Investors rekindled their enthusiasm for Texas Instruments (TXN) during early trading Tuesday after the company raised its earnings estimate during a Monday evening conference call. The news pushed the company s shares up over 5% and bolstered the tech sector, too.

The semiconductor firm revised what it expects to make when its second quarter closes at the end of this month. The range is now between 14 cents and 22 cents a share, up from previous guidance of one cent and 15 cents a share.

Ron Slaymaker, a Texas Instruments spokesman, said on the call that while full recovery isn't here, prospects look less bleak than past quarters. "I would characterize visibility as not great but improving, he said. Lead times in most product areas remain short and stable.

Quinn Bolton, an analyst at Needham & Co., wrote Tuesday that Texas Instruments is in the process of adjusting its own production as its customers swing from big cuts to more regulated manufacturing levels.

"Management believes the company is still undershipping end demand," he said. "We believe this bodes well for sales growth into 2H09 as sales catch up with end-demand."

Order growth is being driven by consumer products such as PCs and handsets, as well as China networking applications. But industrial and enterprise demand remains weak. If that picture changes it could be a future source of growth in the second half of 2009 or 2010. Wireless, however, continues to dim Bolton s overall enthusiasm.

Bottom Line: Hold
This is a good name for riding the upswing of the chip cycle. But smart investors will watch their positions carefully.

Tuxedo Sales Help Men s Wearhouse

Investors boosted shares of Men's Wearhouse (MW) over 10% Tuesday morning after the retailer showed a surprise profit and reported a better-than-expected earnings outlook for its fiscal second quarter.

The Houston-headquartered clothier said it earned 10 cents a share for the fiscal first quarter, surprising Wall Street analysts who were expecting a loss of a penny a share. It added it expects earnings between 56 and 60 cents a share during its second quarter. Analysts are projecting 56 cents a share.

In the first-quarter, markdowns hit gross margins, which dropped to 56.14% from 58.10%. However, there was an appreciable offset from tuxedo rentals. Those garments accounted for 15.4% of total sales from 14.3% in the year ago quarter.

Men's Wearhouse is going to keep cutting costs, but management also said it plans to open eight new stores throughout the year.

"We believe rebounding tailored clothing sales, incremental casual products, and improving sales trends at [the] K&G [unit], coupled with already implemented expense reductions could produce solid F09 earnings power," Wedbush Morgan analyst Betty Chen wrote Tuesday.

Bottom Line: Sell
Nearly 15% of Men's Wearhouse shares are held short. This unexpected good news could provide an exit point until this retailer grows into a more stable economic player.

Ceradyne Cuts Outlook

Defense contractor Ceradyne (CRDN), which makes ceramic body and vehicle armor, cut its full-year outlook by over half to 70 cents a share on Tuesday. The news follows an earlier announcement the company would close a production plant in France. Shares fell over 14% during early trading.

"Global economic conditions have continued to deteriorate, impacting many of our customers as well as a number of our businesses, CEO Joel Moskowitz said Tuesday in advance of the company's annual shareholder meeting. In addition, body armor orders are below our previous estimates,"

Michael French, an analyst with Morgan Joseph, said the revision was not a surprise. But, he added, the company s recent $9.5 million acquisition of Diaphorm Technologies could yield solid results. It has already submitted a proposal to the U.S. Marine Corps Systems Command for an enhanced combat helmet. That product could add $3 million to $4 million in 2009 revenue.

Bottom Line: Hold
A pickup in industrial ceramics will take some time. Meanwhile, defense cuts are more likely under the current White House administration.