Avon Products (NYSE: AVP - option chain) shares are rising today after the company reported a second-quarter profit this morning of $82.9 million, or 19 cents per share. Excluding one-time items, AVP earned 38 cents per share, beating analysts' expectations of 34 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 AVP.

AVP opened this morning at $30.31. So far today the stock has hit a low of $14.40 and a high of $32.77. As of 11:40, AVP is trading at $32.36 up $2.62 (8.8%). The chart for AVP looks neutral and S&P gives AVP a neutral 3 STARS (out of 5) hold ranking.

"Although I'm very leery of the market now, I'll continue to buy gradually when specific stocks are attractive," says Jack Adamo. In Insiders Plus, he looks to a new idea: Avon Products (NYSE: AVP).

"Avon's stock got whacked when fellow paint sellers, Estee Lauder and Elizabeth Arden, guided earnings lower, and analysts lowered earnings expectations for Avon to about $1.90 for 2009.

"They're probably still too optimistic, but I'm buying the stock anyway. We owned Avon for almost 3 years, and sold it for $43.47 in September for a 69% profit.

Analyst upgrades:

• Baird upgraded Regal-Beloit (NYSE: RBC) to Outperform from Neutral based on valuation and growth expectations.
• Black & Decker (NYSE: BDK) and Lennar (NYSE: LEN) were upgraded to Buy from Neutral at UBS based on valuation.
• Kroger (NYSE: KR) and Public Storage (NYSE: PSA) were added to Goldman's Conviction Buy List.
• CIBC upgraded Biovail (NYSE: BVF) to Sector Performer from Sector Underperformer.
• Abercrombie & Fitch (NYSE: ANF) was raised to Neutral from Underperform at Cowen.

Analyst downgrades:

• Merrill downgraded Campbell Soup (NYSE: CPB) to Neutral from Buy and expects marketing and promotional spending to limit earnings growth in 2009 and 2010. The firm lowered their target to $35 from $42.
• Mechel Steel (NYSE: MTL) was cut to Underweight from Equal Weight at Morgan Stanley to reflect declining coal demand.
  
• Friedman Billings downgraded shares of Legg Mason (NYSE: LM) to Underperform from Market Perform on liquidity concerns given the Legg Mason's leveraged balance sheet and falling EBITDA. The firm lowered their target to $7 from $11.

In a conversation with an attorney friend of mine, who happens to be a woman, she asked for some general financial guidance. During the course of the conversation it occurred to me that women need to save more than men. There are many reasons for this, here are a few:

The first and most obvious reason women need to save more than men is that they live longer -- often without the support of a significant other. Living longer and living alone cost more money.

Second of all, women still do not have complete earnings parity with men. Some of this has to do with job type and some with history. But nevertheless, we are not there yet. If there is a 15% disparity, then a woman is starting at a disadvantage whether saving for her retirement in the future or for buying a gallon of gas today. This can only be made up by saving more and investing more. This is a worthy goal except that with less resources the difficulty is exacerbated.

Readers of this space know that the investment bias is toward large-cap companies with demonstrated business models and a competitive advantage in established markets, preferably with a favorable global trend as a support. With this in mind, Avon is worth an evaluation.

For decades a door-to-door company, Avon (NYSE: AVP) has stepped into the globalization and digital ages, and the initial progress reports are positive.

Avon is the midst of a restructuring aimed at increasing efficiency and widening the company's sales venues. In its most recent quarter, Avon's North American region was a laggard, but its international business performed well, registering a 16% increase in sales, with double-digit gains from Central/Eastern Europe, and an impressive 29% rise in China. Further, in general, analysts were pleased with AVP's emerging market performance, citing brand building gains and an ability to attract much-sought, younger-adult women. As a result, AVP is on-track to meet analysts' 7-9% revenue gain for F2008.

Direct selling (5.3 million representatives) continues to be AVP's base, but catalogs, mall kiosks, a day spa, and a web site create a diverse retail presence.

All the while, Avon has also reduced its costs by initiating manufacturing operations in lower-cost regions of the world, and via sales force productivity increases. The company's expanded product base (cosmetics, fragrances, toiletries, jewelry, apparel, and home furnishings) is succeeding at widening its brand appeal across categories. The Reuters F2008/F2009 EPS consensus estimates for AVP are $2.16/$2.57.

"Beauty is as beauty does, the saying goes, and Avon Products Inc. (NYSE: AVP) has delivered a beautiful earnings report," says Jack Adamo in his industry-leading Insiders Plus. Here's his latest.

