Boeing (NYSE: BA), an aerospace entity whose colleagues include Northrop Grumman (NYSE: NOC) and Lockheed Martin (NYSE: LMT), had a very tough earnings report today. Reading about it is not for the shareholder who cannot stand even the smallest amount of pain. According to this Bloomberg article, Boeing missed estimates and posted a woeful loss because of delays for a couple of jet products.

Boeing lost $2.23 per share in the third quarter. The comparison is pretty tough, because in the similar quarter last year, the company earned 96 cents per share. Boeing was expected to lose somewhere around $2.12 per share, according to Earnings.com. Unfortunately, the guidance for the full fiscal year is pretty bad, too. What once was a range between $4.70 per share and $5.00 per share has now dropped to one with a low of $1.35 per share and a high of $1.55 per share.

Northrop Grumman (NYSE: NOC - option chain) shares are rising today after the company announced last night that it has received new contracts from the US Military. NOC will overhaul the Navy's Theodore Roosevelt, a nuclear-powered carrier, for $2.4 billion. NOC also received a modified $3.44 billion contract from the Air Force to provide services for its B-2 weapon system. 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 NOC.

NOC opened this morning at $49.52. So far today the stock has hit a low of $48.17 and a high of $49.84. As of 11:40, NOC is trading at $49.16 up 69 cents (1.4%). The chart for NOC looks neutral and S&P gives NOC a neutral 3 STARS (out of 5) hold ranking.

Northrop Grumman (NYSE: NOC - option chain) shares have moved higher today after with other large defense contractors after President Bush and Defense Secretary Gates recommended that President-elect Obama increase overall defense spending for at least the next five years. This comes just one day after NOC CEO Ron Sugar said that he expects steady spending for at least the next two years. 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 NOC.

NOC opened this morning at $36.80. So far today the stock has hit a low of $35.24 and a high of $38.05. As of 12:35, NOC is trading at $37.70, up 90 cents (2.4%). The chart for NOC looks bullish and S&P gives NOC a positive 4 STARS (out of 5) buy ranking.

For a bullish hedged play on this stock, I would consider a December bull-put credit spread below the $30 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 an 8.7% return in just one month as long as NOC is above $30 at December expiration. NOC would have to fall by more than 20% before we would start to lose money.

NOC hasn't been below $35 at all in the past year and has shown support around $35.25 recently.

Brent Archer is an options analyst and writer at Investors Observer.

DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in NOC.

This post is part of a series in which TheStockAdvisors.com asked financial experts to name their top stock pick if McCain or if Obama wins the election.

Which stocks would benefit from a victory by either Senator John McCain or Senator Barack Obama? To help investors sort through the sectors and stocks best positioned to benefit in a post-election environment, we posed this question to some of the nation's leading financial newsletter advisors.

Importantly, this is not a partisan report; each participating advisor has provided a favorite stock for both candidates, focused not on political preferences but unbiased stock analysis. Below we feature those stocks and ETFs that the advisors believe will be the winners depending on which candidate prevails.

McCain Stocks:

Roger Conrad - Comcast (NYSE: CCW)
Gregg Early - Elbit Systems (NASDAQ: ESLT)
Elliott Gue - Paladin Resources (Toronto: PDN)
Doug Fabian - Market Vectors Nuclear Energy (NYSE: NLR)
Vivian Lewis - Barclays (NYSE: BCS)
Bill Martin - CGG Veritas (NYSE: CGV)'
Yiannis Mostrous - Lonking Holdings (OTC: CIMHF)
Carla Pasternak - Eaton Vance Tax-Advantaged Dividend Income Fund (NYSE: EVT)
Nate Pile - SPDR Gold Trust (NYSE: GLD)
John Reese - General Dynamics (NYSE: GD)
Nathan Slaughter - USEC (NYSE: USU)
Paul Tracy - Shaw Group (NYSE: SGR)
Kelley Wright - CenturyTel (NYSE: CTL)
Tom Vass - Molex (NASDAQ: MOLX)
Martin Hutchinson - Northrop Grumman (NYSE: NOC), Merck & Co. (NYSE: MRK), EOG Resources (NYSE: EOG)

Obama Stocks:

