Agricultural issue Archer Daniels Midland Company (NYSE: ADM) is sharply lower in today's trading after falling short of Wall Street's earnings expectations. The company confessed to a 98% slide in third-quarter net income, thanks to hefty investment losses and a weak pricing environment.

ADM reported a profit of $8 million, or 1 penny per share, compared to its year-ago results of $517 million, or 80 cents per share. Investment losses for the period totaled 36 cents per share. Revenue for the quarter tumbled 21% to $14.8 billion, impacted by strength in the U.S. dollar and softer commodity prices. As a result, gross margin contracted from 6.2% to 4.4%.

It goes without saying that you'd call this a selective market: select the wrong stock, and there's a 30-40% haircut up ahead; select the correct stock, and you're positioned for the recovery with modest downside exposure. And with the aforementioned in mind, Archer Daniels Midland Co. (NYSE: ADM) is worth a review.

The global recession decreased demand for ADM's products, and the company is likely to face challenging conditions for at least the next two quarters.

"If you're going to stay invested, you should look to defensive sectors," explain Ron Rowland and Brandon Clay, who point to consumer staples as a top pick for the current market environment.

In their Invest with an Edge, the advisors explain, "Perhaps the best way to stay defensive is with the Consumer Staples Select Sector SPDR (NYSE: XLP), an exchange traded fund.

"In a bear market, opportunities are usually limited to certain sectors. Surveying the investment horizon, we think the consumer staples sector has the best opportunity for growth in this economy.

"Regardless how the economy acts, people still eat. Consumers may not shop at Whole Foods, but they'll still buy groceries. Companies like Wal-Mart (NYSE: WMT) and Safeway (NYSE: SWY) will continue to rake in revenues from hungry customers.

"In addition, these companies should continue to receive additional revenue from consumers who normally shop at specialty stores, but can no longer afford to.

"Consumers may not be shopping at Sharper Image any more, but there are other creature comforts that will be difficult for Americans to abandon.

"Coca-Cola (NYSE: KO) and PepsiCo (NYSE: PEP) will still sell products during a prolonged downturn. In addition, companies providing toiletries and convenience like Procter and Gamble and CVS Pharmacy stand to do well during a shifty economy.

Anglogold (NYSE: AU) closed at $27.47 Thursday. Gold is recently down 3.11% to $789.20 according to Bloomberg. AU September option implied volatility of 51 is above its 26-week average of 43 according to Track Data, suggesting larger movement.

Valero Energy (NYSE: VLO) closed at $33.93 Thursday. Crude oil futures are recently down 1.64% to $113.37. VLO September option implied volatility of 53 is above its 26-week average of 47 according to Track Data, suggesting larger price movement.

Southern Peru Copper (NYSE: PCU) closed at $24 Thursday. Copper is recently down 3.80% to 326 according to Bloomberg. PCU September option implied volatility of 53 is near its 26-week average according to Track Data, suggesting non-directional price movement.

Archer Daniels (NYSE: ADM) closed at $26.62 Thursday. Corn futures are recently down 3.38% to 557.75, Soybean futures are down 2.59% to 1241 according to Track Data. ADM September option implied volatility of 44 is above its 26-week average of 40 according to Track Data, suggesting slightly larger price movement.

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

When natural disasters happen, there are always some companies that can turn the circumstances in their favor. Recent downpours in the Midwest provided such an opportunity as they came not only with high damages for people in the area, but also with floods for crop production, causing even higher agricultural commodity prices. The rise in corn and soybeans prices could easily lead to an increased demand for seeds, agricultural equipment, and fertilizers. BusinessWeek suggests some big names to invest in that could offer us the advantages we are looking for.

One such company is Archer Daniels Midland (NYSE: ADM), which could also benefit from higher ethanol prices, after purchasing seven businesses in 2007. Bunge Limited (NYSE: BG) is also amid possible winners, having forecast better-than-expected fertilizer earnings. Shell eggs producer Cal-Maine Foods (NASDAQ: CALM) is also on the selected list; the company saw its shares climb 15% year to date, and has just revealed a new dividend payout policy.

