Analyst upgrades:

• Morgan Stanley upgraded shares of Apple (NASDAQ: AAPL) to Overweight from Equal Weight on expectations of continued iPhone growth. The firm raised its target on the stock to $180 from $105.
• FBR Capital upgraded Bank of America (NYSE: BAC) to Market Perform from Underperform as it sees limited downside with half of the company's capital plan completed. The firm keeps a $12 target on the stock.
• Jefferies upgraded Cash America (NYSE: CSH) to Buy from Hold to reflect a strengthened balance sheet following the capital raise and easing regulatory risk. The firm raised its target price to $30 from $22.
• Ericsson (NASDAQ: ERIC) was upgraded to Outperform from Market Perform at Bernstein.
• MB Financial (NASDAQ: MBFI) was raised to Outperform from Neutral at Baird.
• Pinnacle West (NYSE: PNW) was upgraded at Credit Suisse to Outperform from Neutral.

Sometime in the future the economy will recover, maybe not with staggering gains, but it will recover. Ah, but you ask when? Well, trying to forecast that, would really be sticking my neck out.

If you are an avid reader then you have seen some predictions that speak of a recovery in the spring and some that push it out as far as 2011. Tough business that prediction business.

All that is well and good, but let me get to something that I do feel comfortable predicting, or at least repeating the daily news: UNEMPLOYMENT WILL BE GETTING A LOT WORSE in 2009. Who will benefit from this? I expect the church pews and bar stools will be in full use. I also think pawn shops, those lenders of last resort (excepting your local loan shark) will be doing a booming business.

The two most prominent pawn shops that are expanding organically and by acquisition are Cash America (NYSE: CSH) and EZCorp Inc. (NASDAQ: EZPW). Both are down this year but beating the indices by a fair margin.

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

• Alcoa Inc. (NYSE: AA) Q2 earnings decline on materials costs but beat analysts estimates (see transcript).
• Apollo Group Inc. (NASDAQ: APOL) solid Q3 results were accompanied by a share buyback program.
• Boeing Co. (NYSE: BA) warned that Q2 results will include a delay-related charge of 22 cents per share.
• Cash America International Inc. (NYSE: CSH) predicted Q2 earnings above previous guidance.
• EZcorp Inc. (NASDAQ: EZPW) predicted better-than-expected Q3 results due to strong sales.
• Family Dollar Stores Inc. (NYSE: FDO) beat Q3 expectations and raised its Q4 guidance.
• Flow International Corp. (NASDAQ: FLOW) swung to a better-than-expected Q4 profit on strong demand.
• General Electric Co. (NYSE: GE) reported mixed Q2 results and offered an uninspiring Q3 outlook (transcript).
• Helen of Troy Ltd. (NASDAQ: HELE) Q1 results were colored by write-downs and other charges.
• International Speedway Corp. (NASDAQ: ISCA) Q2 earnings soared while revenue slipped.
• Levis Strauss Q2 profitability plunged due to declining sales and higher administrative costs.
• Marriott International Inc. (NYSE: MAR) topped Q2 estimates but lowered its guidance (see transcript).

Cash America International (NYSE: CSH) offers secured non-recourse loans, known as pawn loans, through 501 locations in 22 states under the brand names Cash America Pawn and SuperPawn. Customers collateralize high-interest loans with such possessions as jewelry and electronics. If the loans aren't repaid, the firm sells the collateral in its stores. The company also offers short-term cash advances in many of its stores, including 292 locations that offer this service under the brand names Cash America Payday Advance and Cashland. Short-term advances are also offered over the Internet, to customers in the U.S. and the U.K. The firm provides check cashing services through 135 franchised and company-owned "Mr. Payroll" outlets.

Cash America pleased the Street earlier in the week, when it said that revenues from pawn loans, merchandise sales and on-line cash advances were expected to boost Q2 earnings above previous guidance. Management projected EPS of 62-64 cents, a range well above the 51-54 cents anticipated in April. The Street was looking for 53 cents.

MOST NOTEWORTHY: Nokia, Thornburg Mortgage and AbitibiBowater were today's noteworthy upgrades:

• Oppenheimer upgraded shares of Nokia (NYSE: NOK) to Outperform from Perform on valuation following the recent weakness, as their checks indicate demand remains solid. WestLB raised Nokia to Buy from Add on valuation, as they believe concerns about Chinese demand are overdone.
  
• Bear believes Thornburg Mortgage (NYSE: TMA) is much more likely to survive given liquidity from the Fed's Term Securities Lending Facility. Bear upgraded Thornburg to Peer Perform from Underperform.
  
• BMO Capital upgraded AbitibiBowater (NYSE: ABH) to Market Perform from Underperform citing the company's $496M private debt exchange offer.

OTHER UPGRADES:

• JMP raised Cash America (NYSE: CSH) to Outperform from Market Perform.
  
• Veolia Environment (NYSE: VE) was upgraded to Buy from Neutral at Goldman.
  
• Deutsche Bank raised Groupe Danone (OTC: GDNNY) to Buy from Hold.

Although short selling -- the practice of selling borrowed shares with the hope of repaying the loan by buying back the shares at a lower price -- goes against the American belief that stocks always go up, I have long been fascinated with it. Short Stories discusses what works, what doesn't, and what some of the leading lights in shorting stocks think about its opportunities and threats. I describe possible short trades and seek your comments and questions for story ideas. I don't offer any investment advice and I don't trade on any of the posts I write.