Roger Conrad - SunPower (NASDAQ: SPWR)
Gregg Early - AeroVironment (NASDAQ: AVAV)
Elliott Gue - SunPower (NASDAQ: SPWR)
Doug Fabian - Industrial Select Sector SPDR (NYSE: XLI)
Vivian Lewis - Cosan (NYSE: CZZ)
Bill Martin - Geron (NASDAQ: GERN)
Yiannis Mostrous - Dr. Reddy's (NYSE: RDY)
Carla Pasternak - Kinder Morgan Energy Partners (NYSE: KMP)
Nate Pile - Apple (NASDAQ: AAPL)
John Reese - American Eagle (NYSE: AEO)
Nathan Slaughter - Fluor (NYSE: FLR)
Paul Tracy - Market Vectors Global Alternative Energy (NYSE: GEX)
Kelley Wright - Cardinal Health (NYSE: CAH)
Tom Vass - Ingersoll Rand (NYSE: IR)
Martin Hutchinson - Microsoft (NASDAQ: MSFT), Time Warner Inc. (NYSE: TWX), First Solar (NASDAQ: FSLR)

In business, as in international relations, there are battles you fight and battles you don't fight.

It looks like Boeing's decision earlier this year to protest the U.S. Department of Defense's award of an aerial refueling tanker contract constituted a savvy corporate tactic. Government auditors first ordered a rerun of the competition, and then today U.S. Secretary of Defense Robert Gates delayed the $35 billion award contest, saying there isn't enough time to complete the contest fairly, by the end of the Bush Administration, the Pentagon announced.

"Over the past seven years the process has become enormously complex and emotional -- in no small part because of mistakes and missteps along the way by the Department of Defense," Secretary Gates said in a statement. "It is my judgment that in the time remaining to us, we can no longer complete a competition that would be viewed as fair and objective in this highly charged environment."

Gates added that the 'cooling off' period will allow the next administration to objectively review the military requirements and craft a new acquisition strategy for the refueling tanker.

Yesterday I speculated that McCain picked Sarah Palin as his VP over the objections of his advisers. I thought that McCain -- who prides himself on fighting corruption in politics -- somehow saw himself in her. But both politicians have experience with the very thing they pride themselves on fighting.

In the case of McCain, his efforts to rid politics of the corrupting influence of corporate money followed his protection of Charles Keating who was securing a real estate deal for his wife, Cindy. The bankruptcy of Keating's S&L cost taxpayers $3.4 billion. More recently former McCain Finance Chair Tom Loeffler, a lobbyist for French company EADS, parent of Airbus, helped it and Northrop Grumman (NYSE: NOC) to prevail in a $35 billion competition for airborne refueling Tankers in February over Boeing Inc. (NYSE: BA) before the General Accounting Office (GAO) concluded that the process was flawed.

Alaska's governor, Sarah Palin, knows a thing or two about lobbyists. The New York Times reveals that she won that post after taking on bribery charges from the oil industry against politicians -- her attack against such corrupting influences helped her prevail over former Alaska governor, Frank Murkowski. That's why it came as a surprise to learn that as governor Palin employed a lobbyist for an energy company for which she procured $500 million in state subsidies so it could build a gas pipeline.

As I suspected, Boeing Inc. (NYSE: BA) was trying to exert pressure to change the terms of the competition when it signaled this week that it might withdraw from the bidding for the $35 billion Air Force contract for airborne refueling tankers. BusinessWeek reports that Boeing wants the Air Force to delay the date for submitting the proposal and to change the specifications to favor Boeing's smaller modified 767.

BusinessWeek also reveals that the competition is tied in with this November's election. John McCain's former finance committee chair, Tom Loeffler, is a lobbyist for EADS, parent of France's Airbus, which has joined with Northrop Grumman (NYSE: NOC) in a bid for the tanker. In June, the General Accounting Office (GAO) agreed with Boeing that the February award to Loeffler's client had process irregularities. So the Air Force announced it would rebid, but it did so in a way that -- if my hunch is correct -- Boeing believes will put Loeffler's French client at a big advantage.

As BusinessWeek points out, if the Air Force sticks with its current schedule and specifications, it will help McCain win Republican-dominated Alabama in November, which is where Northrop would build the modified A330 that it would deliver to the Air Force if it wins the competition. Democratic Washington would benefit if Boeing won the competition.