Another important name is Mosaic Co. (NYSE: MOS), whose stock prices have surged 70% so far this year. BusinessWeek cites Mosaic as being able to benefit from higher prices for fertilizer and potash. Following the same logic, the article points out potash provider Potash Corp. of Saskatchewan (NYSE: POT) and fertilizer distributor CF Industries Holdings (NYSE: CF), which should be able to take advantage of the weak dollar and higher sales prices.

Archer-Daniels-Midland Co. (NYSE: ADM) shares are rising today helped by higher soybean futures. Soy is getting a boost from higher energy prices including crude oil prices. Alternative energy interests are also getting a lift from an energy bill that was passed by the US House limiting subsidies on oil companies. If you think that the company 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 ADM.

After hitting a one-year low of $31.28 in August, the stock hit a one-year high of $47.33 in December. ADM opened this morning at $44.99. So far today the stock has hit a low of $44.99 and a high of $46.95. As of 11:15, ADM is trading at $46.05, up 82 cents (1.8%). The chart for ADM looks bullish but deteriorating slightly, while S&P gives the stock a neutral 3 STARS (out of 5) hold rating.

For a bullish hedged play on this stock, I would consider an April bull-put credit spread below the $40 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. This particular trade will make a 6.4% return in just two months as long as ADM is above $40 at April expiration. ADM would have to fall by more than 13% before we would start to lose money.

ADM hasn't been below $40 since December and has shown support around $45 recently. This trade could be risky if the demand for alternative fuels slows, but even if that happens, this position could be protected by the support the stock might find around $40, where the stock bounced in January.

Brent Archer is an options analyst and writer at Investors Observer. At publication time, Brent neither owns nor controls positions in ADM.

While Michelle Obama's rather outlandish comment hasn't gotten a lot of mainstream media play, I would like to present two American stocks that even she would be proud of.

Michelle Obama said, "for the first time in my adult lifetime, I am really proud of my country." Now Michelle hasn't exactly led a life of your typical third world citizen. She graduated from Princeton University and Harvard Law School. While America may not be perfect, it is by far and away the greatest nation on earth. If she was so anti-U.S. for the last 25 years, why did she bother staying? The fact that millions of people are trying to enter the U.S. every year means something. You don't see people crowding into boats to be smuggled into Cuba (enjoy your retirement, Fidel).

I will not go into all the things that we can be proud of as Americans that have occurred over the last 25 years. What I will do is present two great U.S. companies that will make you proud. They have not only created products that have been an enormous help to people around the world, but also make for potentially intriguing investments.

Shares of food processor Archer Daniels Midland Co. (NYSE: ADM) are slightly lower this morning after the company posted a rise of 7% in its second-quarter profit, but missed analysts' earnings estimates.

The company said its profit increased during the second quarter as the company benefited from higher volumes and selling prices. Strong earnings from oilseed processing and higher feed grains demand helped ADM offset lower ethanol business margins.

Archer's profit climbed to $473 million, or 73 cents per share. These numbers are up from $441 million, or 67 cents per share, in the same period a year ago. Analysts, on average, expected the food processor show earnings of 74 cents per share.

The world's largest producer of corn-based ethanol also announced a respectable jump of 50% in revenue to $16.5 billion, up from $10.98 billion a year earlier. Sales during the period were helped by higher commodity prices, such as feed grains, wheat and corn. Analysts had forecast $12.75 billion in revenue, according to Thomson Financial.

Archer Daniels Midland Co. (NYSE: ADM) shares are trading higher today as corn futures are trading higher. Corn futures are being sent up by rising oil prices, which increase demand for corn ethanol. If you think that the company 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 ADM.

After hitting a one-year low of $30.20 in January, the stock hit a one-year high of $45.30 on Monday, which it has surpassed again today. ADM opened this morning at $44.99. So far today the stock has hit a low of $44.95 and a high of $45.99. As of 11:15, ADM is trading at $45.75, up $0.76 (1.6%). The chart for ADM looks bullish and steady, while S&P gives the stock a positive 4 STARS (out of 5) buy rating.