BusinessWeek reports that the consumer is tapped out. Can you profit from the combination of a falling market and a cash-starved consumer?

I was scheduled to appear this morning on CNBC's Squawk Box to discuss ways to profit from problems with consumer finance. Last night, my appearance was canceled -- I think it might have had something to do with the global market crash. But CNBC's loss can be your gain. Here's why I think the consumer will be the next shoe to drop in the economy and a few ways to profit.

• Unemployment rate rising (to 5% in the most recent report)
• Wage growth slower than inflation
• Declining value of homes makes home equity borrowing a non-option
• Savings rate -0.7% -- the worst since 1929
• Consumer installment borrowing at record $2.46 trillion

New Century Financial Corp. (OTC: NEWC) filed for Chapter 11 bankruptcy protection today, and is eliminating half its workforce (3,200 jobs). The shares traded down to $0.90 today, after starting the year above $30 per share.

New Century is one of the largest victims of the down-turn in the subprime lending industry, which has collapsed with the housing slowdown. Subprime lenders make high-interest loans to borrowers with bad credit or no credit, and the industry soared during the booming real estate market. But with the real estate market softening, and default rates climbing, the idea of lending money to people who can't afford to pay it back doesn't look quite as smart as it once did.

Earlier today, I wrote about concerns that the subprime crisis could spill over into other sectors. It remains to be seen how effectively this crisis will be contained, but if the concerns of some analysts come to fruition, retailers like Wal-Mart could find themselves in a lot of trouble.

However, I have some ideas for companies that could benefit from tough time for lower-income folks. These may seem like predatory investments but, if it hurts your conscience, you can always donate a portion of your proceeds to charity. If working people are having a hard time paying the bills, they may turn to payday lenders. Although the industry faces increasing regulatory scrutiny, here are some stocks in the industry:

Cash America International Inc. (NYSE: CSH)

EZCorp, Inc. (NASDAQ: EZPW)

Advance America, Cash Advance Centers (NYSE: AEA)

Cramer on tonight's MAD MONEY said that the blowup in sub-prime might actually create a boom for pawnbrokers. Hmm, this sounds familiar.... I posted 15 Second-Line Defensive Stocks and Cash America (NYSE:CSH) was the one I noted as the beneficiary there.

Cramer thinks the first way to play lower-income-not-being-able-to-borrow is via pawn shops. He likes Cash America as his pick ... hmm, sounds familiar. CSH traded up 2% after Cramer touted this one. Payday cash advances are another way to play these, even if the rates are super-high. The best play according to him here is Advance America Cash Advance Centers Inc. (NYSE:AEA). Cramer said that some states have been trying to limit these and that there has been pressure to stop the regulation from the people that need to borrow. AEA traded up 3% after Cramer touted this one.

Chemed Corp. (NYSE:CHE) is a stock that Cramer actually likes as one among the rubble. CHE is divided into two segments that aren't related: one is Roto-Rooter drain cleaner and one is Vitas that runs hospices. Neither operation is related but they both make lots of money. It has exited the Medicare-related hospices to avoid caps, and its earnings power is there. They beat earnings expectations and they raised guidance. Cramer said the company didn't even envision being this popular. It jumped $7.00 on the news and the market sell-off took off about $2.00. He thinks this one can run and he thinks it will get its momentum back.

On a call-in Cramer did say that Service Corp. Intl. (NYSE:SCI) in the funeral area is a winner and it is close to a yearly high. Cramer also thinks that UnitedHealth Group (NYSE:UNH) is one that he feels better about.

Jon Ogg does not own securities in the companies he covers.

The Wall Street Journal [subscription required] reports this morning that payday lenders are trying to keep the Chairman of the House Committee on Financial Services, Barney Frank (D-MA) from imposing regulation on them.

In case you have not taken out a loan from one of these outfits, payday lenders charge slightly above the prime rate to give cash advances to poor people. Specifically, they charge 390% annual interest rates to people who are so desperate for cash that they take out short-term loans using their paychecks as collateral.-- and the loans must be paid back when borrowers receive their next paycheck.

While lenders say this structure is necessary to cover costs, offset higher default rates and still turn a profit; critics -- including Barney Frank -- say the rates are exorbitant and often trap financially strapped borrowers in a cycle of paying additional "rollover" fees to renew the same amount of principal. To keep the wolf -- in the form of Barney Frank -- from their doors, the payday lenders have proposed to voluntarily limit advertising and offer a once-a-year break to borrowers who don't pay back loans quickly.

Between the subprime mortgage lenders and these payday lenders, there's a big industry dedicated to extracting profit from Americans who can't keep up. 390% strikes me as a pretty high interest rate. And if you have the stomach for it, you can profit right along with the likes of Advance America Cash Advance Centers, Inc (NYSE: AEA), Cash America International, Inc. (NYSE:CSH), and QC Holdings (NASDAQ:QCCO), whose stocks have risen 5.4%, 64%, and 23% respectively in the last year.

Peter Cohan is President of Peter S. Cohan & Associates, a management consulting and venture capital firm, He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in Advance America, CashAmerica, or QC Holdings.