Stock Investing Guide

We are upgrading our recommendation on BB&T Corp. (BBT) to Neutral from Underperform based on its balanced growth structure, continuous improvement in deposit mix and strong net interest margin (NIM).

BB&T’s third quarter 2010 adjusted earnings came in at 31 cents, a nickel ahead of the Zacks Consensus Estimate. Adjusted earnings for the reported quarter leave out merger-related charges of 1 cent per share. Considering this non-recurring item, earnings per share for the reported quarter were 30 cents compared with 23 cents in the year-ago quarter.

The results were primarily supported by improved mortgage banking income, checkcard fees, non-deposit fees and commissions and higher net interest income.However, higher provision for credit losses and increased non-interest expenses were among the negatives.

BB&T relies extensively on acquisitions to expand its revenue streams. Following the systems conversion of Colonial in the second quarter of 2010, the company is aspiring to be an active acquirer once the Southeast region experiences consolidation. T

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We are initiating coverage on Canadian National Railway (CNI) with a Neutral recommendation and a Zacks #3 (Hold) Rank. We believe increased traffic, solid execution, significant increase in industrial production, ongoing inventory replenishment and a sharp rebound in many of the company’s end markets will fuel growth going forward, due to a sustainable improvement in the economy.

Canadian National consistently leads the Class I railroads relative to several key financial metrics. The company has the industry best operating ratio, free cash generation, return on equity and return on invested capital. The company expects solid double-digit earnings growth for 2010, with carload growth in the low double digits and pricing improvement of about 3.5%. It expects a sustainable operating ratio in the mid-60s over the next few years, given a stronger volume growth at low cost with productivity initiatives such as improving system velocity and fuel efficiency.

Canadian National is expanding its business and investing in certain capital programs, which will allow it to operate efficiently and effectively. T

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