Analyst upgrades:

• Citigroup upgraded Advanced Micro (NYSE: AMD) to Buy from Hold and raised its target to $5.50 from $4.25 citing valuation and expectations for the company's competitive position and gross margins to improve.
• Barclays upgraded American Express (NYSE: AXP) to Overweight from Equal Weight citing long-term earnings growth as the company benefits from declining charge-offs and credit costs. The firm has a $38 target on the stock.
• JPMorgan upgraded Arch Coal (NYSE: ACI) to Overweight from Neutral and raised its target to $22 from $19 citing the FTC approval for the acquisition of Jacobs Ranch mine and valuation.
• Bebe Stores (NASDAQ: BEBE) was upgraded to Overweight from Equal Weight at Stephens.
• Cheesecake Factory (NASDAQ: CAKE) was upgraded to Neutral from Underweight at Piper Jaffray.
• Ashland (NYSE: ASH) was upgraded to Buy from Hold at KeyBanc.

Peabody Energy (NYSE: BTU) a coal company, closed at $35.68. BTU is expected to report Q2 EPS in late July. BTU June option implied volatility is at 62, July is at 61; below its 26-week average of 74, according to Track Data, suggesting decreasing price movement.

Massey Energy (NYSE: MEE) closed at $24.70. MEE June option implied volatility is at 84; July is at 78; below its 26-week average of 91; according to Track Data, suggesting decreasing price fluctuations.

Arch Coal (NYSE: ACI) closed at $18.82. ACI June and July option implied volatility of 68 is below its 26-week average of 83 according to Track Data, suggesting decreasing price movement.

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

Alcoa Inc. (NYSE: AA) started off the new earnings season with disappointing results that helped to stifle the recent rally. Was that enough of a sign of what's to come? No, probably not. But the earnings reports start to fly in earnest this week, which should provide a more detailed picture of the state of things.

Analysts surveyed by Thomson Reuters anticipate that some of the biggest names will prove to be holding their own. Google Inc. (NASDAQ: GOOG) is expected to post a profit of $4.91 per share, marginally higher than a year ago, and Johnson & Johnson's (NYSE: JNJ) expected $1.22 per share profit is slightly lower year over year. Even Mattel Inc.'s (NYSE: MAT) estimated loss of $0.13 per share is the same as in the year-ago period.

Arch Coal (NYSE: ACI) closed at $18.50 Friday. ACI January and February option implied volatility of 87 is near its 26-week average according to Track Data, suggesting non-directional price movement.

Massey Energy (NYSE: MEE), a coal miner, closed at $16.19 Friday. MEE is scheduled to report Q4 EPS in the February option cycle. MEE February option implied volatility of 108 is near its 26-week average according to Track Data, suggesting non-directional price fluctuations.

Consol Energy (NYSE: CNX) closed at $32.15 Friday. CNX has two principle business units: coal and gas. CNX February option implied volatility of 90 is near its 26-week average according to Track Data, suggesting non-directional price movement.

Alpha Natural (NYSE: ANR), an Appalachian coal producer, closed at $18.38 Friday. ANR February option implied volatility of 107 is near its 26-week average according to Track Data, suggesting non-directional price movement.

Peabody Energy (NYSE: BTU), a coal company, closed at $25.06 Friday. BTU is expected to report Q4 EPS in late January. January and February option implied volatility of 97 is above its 26-week average of 89, according to Track Data, suggesting larger price movement.

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

Whether it's a recession or an economic boom, one thing doesn't change, the need for energy. And until technology leaps ahead, coal is the largest producer of fuel for the generation of electricity in the world. It's also the most abundant fossil fuel in the United States. Coal is obviously not recession immune as people tighten the reigns on their lives and cut back on electricity consumption, but the shear necessity of electricity makes the coal industry fairly resistant. An investment in an exchange traded fund (ETF) that is centered on the coal industry is a great way to hedge your bets by investing in a pool of successful companies in the coal field.

