I'm reiterating my Buy rating for 3M Co. (NYSE: MMM), first recommended on April 20, 2009 at a price of $51.97. If you bought 3M in April, you're up an impressive 46%.

Way back in the spring, I argued, among other factors, that a strong case for buying 3M shares could be made based on the company's large free cash flow and net returns on capital, and reasonable P/E (then about 11), before everyone else jumped on the bandwagon.

Well, with a current P/E of about18, 3M is no where near as cheap, but I still like the shares here, around $75.

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

• AirTran Holdings Inc. (NYSE: AAI) reported its third consecutive quarterly profit and will increase capacity.
• Amazon.com Inc. (NASDAQ: AMZN) shares soared after it reported very strong Q3 numbers.
• Apple Inc. (NASDAQ: AAPL) reported stellar Q4 results, driven by the popularity of Macs and iPhones.
• BlackRock Inc. (NYSE: BLK) Q3 earnings soared, due in part to a tax benefit, and assets managed grew.
• Broadcom Corp. (NASDAQ: BRCM) revenue surged sequentially but note the would be flat going forward.
• Caterpillar Inc. (NYSE: CAT) beat Q3 earnings expectations and shares rose though revenue slumped.

3M (NYSE: MMM) is one of those solid stocks that investors love to sock away in a core portfolio. It was down when pessimism about the economy was at its peak, but it's coming back now that Wall Street is becoming comfortable with the idea that the economic clouds will eventually give way to rays of macro sunshine.

Earlier in the week, 3M reported a great quarter. No, it wasn't so great on a comparable basis. The company, which counts Johnson & Johnson (NYSE: JNJ) and DuPont (NYSE: DD) as colleagues, suffered a decline of almost 6% on the top line in Q3. Earnings per share on an adjusted basis, which came in at $1.37 per share, were down 3.5%.

TheStreet.com's Jim Cramer says that as long as we're trapped in a commoditized stock market, use the futures to go bargain-hunting.

What if individual stocks want to go up, but the market wants to go down? Don't laugh. In 1982, when The Kansas City Board of Trade started trading Value Line futures (before there were S&P futures), we used to kick around in securities classes what would happen if eventually stocks became so commoditized that individual companies couldn't be removed from the gravitational pull.

For example, we know today looks like a terrible day, with Europe down horribly and our futures real soggy. But then we look and see that J. Crew (NYSE: JCG) (Cramer's Take), one of the best retailers, is not just saying that the fall season is good; it is saying it is blowout beyond imagination. The big Dow stock 3M (NYSE: MMM) (Cramer's Take) is not just saying that things are getting better; it is showing that business is very strong. The monster insurer and fellow Dow stock Travelers (NYSE: TRV) (Cramer's Take) is boosting the dividend and showing you how a responsible financial can behave.

I'm Reiterating my Buy rating for 3M Co. (NYSE: MMM), first recommended on April 20, 2009 at a price of $51.97. If you purchased MMM at that time, you're up a solid 37%.

Back in April, I argued, among other factors, that a strong case for buying 3M's shares could be made based on the company's strong free cash flow, net return on capital, and reasonable P/E (the about 11), before everyone else jumped on the bandwagon.

Good news: profits are back. Bad news: it hurts like hell to get them.

With Q2 reports starting to come in, several high-profile companies have turned in positive results, and a few -- like Caterpillar (NYSE: CAT), IBM (NYSE: IBM), Pfizer (NYSE: PFE), 3M (NYSE: MMM), and Lowe's (NYSE: LOW) -- have even upped the ante for the rest of the year.

Expectations were low, making the outcomes look surprisingly strong. According to a Thomson Reuters, a third of the biggest companies in the United States that have turned in their Q2 results, and 76% of them have beaten analyst expectations. Less than a fifth of them are losing money.

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.

3M (NYSE: MMM - option chain) shares are rising today after the company reported a second-quarter profit this morning of $783 million or $1.12 per share. Excluding one-time items, MMM earned $1.20 per share, easily beating analysts' forecasts of 94 cents per share. If you think that the stock won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on MMM.

MMM opened this morning at $66.58. So far today the stock has hit a low of $66.35 and a high of $68.67. As of 12:10, MMM is trading at $68.29 up $3.62 (5.6%). The chart for MMM looks bullish and S&P gives MMM a positive 4 STARS (out of 5) buy ranking.

Given the economic crisis and global recession, I hypothesized that multinationals may suffer as a result of a strong dollar. The idea being that investors would flock to the dollar in search of safety. Over the last quarter though, the reverse has been true.

