dd

I'm placing a Hold on shares E.I. du Pont De Memours (NYSE: DD), also known as Du Pont, first recommended on April 22, 2009 at a price of $27.48. If you bought DD in April, you're up about 20%

Look for DD's coatings and color technologies business to begin to recover in 2010, on the U.S./global recoveries. However, DD's pharmaceuticals unit will face a tougher 2010, due to patent expirations. The First Call FY2009/FY2010 EPS estimates for DD are $2.01 to $2.22.

Here are some highlights from last week's earnings coverage from BloggingStocks:

• Altria Group Inc. (NYSE: MO) Q3 earnings beat by a penny but sales fell short of expectations; shares fell.
• AMR Corp. (NYSE: AMR) reported a Q3 net loss and plunging revenue but also raised $4 billion in cash.
• BB&T Corp. (NYSE: BBT) topped Q3 earnings expectations but said bad-loan provisions nearly doubled.
• Boeing Co. (NYSE: BA) missed estimates and posted a Q3 loss due to delays for a couple of jet products.
• Capital One Financial Corp. (NYSE: COF) shares rose after it reported better-than-expected Q3 numbers.
• Coca-Cola Co. (NYSE: KO) posted a better-than-expected Q3 profit but sales fell short, and shares fell.

U.S. stocks stocks are poised for a mild open Tuesday morning, a day after U.S. markets already set new 2009 highs and following solid results from Apple (NYSE: AAPL) and Texas Instruments (NYSE: TXN) late Monday. A flood of earnings from such heavyweights as Coca-Cola (NYSE: KO), Pfizer (NYSE: PFE) and DuPont (NYSE: DD) is also due out this morning. In addition, some economic releases, including inflation and housing data, are scheduled for this morning.

More here: Before the bell: Stock futures higher as earnings generally top estimates

Palm (NASDAQ: PALM) closed at $16.45. PALM's Pixi product is expected to be available at Sprint (NYSE-S) before the holidays. PALM November option implied volatility is at 67, January is at 75; verses its 26-week average of 78, according to Track Data, suggesting decreasing near term price movement.

DuPont(NYSE: DD) closed at $34.10. DD is expected to report Q3 EPS on October 20. DD November option implied volatility is at 35; January is at 36; below its 26-week average 40 according to Track Data, suggesting decreasing price movement.

Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.

"The Dogs of the Dow strategy has a long-term history of outperforming the Dow Jones average," notes technical expert Gerald Appel.

In his Systems & Forecasts, he explains, "The theory is that the highest yielding stocks are undervalued and should have the greatest change of appreciating." Here, he reviews the five highest yielders.

"In calculating a formal track record for the strategy, dividend yields are ranked on the last trading day of each year. However, there is no reason why you are limited to ranking stocks only at the end of the year.

"The current market climate appears favorable for using this strategy to garner investment income, since market risk appears below normal and investment income is getting hard to come by.

Analyst upgrades:

• Citigroup upgraded Capital One (NYSE: COF) to Buy from Hold as it believes the credit cycle is starting to recover for U.S. credit cards and an improving economy will support bank credit stabilization. The firm raised its target on shares to $44 from $28.
• JPMorgan upgraded Morgan Stanley (NYSE: MS) to Overweight from Neutral on valuation and believes the stock market recovery will serve as a catalyst.
• Deutsche Bank upgraded F5 Networks (NASDAQ: FFIV) to Buy from Hold after its channel checks indicated a sooner-than-expected order ramp and stabilizing pricing trends. The firm raised its target on shares to $46 from $39.
• COTT Corp. (NYSE: COT) was upgraded to Buy from Neutral at UBS.
• Blackstone Group (NYSE: BX) was upgraded to Equal Weight from Underweight at Barclays.
• Illinois Tool Works (NYSE: ITW) was upgraded to Conviction Buy from Neutral at Goldman.

Du Pont reported better-than-expected Q2 earnings, but the report nevertheless did not overwhelm institutional investors, who've granted the company only a modest P/E of 14.