Market Vectors Coal ETF (NYSE: KOL) seeks to replicate the price and yield performance of the Stowe Coal index, which provides exposure to publicly traded companies worldwide that derive greater than 50% of their revenues from the coal industry. With KOL you'll own shares of some of the most noted coal companies in the world, including Arch Coal Inc. (NYSE: ACI), which specializes in steam and metallurgical coal; CONSOL Energy Inc. (NYSE: CNX), a large provider of fuel for electricity in the United States; Alpha Natural Resources Inc. (NYSE: ANR), another leader in steam and metallurgical coal; and Peabody Energy Corp. (NYSE: BTU), an exploration miner and coal producer worldwide, as well as several other highly rated coal companies across the globe.

Market Vector charges only a 0.65% fee, a fraction what a professional money manager would charge you to analyze research and pick coal mining stocks with this level of global reach. Recently KOL has gone through a typical correction for this commodity sector, but then suffered a greater hit as Asia saw a 20% decline in spot prices for thermal coal. The result? A better deal for those currently willing to dive into coal as an investment. KOL is up 14%, so maybe there's some light at the end of the mine.

While other earnings may have disappointed last week, the news was good for oil giant ConocoPhilips (NYSE: COP). In what some took as a good sign for big oil, the Houston-based company reported that third quarter net income surged 41% year over year to $3.39 per share, and that revenue also surged 52% to $70 billion. We'll see whether the good news extends to other petroleum giants scheduled to report quarterly results this week.

Analysts surveyed by Thomson Financial are looking for BP (NYSE: BP) profits to have grown 43.2% in the most recent quarter to $2.34 per share on revenue of $109.7 billion, and Chevron Corp. (NYSE: CVX) to post earnings up 39.4% to $3.25 per share on revenue of $86.8 billion. Marathon Oil Corp. (NYSE: MRO), ExxonMobil Corp. (NYSE: XOM), and Royal Dutch Shell (NYSE: RDS.A) likewise are expected to report higher net income of $2.33 per share (sales of $23.4 billion), $2.40 per share (sales of $131.4 billion), and $2.65 per share, respectively. Even Valero Energy Corp. (NYSE: VLO) is expected to post earnings slightly higher to $1.46 per share (sales of $36.4 billion), despite the effects of Hurricane Ike. Among these companies, only BP and Valero beat earnings expectations in the previous quarter. Not surprisingly, analysts on average recommend buying all except Valero, and shares of all of these companies have recently hit 52-week lows.

During July, the prices of oil exploration and coal stocks mentioned in my newsletter tumbled precipitously. For example, Arch Coal (NYSE: ACI) and Peabody Energy (NYSE: BTU) lost roughly a quarter of their value by the end of July and Ultra Petroleum (NYSE: UPL) and Southwestern Energy (NYSE: SWN) which had been up over 40% through June ended July up a relatively paltry 4% and 11% respectively.

I find this interesting because it violates one of the basic theories I have about what moves stock prices. This beat-and-raise theory says that if a company beats earnings estimates and raises its guidance, then the stock will rise. Otherwise it will fall. In the case of these four companies, each of them with the exception of Ultra which did not report, reported doubling or tripling of earnings and raised their guidance.

So why did their stocks fall? In the case of the oil and gas companies, it could be because of declining oil prices. Those peaked at $146 a barrel and recently traded at $127. But I am not aware of any diminution in the price of coal for which demand is strong due to Chinese and Indian infrastructure investment among other factors. Coal is used to make steel and to fire up power plants.

MOST NOTEWORTHY: Progressive, Netflix and Public Service Enterprise Group were today's noteworthy upgrades:

• Wachovia upgraded Progressive (NYSE: PGR) to Market Perform from Underperform based on modest signs of improvement in underwriting trends.
  
• Lehman upgraded Netflix (NASDAQ: NFLX) to Overweight from Equal Weight based on strong core trends and a potential announcement of digital service partners into its May 28 investor day.
  
• Credit Suisse upgraded Public Service Enterprise Group (NYSE: PEG) to Outperform from Neutral based on earnings growth through utility investment, valuation, upside from U.S. CO2 policy.

OTHER UPGRADES:

• Precision Drilling (NYSE: PDS) was raised to Outperform from Sector Perform at RBC Capital.
  