The dollar weakened significantly as investors bet against the greenback due to inflationary spending in the U.S. As a result, the multinationals have been big winners in the last quarter.

3M (NYSE: MMM) though was only up slightly in the second quarter as the company's products failed to capture the imagination of buyers across the globe. When the dollar strengthens in the latter half of 2009, look for MMM to stumble.

Next: Stock to Avoid #4

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.

Analyst upgrades:

• Keefe Bruyette upgraded KeyCorp (NYSE: KEY) to Outperform from Market Perform due to valuation and the company's capital position. The firm has an $8 target price on the stock.
• BofA/Merrill upgraded its view of the semiconductor sector and upgraded Intel (NASDAQ: INTC) and Marvell Technology (NASDAQ: MRVL) to Buy from Neutral, LSI Corp. (NYSE: LSI) to Buy from Underperform, and Maxim (NASDAQ: MXIM) and National Semiconductor (NYSE: NSM) to Neutral from Underperform. The firm now sees 2010 revenue growth of 21% vs. its prior estimate of 14% due to improving electric demand and lean inventories.
• Thomas Weisel upgraded Vital Images (NASDAQ: VTAL) to Overweight from Market Weight based on compelling valuation and potential upside from its new ViTAL Enterprise product offering.
• Jones Apparel (NYSE: JNY) was upgraded to Buy from Neutral at Goldman.
• Hess Corp. (NYSE: HES) was upgraded to Overweight from Equal Weight at Barclays.
• Nationwide Health (NYSE: NHP) was upgraded to Outperform from Market Perform at Morgan Keegan.

Analyst Upgrades

• Barclays upgraded Anglo American (NASDAQ: AAUK) to Overweight from Equal Weight based on a potentially higher bid from Xstrata (OTC: XSRAY) or a white night willing to pay a premium for the group, higher copper prices, and improving operating performance.
• Janney Montgomery upgraded Chiquita Brands (NYSE: CQB) to Buy from Neutral citing improved bagged salad margins, strong free cash flow, solid banana trends, and valuation. The firm has a $13 target on the stock.
• Wunderlich upgraded Legacy Reserves (NASDAQ: LGCY) to Buy from Hold due to the firm's belief that the back of the crude board is still very cheap, the firm's increased distribution outlook, and the movement of the stock after the discontinuation of the company's talks with Apollo.
• Deutsche Bank (NYSE: DB) was upgraded to Buy from Neutral at UBS.
• UBS (NYSE: UBS) was upgraded to Outperform from Neutral at Credit Suisse.
• Illinois Tool Works (NYSE: ITW) was upgraded to Outperform from Market Perform at Wachovia.

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

• Amazon.com Inc. (NASDAQ: AMZN) reported strong Q1 results easily beat expectations.
• Bank of America Corp. (NYSE: BAC) posted better-than-expected Q1 earnings, helped by home refinancing.
• Caterpillar Inc. (NYSE: CAT) reported its first quarterly loss since 1992 and cut its revenue outlook.
• Coca-Cola Co. (NYSE: KO) posted Q1 earnings that were in line with expectations, but shares fell.
• eBay Inc. (NASDAQ: EBAY) posted better-than-expected Q1 earnings despite a decline in sales.

3M (NYSE: MMM) had a not-that-great first quarter. The declines were significant and ugly. First, net sales plunged over 20%. Second, net income on an adjusted basis likewise spiraled out of control, declining over 40% to $0.81 per share. And no, that didn't meet expectations. Wall Street was looking for $0.86 per share. Sorry, gang.

You've got the dollar and the global recession to blame. Currency translations affected sales, and declines in economic activity didn't help much, either. Many people look to 3M as a staunch dividend play. As such, cash flow is important. Unfortunately, the statement of cash flows this quarter was hard to read. Net cash from operations decreased 30%, and free cash flow lost 35% of its value when compared to the year-ago period. Thankfully, there was enough free cash to cover the dividend.

Most investors know that this market is not for the squeamish. The United States remains in a pronounced recession and although there are some 'green shoots,' the reality is commercial conditions could remain sluggish for another year, or perhaps longer.

Still, no one ever made a dime by not taking prudent risks, and with this in mind, 3M (NYSE: MMM) is worth a review.

First, in general, analysts expect 3M's revenue to decline 8-12% in 2009, but improvement in the second half creates a silver lining, and an opportunity for investors who can tolerate moderate risk.