Reuters reports that Boeing Inc. (NYSE: BA) is signaling that it may not submit a bid for the $35 billion Air Force contract for Tankers -- airborne refueling vehicles. Is Boeing serious about not submitting a bid or is it using its leverage to get the Air Force to revise the bidding process to create a more level playing field?

The tanker contract has a long history. The Air Force awarded it this February to EADS, parent of Airbus, and Northrop Grumman (NYSE: NOC). Boeing protested the award citing errors in the way the process was run. The General Accounting Office (GAO) sided with Boeing. And the Air Force announced that it would rebid the contract. But many thought that the rebidding process favored the French company.

Now Boeing is considering not submitting a bid. If Boeing ends up not bidding, it will be an embarrassment for the Air Force, which was bending over backwards to change the specifications to keep Airbus and Northrop in the process so there would be two bidders. Or it might have been to satisfy Thomas Loeffler, an EADS lobbyist who headed up John McCain's finance committee. Regardless of why it was done, if Boeing doesn't bid, the Air Force will be in a tight spot.

Bloomberg News reports that Boeing Co. (NYSE: BA) has a whole lot of losing going on. Yesterday, Boeing suffered its fourth straight defeat in three months on a U.S. defense contract. This loss represents $41 billion in lost revenue.

Here are the four contracts:

• Yesterday. Lockheed Martin (NYSE: LMT) the world's largest defense company, beat Boeing for a $1.46 billion U.S. Air Force award to build a new network of navigation satellites for military and civilian use. The Air Force said it reviewed five years of past performance for both contractors. Boeing has yet to launch a single satellite under its most recent GPS contract from April 1996, and in 2006 the company forfeited $21.4 million and replaced the program's managers after delays and cost overruns.
• February 2008. EADS, parent of Airbus and Northrop Grumman (NYSE: NOC) won a $35 billion tanker contest for the Air Force. I've spilled much electronic ink on this one -- it looks like the Air Force changed the specifications for the project but only told EADS about the change.

MAJOR PAPERS:

• Harris Corporation (NYSE: HRS), concerned about its future growth, may see limited opportunity and may consider selling itself, the Wall Street Journal reported. If it does decide to sell, suitors could include Raytheon Company (NYSE: RTN), BAE Systems Plc (OTC: BAESY) and Northrop Grumman Corporation (NYSE: NOC).
• The Wall Street Journal reported that, in an attempt to toughen its regulation standards, SEC chairman Christopher Cox said earlier this week the agency would push Wall Street investment houses will have to reduce borrowing and rely less on short-term financing.
• As part of plans to reduce costs and restore profit growth, people close to the situation said that Citigroup Incorporated (NYSE: C) is likely to today identify up to $400B in non-core assets that could be sold. Additionally, the Financial Times reported that Citigroup CEO Vikram Pandit will confirm his pledge to cut the bank's cost base by about 20% at a meeting with analysts today. Sources familiar with the matter believe Pandit will dismiss calls for a break-up of the company.

OTHER PAPERS:

• According to sources, the New York Post reported that the ax may fall as early as next week on some investment bankers at The Bear Stearns Companies Inc (NYSE: BSC).

MOST NOTEWORTHY: Northrop Grumman, Phase Forward and Celestica were today's noteworthy upgrades:

• Cowen upgraded Northrop Grumman (NYSE: NOC) to Outperform from Neutral following the Q1 report based on accelerating growth. Shares were also upgraded at JP Morgan to Overweight from Neutral.
  
• Friedman Billings upgraded Phase Forward (NASDAQ: PFWD) to Outperform from Market Perform following the solid Q1 report and views guidance as beatable.
  
• CIBC raised Celestica (NYSE: CLS) to Sector Outperformer from Sector Performer following Q1 results, citing end markets that look stable.

OTHER UPGRADES:

• JP Morgan upgraded the Consumer Discretionary Sector to Overweight from Underweight.
  
• Wendy's (NYSE: WEN) was raised to Neutral from Sell at Goldman.
  
• Progenics Pharmaceuticals (NASDAQ: PGNX) was upgraded at Citigroup to Hold from Sell.
  
• Merrill Lynch raised Wal-Mart (NYSE: WMT) to Buy from Neutral.