• Hertz Global (NYSE: HTZ) was upgraded at Soleil to Buy from Hold.
  
• Calyon upgraded Foundation Coal (NYSE: FCL) and Arch Coal (ACI) to Add from Neutral.

"Arch Coal (NYSE: ACI) is fired up from its first quarter earnings; the results were well above analysts expectations," notes Joseph Hargett.

And with 13.5 million shares of the stock sold short, the analyst with Schaeffer's Research explains, "Shorts account for about 9.5% of the stock's float, which could result in a short squeeze." Here is his review.

"Net income nearly tripled to $81.1 million, or 56 cents per share. Revenue for the auarter rose to $699.4 million from $571.3 million. For the year, Arch Coal lifted its earnings estimate to a range of $2.40 to $2.80 per share, versus Wall Street's consensus view for $2.43 per share.

"Digging into the report, the company noted that profit margins were particularly wide in the Central Appalachia region, while higher prices for coal and cost controls also contributed to the results. Arch noted that the average sales price per ton rose 9.7% to $18.49 from $16.85, while the cash cost per ton rose less than 1% to $13.05 from $12.93.

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

• American Axle & Manufacturing Holdings Inc. (NYSE: AXL) reported a strike-related Q1 loss.
• Arch Coal Inc. (NYSE: ACI) Q1 profit tripled on increased demand and higher prices.
• Boeing Co. (NYSE: BA) posted better-than-expected earnings despite Dreamliner delays.
• Coach Inc. (NYSE: COH) better-than-expected quarter didn't impress Jim Cramer.
• ConocoPhillips (NYSE: COP) reported Q1 earnings and revenue above analysts' forecasts.
• Delta Air Lines Inc. (NYSE: DAL) reported a big loss on a one-time charge and fuel costs.
• Dow Chemical Co. (NYSE: DOW) posted a smaller-than-forecast profit drop and predicted a good Q2.
• EI DuPont de Nemours & Co. (NYSE: DD) Q1 earnings rose 26% but missed expectations.
• Ford Motor Co. (NYSE: F) surprised Wall Street by swinging to a profit in the first quarter.
• Goodyear Tire and Rubber Co. (NYSE: GT) easily surpassed analyst estimates for the first quarter.
• Halliburton Co. (NYSE: HAL) Q1 earnings and revenue rose due to international growth.
• Hershey Co. (NYSE: HSY) profit fell but was in line with analysts' expectations.

Despite a tumbling economy where recession fears gain ground each day, the good times are rolling for coal producer Arch Coal Inc. (NYSE: ACI) which reported this morning that its first-quarter profit nearly tripled. For this period, the company counted strong demand and higher fuel prices. Wall Street expressed enthusiasm over its surprising earnings numbers by pushing the stock to a new 52-week high.

The coal producer said its profit increased during the first quarter to $81.1 million. This is a significant jump from the same period of last year when the company reported a profit of $28.7 million. Arch Coal posted quarterly earnings of 56 cents per share, topping analysts' predictions for earnings of 46 cents per share.

Taking a look at the company's quarterly revenue, we see a growth of 22% to $699.4 million as prices have almost doubled during the past year. The company also said it sold 34.3 million tons of coal in the first quarter compared with 31.4 million tons in the same period a year ago. Analysts had forecast $686.8 million in revenue, according to Thomson Financial.

Arch Coal (NYSE: ACI) is engaged in mining, processing, and marketing coal. The company produces about 130 million tons a year from more than 20 mines in the western US and central Appalachia. It has proven and probable reserves of about 2.9 billion tons. The low-ash coal used to fire electric utility boilers accounts for most of the company's revenues. The firm provides the fuel for approximately 6% of the electricity generated in the United States. It also supplies steel producers and industrial facilities.

Arch affirmed FY08 earnings guidance, earlier in the week. Management said it expected EPS of $2.00-$2.50, versus Street consensus of $2.42. The CEO noted that U.S. coal requirements are expected to soar this year, ensuring that prices will remain strong.

