-Probe (GPRO) and Beckman Coulter (BEC) to neutral from underperform.
• Tyco (TYC) was upgraded to neutral from reduce at Nomura.
• BofA/Merrill upgraded Cousins Properties (CUZ) to buy from underperform.
• Morgan Stanley upgraded Energy Conversion (ENER) to equal weight from underweight.
• Thermo Fisher (TMO) was upgraded to buy from hold at Auriga.

In the midst of deep fear and melodramatic headlines in May, I dove into the market suggesting investors take a hard look at three companies that would survive anything the world could throw at them.

There are often profits to be made from the headlines as fear and greed drive the market. You must have read umpteen times in journals worldwide "my pal Warren's" trumpeting smart investors to buy on fear. Well, last may Novartis AG ADS (NVS), Telefonica SA (TEF) and Unilever ADR (UL) were on sale as fear ruled the day. So let's see how these ideas worked out.

According to Bloomberg, Novartis AG (NVS) has agreed to pay $422.5 million in order to resolve criminal and civil investigations into the marketing of Trileptal -- an epilepsy drug. The U.S. Attorney's Office in Philadelphia announced that NVS will plead guilty to a misdemeanor and pay a $185 million fine.

NVS has also agreed to pay $237.5 million in order to resolve civil allegations over Trileptal's promotion for uses not approved by the U.S. FDA. The settlement brings to an end several lawsuits that were filed by whistleblowers citing the False Claims Act -- which allows private citizens to sue on behalf of the government and share in any recovery.

Analyst Upgrades

• Soleil upgraded Baxter (BAX) to buy from hold on expectations the company will benefit from supply disruptions at privately-held plasma manufacturer Octapharma. The firm raised its price target for shares to $56 from $45.
• Deutsche Bank upgraded Dolby (DLB) to buy from hold, citing valuation following the recent underperformance of shares. The firm upped its price target to $75 from $70.
• Bernstein upgraded Alexion (ALXN) to outperform from market perform based on increased Soliris forecasts for PNH and potential in aHUS. The firm also raised its price target to $75 from $60.
• Agrium (AGU) was upgraded to buy from neutral at BofA/Merrill.
• Roche (RHHBY) was upgraded to conviction buy from neutral at Goldman.
• BMO Capital upgraded Energizer (ENR) to outperform from market perform.

"For years the health care sector had a well-deserved reputation for consistent returns and profitability regardless of broader economic conditions," observes Elliott Gue.

The contributing editor to Personal Finance explains, "But the past two years have challenged this reputation, and these stocks are out of favor. Some favorites, such as Novartis (NVS) are trading at their most attractive valuation in years.

"Although the sector faces undeniable challenges, markets often overreact to new regulation, providing attractive entry points for savvy investors and a low bar of expectations.

Here is a common sentiment about the stock market: "No fun at all. As I have said before, I believe it has turned into one big casino largely divorced from its original goal of providing capital to companies who produce something of value."

There's a lot of truth to what "granny" recently said to me in an e-mail. Fortunately she also noted "FYI Granny's up 5.86% + dividends." That would give her a gain of about 10% in the past ten months since I posted Where should granny put $50,000, suggesting a very conservative portfolio for an uncertain time.

Not only has she earned a very nice return, surpassing her CD account by 9.5% (20 fold), but she was able to do so with a great deal less volatility than the overall market most of us have lived through.

I'm looking at Novartis (NVS) late in the trading day. There's less than an hour to go before the market closes. The stock is up 0.4% to $50.97. Is it me, or is Wall Street telling us that it isn't too excited by the drug maker's latest earnings report? Which actually wasn't bad, as far as I can tell. Perhaps the market actually is excited, but the response is being muted by the overall tone of the session (volume is strong, I should mention).

The one-year chart for the equity probably wouldn't make you want to buy this one for a trade. It almost seems as if the chance to get in on a great pullback has come and gone, doesn't it? Well, let's have a peek at the fundamentals.

In its weekend edition, Barron's Andrew Bary wonders whether Big Pharma's punishment on Wall Street has gone too far. The sector has fallen out of favor with Wall Street and now has one of the lowest price/earnings ratios of any major sector of the stock market, Bary writes.

Investors are staying away from the large pharmaceutical companies ahead of their looming patent cliff, when blockbuster drugs like Lipitor, Plavix and Singulair lose patent protection and lose most of the sales from these drugs to generics. Investors also fear the companies don't have enough new drugs in the pipeline to make up for the lost sales, which could mean big hits to earnings.

But when the Street writes off one of the world's most important industries and with valuations at all-time lows, investors ought to take notice, Bary says. Especially when the average dividend yield of the big drugmakers is 4.8%.