For a bullish hedged play on this stock, I would consider a June bull-put credit spread below the $35 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 7.5% return in just 6 months as long as ADM is above $35 at June expiration. ADM would have to fall by more than 15% before we would start to lose money. Learn more about this type of trade here.

With the markets' choppy/consolidation pattern continuing, it's best to consider a defensive stock or two for your portfolio, and Archer Daniels Midland Company (NYSE: ADM).

The argument here is not that the biofuel trend is over; hardly. However, the frenzy that accompanied the financial world's realization that biofuel could represent a suitable alternate energy form, for some energy users, appears to tapering.

Biofuel interest remains high, and ADM is likely to benefit from wider and wider use these fuels. Most analysts see accelerating annual earnings growth on strong corn and soybean demand, with pricing power. Further, it's worth underscoring in these high-energy-cost times that ADM is foremost a large, vertically-integrated, food commodity company (wheat, corn, soybeans), and food rarely goes out of style. The Reuters F2008/F2009 EPS consensus estimates for ADM are $2.58/$2.97.

Note: Technical analysis agnostics stop reading here; all others continue.]

Technically, ADM's chart looks adequate. A base appears to be in place in the $32 range, and the stock has moved back above its 50-day and 200-day moving averages. Further, ADM's low p/e of 11 also reduces the stock's risk/return ratio.

Stock Analysis: Archer Daniels Midland is a moderate-risk stock not suitable for low-risk investors. Investors with an investment horizon longer than 2 years should be rewarded from ADM's shares. Sell / Stop Loss: $24.

Visit AOL Money & Finance for more earnings coverage

Regarding the "agricultural boom," Kevin Kerr notes, "Green Acres is still the place to be." Here, the editor of MarketWatch Global Resources looks at Archer Daniels Midland (NYSE: ADM).

Kerr explains, "Our portfolio has already seen some big gains from the agriculture, and we are getting ready to position ourselves for even more gains. How long will the boom last? The honest, albeit unsatisfying, answer is that nobody knows."

The advisor continues, "Growing interest is a good indicator that the grain markets have a good bit of wind at their back. Indicators suggest that we are seeing good momentum in the grain market investment vehicles and likely will for many years to come.

"Meanwhile, there are some key differences about the agricultural trading boom as compared to say the high tech stock frenzy. After all, food, unlike high tech stocks, is not only high in demand; it still remains way undervalued even at current record levels."

It has been a pretty rocky earnings season so far, and on Monday morning, it will be Archer-Daniels-Midland's (NYSE: ADM) turn to step up to the plate. The company will be reporting its fiscal fourth quarter earnings Monday before the market opens, and analysts are expecting to see the company come in with $0.59 per share.

The last time that the company reported earnings was back on May 1 when it put up rather disappointing numbers for its fiscal third quarter. During its third quarter, the company was however able to show higher than expected revenues, but the stock got hit pretty hard due to the lower than expected earnings.

After its disappointing third quarter the stock gradually traded lower through all of May and June before making a modest rebound during the first half of July trading. The past few days have been tough on the company (as well as the entire market) so Monday's results will be critical in determining whether the company's recent rebound will in fact carry into August.

One of the main reasons for the company's less than stellar third quarter was the cost of corn. That could lead traders to think that it may be a better quarter this time around as corn prices have definitely eased somewhat. Corn prices have declined of late, mainly as a result of a report from the U.S. Department of Agriculture stating that U.S. farmers had planted 19 percent more corn this season than a year ago. While that is great news, another crop that the company relies on is soybeans, and this year it is estimated that there were 15% less crops planted than last year.

Let me introduce my Yankee Doodle Dandy portfolio, a compilation of red, white and blue stocks for investors to consider as they celebrate our nation's independence.