Even so, I'm Reiterating my Buy rating for E.I. du Pont de Nemours & Company (NYSE: DD), first recommended on April 22, 2009 at a price of $27.74. Here's why:

DuPont (NYSE: DD) closed at $32.57. August 11 DD options were active on volume of 349,770 contracts into today's ex-dividend. DD August option implied volatility of 33; September is at 35; below its 26-week average 43 according to Track Data, suggesting decreasing price movement.

Eli Lilly (NYSE: LLY) closed at $33.18. LLY goes ex dividend today with a 49 cents dividend. On August 11 LLY options were active on volume of 28,953 contracts. LLY August option implied volatility is at 28, September is at 27; below its 26-week average of 31, suggesting decreasing price movement.

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

Excluding a 15-cent-per-share hit from restructuring charges, chemicals giant DuPont (NYSE: DD), yet another Dow component, said it would have earned 61 cents per share. That number bested consensus estimates for a 53-cent per share profit, but once again, the top-line number is cause for concern.

DuPont said its second-quarter profit dropped 61% to $417 million, or 46 cents per share, with revenue falling 24% to $7.09 billion. Analysts had expected the company to bring in $7.14 billion in revenue.

Although the headlines are screaming about how companies are beating their earnings estimates, little newsprint is being devoted to this quarter's real story.

That story is that revenues for many corporations are way down year over year, and more importantly, their top-line revenues are often coming in below Street estimates.

To be certain, there have been some real success stories so far in Q2, and we'll be talking about some of those in a moment. Moreover, it is always a good sign when companies beat their earnings estimates.

Here are some highlights from last week's earnings coverage from BloggingStocks:

• AK Steel Holding Corp. (NYSE: AKS) posted a smaller-than-expected Q2 net loss as steel prices rise.
• Boston Scientific Corp. (NYSE: BSX) posted a better-than-expected Q2 profit on strong overseas sales.
• Caterpillar Inc. (NYSE: CAT) shares jumped after it beat earnings, missed revenues, and offered guidance.
• DuPont (NYSE: DD) shares declined after it posted a higher-than-expected profit but lower revenue.
• Eaton Corp. (NYSE: ETN) disappointing results were a sign that the bulls are in charge, said Jim Cramer.
• General Electric Co. (NYSE: GE) Q2 earnings and sales declined, dragged down by finance and NBC units.

Today's news boiled down to two issues. First was that five DJIA components reporting earnings this morning, with details on three components. The second issue was Ben Bernanke testifying that inflation was not a huge concern because the economy is likely to stay frail for some time. The markets were mixed to down most of the day until a late day rally saved shares.

Here were today's unofficial closing bell levels:

Dow 8,911.71 +63.56 (0.72%)
S&P 500 954.10 +2.97 (0.31%)
Nasdaq 1,914.13 +4.84 (0.25%)

Top 10 Analyst Upgrades/Downgrades

Another stock leveraged to the oil market is Dupont (NYSE: DD). Because many of the company's products are derived from crude oil, rising oil prices negatively impact profit margins. The only recourse, then, is to raise the price for consumers. But doing so in this environment is unlikely given the weakness in the economy.

As a result, the dynamics of the market are such that profits for DD will be lower in the near term.

That puts the company in a bit of a Catch-22.

With such uncertainty, following an absolute return strategy continues to offer investors the biggest bang for their buck. There is no sense in guessing where the market will be down the road.

Instead, buy cheap stocks and sell stocks that are expensive. Then blend the two approaches together in one portfolio and chances are you'll make money.

Even with a huge rally in stocks, the S&P 500 ended the second quarter with a year-to-date gain of 1.78%. That is a vast improvement compared to the 11% loss at the end of the first quarter, but it's a minimal return for taking risk in the stock market.

Investors need to do better -- and they can.

"Following last year's dismal market performance, investors are looking for something they can be sure of in the year ahead; and for income investors, that means finding a safe and rewarding dividend yield," says Carla Pasternak.

In her High Yield Investing, she offers a fascinating review to find the "safest dividend in the Dow." Here's her assessment.

"The 30 members of Dow Jones Industrial Average represents some of the strongest names in America. So these corporate titans are a good place to start searching for the safest dividend.

"The first step in the process is not to look at the Dow at all, but to start with the 10-year Treasury note, currently yielding 3.86%.