MAJOR PAPERS:

• What Countrywide Financial Corporation (NYSE: CFC) knew about its mortgage borrowers, and how it handled that information, is under review by Federal investigators, according to the Wall Street Journal. Some of their findings reveal that Countrywide had questionable information, which it then put together many of those mortgages into securities, and sold them to investors.
• The Air Force's award of a $40B contract for aerial refueling tankers to Northrop Grumman Corporation (NYSE: NOC) and European Aeronautical Defense & Space, will be protested by The Boeing Company (NYSE: BA), reported the Wall Street Journal.
• The Financial Times reported that News Corporation (NYSE: NWS) CEO Rupert Murdoch dashed the hopes of Yahoo! Inc (NASDAQ: YHOO) executives seeking an alternative to Microsoft Corporation's (NASDAQ: MSFT) $40B offer after Murdoch endorsed the view of analysts and investors that it could not match the value offered by Microsoft.

OTHER PAPERS:

• According to General Motors Corporation (NYSE: GM) president and COO Frederick A. Henderson, the New York Times reported that the auto maker will not intervene in the dispute between parts supplier American Axle and Manufacturing Holdings Inc (NYSE: AXL) and the United Auto Workers union. Given that the strike has not yet hurt the company's ability to sell vehicles, Henderson said company officials "just have to keep to our own knitting."

BusinessWeek reports that Boeing Inc.'s (NYSE: BA) loss to Northrop Grumman (NYSE: NOC) and EADS for the $100 billion contract for Air Force tankers -- aircraft that refuel fighter craft while they're in the air -- was a no-brainer from the Air Force's perspective.

BusinessWeek quotes Loren Thompson, a Lexington Institute defense analyst, who concluded that "Northrop Grumman's victory was not a close outcome." Here are two reasons he cited:

• Northrop offered more bang for the buck. While both Boeing and Northrop Grumman satisfied requirements established by the Air Force, Northrop was clearly the better buy. With Northrop, the military could have "49 superior tankers operating by 2013," Thompson said, while Boeing's proposal would give it "only 19 considerably less capable planes" by then.
• Boeing's Tankers did not perform as well as Northrop's. "Boeing didn't manage to beat Northrop in a single measure of merit" -- not in flight range, fuel capacity, speed of delivery, or cost. "Boeing would have to find a lot of problems to overturn this outcome," Thompson told BusinessWeek. The Northrop tanker carriers 250,000 pounds of fuel, compared to 202,000 on Boeing's, a crucial difference considering that refueling tankers must often circle for many hours when military operations require.

I'm writing a book about Boeing and if Thompson is right, the loss raises questions about Boeing's competitive vigor. Not winning this $100 billion deal is obviously not a help for its stock either.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in the securities mentioned.

MOST NOTEWORTHY: Northrop Grumman, Groupe Danone and MercadoLibre were today's noteworthy upgrades:

• Oppenheimer upgraded shares of Northrop Grumman (NYSE: NOC) to Outperform from Perform after the Pentagon selected the company over Boeing (NYSE: BA) for the newly designated KC-45A Aerial Refueling Tanker with a potential value of $35B.
  
• Citigroup upgraded shares of Groupe Danone (OTC: GDNNY) to Buy from Hold on valuation, as they believe the sell-off on commodity cost concerns is overdone.
  
• MercadoLibre (NASDAQ: MELI) was raised to Outperform from Sector Perform at RBC Capital, as they believe MELI's long-term thesis is more compelling now vs. six months ago and notes favorable reaction to Mercado Pago v2.0.

OTHER UPGRADES:

• Goldman upgraded Societe Generale (OTC: SCGLY) to Neutral from Sell.
  
• Jefferies upgraded Exelon (NYSE: EXC) to Buy from Hold.
  
• Deutsche Telekom (NYSE: DT) was raised to Neutral from Underweight at JP Morgan.

Northrop Grumman (NYSE: NOC) was trading at $83.50 in pre-open trading above its close of $78.61 on Friday.

The Pentagon announced NOC/EADS A330 aerial refueling tanker won a $35 billion contract to supply 179 midair refueling planes.

Oppenheimer says: "We are raising our price target to $95 from prior $91 as we see the initial contract, at a minimum, as $3-6 of value per share."

NOC March option implied volatility of 29 is above its 26-week average of 23 according to Track Data, suggesting larger price movement.

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