AMR Corporation (NYSE:AMR) is carrying a lot of hidden value, according to many analysts. The American Airlines parent has a low price/earnings multiple, improving balance sheet, developed route network and many valuable non-airline assets that could eventually be spun-off.

AMR is trading well off of its 52-week highs around $41/share due to higher fuel costs and an all-around tough year for airlines. These non-company specific factors have led to a stock that is trading at just 11x its 2007 earnings and 7x its projected 2008 earnings. After dropping over 50% since January, many are starting to look at this stock as a bargain stock.

FL Group, a $6 billion Icelandic hedge fund, is one of these investors and requested last month that the company consider spinning off some of its assets to unlock value for shareholders. Specifically, the hedge fund urged the company to spin off its AAdvantage frequent-flier program.
 
The move would follow similar actions by Air Canada parent ACE along with others considering the option like Australia's Quantas and United parent UAL. FL Group believes that segment is worth close to $6 billion - nearly as much as the company's $7.5 billion market capitalization. AMR also has other assets that could be spun off including its American Eagle regional airline and its investment arm American Beacon.

"It's a no-brainer," said Hannes Smarason, chief executive of FL. "It's a tough environment for the airlines now, and it's incumbent on the management and the board to find avenues where value can be created."

In the end, the company announced that it was considering such moves but has not made a decision yet. In the meantime, this stock is definitely one worth watching closely as this situation unfolds!

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Southwest Airlines Co. (LUV)

Biogen Idec (NDAQ:BIIB) shares jumped almost 20 percent this morning after the company announced that several firms had expressed interest after it put itself on the auction block on Friday. The news comes after billionaire activist Carl Icahn had pressured the company to unlock value for shareholders.

Many analysts believe that Biogen may have a difficult time selling itself given that it is trading at around 8x earnings in a difficult credit environment. Moreover, the biopharmaceutical industry is a risky one where the FDA can halt trials and block sales on a moments notice. Specifically, there are safety concerns about the company's multiple sclerosis drug Tysabri.

Others believe that the company could fit well with a large pharmaceutical company looking to fill its pipeline and drive top and bottom line growth. Billionaire investor Carl Icahn - who initially pressured the company to sell - made this argument and insists that there would be substantial interest.

These bullish analysts and investors peg the fair value of the company at around $70 to $90 per share. The numbers are in part based on the enormous valuation given to MedImmune when it was acquired earlier this year for 11x annual sales. This is a clear indicator of big pharma's appetite for padding their drug pipelines with strong potential blockbusters.

Rumors today surfaced that Pfizer, Sanofi and J&J may be among the companies interested in making an acquisition. Meanwhile, many are discounting AstraZeneca and Roche since they already have biological capacity and the price is a little on the high end. Regardless, this is definitely a stock worth watching over the next few months!

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Broad indexes are up 120% this year; the average IPO makes 192% in its first day; even blue chip stocks are nearly doubling every year; and there are more IPOs than ever before in history. Sound familiar? No, it's not the dot-com boom of 1999. Rather it's the manufacturing boom being seen in China right now... and it's the next big bubble.

Just how crazy has it become? Well, China Shenhua Energy recently IPO'd and rose 87% in its debut to which its chairman said he "was not totally satisfied". Low floats, spectacular valuations, investment restrictions, and a greedy market has made China the next big bubble and many say is approaching critical mass.

Bullish investors insist that the Chinese bubble differs greatly from the dot-com boom in the United States. After all, these companies are actually generating real profits with real businesses supported by a robust economy. However, bears are quick to point out that the valuations are still just as bad with some companies like Baidu trading at more than 70x earnings!

In the end, China is an extremely hot market that shares a lot in common with the dot-com boom of the 90s in the United States. Investors in this space should be careful to hedge their positions and limit their exposure as these valuations can come crashing down at any time. However, until then, the Chinese market indexes and ETFs - like FXI - are definitely worth watching!