MOST NOTEWORTHY: The coal sector, independent refiners and Alexion Pharmaceuticals were today's noteworthy downgrades:

• Goldman downgraded the coal sector to Cautious from Neutral, citing valuations and expectations for lower coal prices. The firm downgraded CONSOL Energy (NYSE: CNX) Peabody Energy (NYSE: BTU) to Neutral from Buy and Arch Coal (NYSE: ACI) to Sell from Neutral.
  
• Lehman downgraded independent refiners, including Alon USA Energy (NYSE: ALJ), to Negative from Neutral and continues to believe that 2H07 marked an inflection point for U.S. refiners, which are transitioning from a multiyear up-cycle into a new downtrend.
  
• Alexion Pharmaceuticals (NASDAQ: ALXN) was lowered to Market Perform from Outperform at Wachovia following the company's Q4 results, as they believe management's revenue guidance represents a best-case scenario.

OTHER DOWNGRADES:

• Lehman lowered Bayer (OTC: BAYRY) to Equal Weight from Overweight and Whole Foods (NASDAQ: WFMI) to Underweight from Equal Weight.

Most investors are aware that China's surging growth and increasing energy use have helped push oil to +$90 per barrel near-record highs. But what many probably don't know is that China's double-digit GDP growth is forcing up the price of another major energy source: coal.

The price of coal -- the most plentiful energy resource -- is rising at an alarming rate: Asia prices are up more than 30% this year, The Wall Street Journal reported Tuesday (subscription required), due mostly to China's net importer status. China had been a net exporter of coal, but in mid-2007 it imported coal for the first time. Coal is trading above $125 per metric ton. In 2003 it traded at about $25 per metric ton. Since January 2007 alone, coal is up more than 140%.

U.S. coal suppliers have benefited from the run-up: Arch Coal (NYSE: ACI) is up about 90% since August 2007; ACI was down about $1.50 to $53.32 in Tuesday afternoon trading. Meanwhile, Peabody Energy (NYSE: BTU) is up about 45% since August 2007; BTU fell 40 cents to $56.12 on Tuesday afternoon.

The earnings crunch rolls on, and here are a few of the highlights of this past week's earnings coverage from BloggingStocks:

• Activision Inc. (NASDAQ: ATVI) earnings soared on popularity of Guitar Hero and other game franchises.
• Arch Coal Inc. (NYSE: ACI) beat earnings expectations and offered revised guidance.
• Avon Products Inc. (NYSE: AVP) beat estimates despite lower profits due to restructuring costs.
• Chattem Inc. (NASDAQ: CHTT) beat estimates and raised its guidance.
• Cisco Systems Inc. (NASDAQ: CSCO) met estimates but a weak forecast raised concerns.
• Dionex Corp. (NASDAQ: DNEX) beat estimates on strength in petrochemical and food/beverage markets.
• Electronic Data Systems Corp. (NYSE: EDS) earnings fell, helping to raise concerns about tech stocks.
• Flextronics International Ltd. (NASDAQ: FLEX) beat estimates and affirmed its outlook.
• Gannett Inc. (NYSE: GCI) missed fourth-quarter earnings estimates on lower ad revenue.
• Las Vegas Sands Corp. (NYSE: LVS) missed expectations due to rising construction costs.
• MGM Mirage (NYSE: MGM) forecast it would beat earnings expectations by as much as 10 cents a share.
• Old Dominion Freight Line Inc. (NASDAQ: ODFL) beat revenue estimates and raised its guidance.
• RealNetworks Inc. (NASDAQ: RNWK) warned it would miss first-quarter and full-year expectations.
• Silicon Laboratories (NASDAQ: SLAB) beat expectations and raised its guidance.
• THQ Inc. (NASDAQ: THQI) posted disappointing results that included cancelled game franchises.
• Time Warner Inc. (NYSE: TWX) met estimates and announced restructuring plans (see transcript).
• Unilever (NYSE: UL) fourth-quarter net income tanked on a sell-off of its European frozen food business.
• Walt Disney Co. (NYSE: DIS) posted better-than-expected results on gains in TV and theme parks.