Regardless of your views on the Iraq war, there's no denying that defense stocks including Lockheed Martin Corp. (NYSE: LMT), Northrop Grumman Co. (NYSE: NOC), Raytheon Co. (NYSE: RTN) and General Dynamics Corp. (NYSE: GD) are reasonably valued. This is especially noteworthy considering that defense spending will need to be maintained at pretty high levels for years to come in order to replace equipment that's been worn out from combat. President Bush is proposing to spend a record $439 billion in fiscal 2007 on defense and another $42.7 billion on homeland security.

Lockheed, the maker of the F-16, seems especially cheap, trading at a forward multiple of 14.6. Its shares have only gained 4.6% this year even though the company reported better-than-expected first-quarter results and raised earnings guidance. Missile and defense electronics company Raytheon, up less than 3%, is in the same situation.

Investors often overlook the huge businesses that Lockheed and Raytheon have in areas outside of defense, including computer systems and air-traffic control. The managements of both companies also have vastly improved over the past few years. Northrop and General Dynamics have always been pretty well run.

Boeing Co. (NYSE:BA), notably the second-largest defense contractor, also looks worth snapping up. Its stock is up less than 3% this year, which is surprising considering how well it's rebounded against European rival Airbus. The company trades at a forward multiple of 17.7.

At last, U.S. investors who want a piece of the ethanol game may have a pure play that's solidly profitable. South America's largest ethanol company, Cosan, filed Monday to raise $2 billion through the United States financial markets. According to Dow Jones, Cosan will use about $650 million in IPO proceeds for a new ethanol plant. $500 million to expand existing sugar and ethanol plants, and $325 million to build plants to generate electricity from left over sugar cane.

Cosan reported net income of $346.5 million in fiscal year 2007, and its size and strength have led to speculation that Archer Daniels Midland (NYSE: ADM) may make a run at buying the company. The plans for an IPO make that seem less likely however.

Cosan may have missed the speculative ethanol bull market of last year that sent companies like Pacific Ethanol (NASDAQ: PEIX) into the stratosphere, but the fact that Cosan actually makes money -- and lots of it -- gives it the making of a potentially very successful IPO.

Cosan's sugar-based ethanol is probably more efficient than the corn-based ethanol that is being produced in the United States, but huge government tariffs and farm subsidies will put the company at a disadvantage in the United States for now. But if gas prices continue to soar and pressue mounts in Washington to remove the tarrifs, Cosan would probably become a major player in the ethanol market here. If that happens, investors who scoop up Cosan at the IPO will be richly rewarded.

MAJOR PAPERS:

• Kohlberg Kravis Roberts & Co. is planning an initial public offering, following in the footsteps of arch rival Blackstone Group (NYSE: BX), reported the Wall Street Journal (subscription required).
  
• Archer-Daniel-Midland Company (NYSE: ADM) is expected to enter the sugar cane ethanol business in Brazil, including the possible purchase of Cosan, Brazil's largest ethanol producer, reported the Wall Street Journal.

OTHER PAPERS:

• British energy company BP plc (NYSE: BP) will agree to the demands of the Russian government to give up its stake in the $20B Kovykta gas project, reported the U.K. Times.
• From BusinessWeek's "Inside Wall Street" column:
• Bulls and bears argue over where it is time to own Deere and Company (NYSE: DE) stock, some see the stock hitting $150, some believe the party is over.
• Document Security Systems Inc (NYSE: DMC) has nine patented technologies to help protect documents and printed products from brand and security fakers, leading Brookhaven Capital Management to believe it will reach $50-a-share over the next two years.
• WBB Securities believes Cleveland BioLabs Inc (NASDAQ: CBLI) is likely by summer's end to get a U.S. Department of Defense contract for its radiation protection compound called Protectan or CBLB502.

WEBSITES:

• CNN.com reported that a 16-year-old girl had both of her feet severed in an accident on the free-fall ride "Superman Tower of Power" at Six Flags Inc's (NYSE: SIX) Kentucky Kingdom amusement park yesterday.