"Despite a 14% increase in advertising (or perhaps, because of it) the company delivered EPS up 26%. In North America, the only underperforming region, revenues continued their slow downward slide. But active representatives increased for the first time in ages, which may brighten the future on the company's home turf.

"International sales continued to soar. Latin America was 19% higher in local currencies, and 32% higher after translation into the American Peso, also known as the U.S. Dollar. In Central & Eastern Europe, first-quarter revenue rose 17% (6% in local currency). Revenue in China grew 29% (19% local). Only Japan dragged things down a bit with its 2% gain.

Avon (NYSE: AVP) delivered not a bag of cosmetics to Wall Street, but a batch of growing earnings. Total revenues for the first quarter were up beautifully, rising 14% to $2.5 billion. Earnings per diluted share likewise did the double-digit-increase dance, rocketing 26% to $0.43.

Now, I would have liked the report a lot more if the company had indicated in its cash flow statement that everything was positive -- unfortunately, that was not to be, as operational cash flow was, in fact, negative. Avon needed to use $41 million for its operating activities during the quarter. Well, one thing I can say is that it's a lot less than the cash needed to fund last year's operations -- Avon burned through over $160 million in the comparable period. A check of the latest 10K shows that, while operational cash flow has been decreasing over the last few years, it has remained positive, so since this is the first quarter of the new fiscal year, we can wait to see how cash flow shapes up as the quarters go by.

Avon competes with companies like Procter & Gamble (NYSE: PG), Revlon (NYSE: REV) and Estee Lauder (NYSE: EL). As I've stated in the past, Procter & Gamble is more my kind of consumer-products business, but I'll give Avon its due since it does have a good product portfolio backing its brand and a devoted base of users. The stock is not too far off from its 52-week high as of this writing, and so long as it can keep sales growing and fight inflationary pressures, it should be a decent long-term bet.

Disclosure: I don't own shares in any of the companies mentioned; positions can change at any time.

TheStreet.com's Jim Cramer says investors should be negative, but they have to keep an eye out for rallies.

Have you looked at the charts lately? I still carry them around and, frankly, have been reluctant to sit down and look at one after another the way Helene Meisler has for years and years.

But I have forced myself to do so since this year began just to remind myself that this bear market is a vicious one and you better have a darned good reason to buy a stock because you are most likely going to lose money otherwise.

The charts are amazingly bad. The vast majority of stocks are simply awful. You eliminate the oils, the golds, the ags, you have nothing, I mean, really, nothing. You can see that an Avon (NYSE: AVP) (Cramer's Take) could rally or maybe a Coke (NYSE: KO) (Cramer's Take), and you can make a case for the utilities to bottom on interest rate compares but that's really about it. The banks? They all look like they have no bottom.

Forget about being in the beauty business. This overhaul at Avon Products, Inc. (NYSE: AVP) isn't going to be pretty in the least. As part of its previously announced restructuring plan, 2,400 jobs will be cut and the company plans to save about $430 million per year. The plan will cost $530 million, with $460 expensed through the end of 2007 and the remainder being charged between now and the end of 2009. Additionally, the company's going to write of $110 in inventory as it says it's simplifying product lines by getting rid of low selling products.

This turnaround plan for Avon was announced in November of 2005 and is focused on creating efficiencies in the operation, thereby cutting costs. They're also focusing on the "career opportunity" for representatives and they're trying to make it more attractive.

Avon is one of the oldest multi-level marketing (MLM) companies around. It was established in 1886, a time when door-to-door sales were a common way of purchasing items that were needed. Over time, the business model has evolved to more of home party model and one-on-one selling that doesn't necessarily involve knocking on stranger's doors.

Apple, Inc. (NASDAQ: AAPL) has wooed Avon Products, Inc. (NYSE: AVP) CEO Andrea Jung to its board of directors, giving the Apple board a count of eight members as of January 2008. At this point in time, this really does make sense for Apple and the decision is a great one. Here's why.

Jung, who has been with Avon for over 11 years, is deeply entrenched into how direct sales and marketing strategies apply to women. Although Apple's iPod has been geek-lust for many teenage boys and 20-somethings (among other demographics), the marketing of the iPod has almost always involved women in some form.

Procter & Gamble Co. (NYSE: PG), Colgate-Palmolive Co. (NYSE: CL) and Avon Products Inc. (NYSE: AVP) all reported strong results today because the weak dollar has made their products attractive to consumers overseas.

Net income at Procter & Gamble rose 14% to $3.08 billion, or 92 cents a share, compared with $2.7 million, or 79 cents, a year earlier. Revenue surged 7.5% to $20.5 billion. Excluding a tax-benefit, profit was 90 cents. Analysts had expected profit of 89 cents on revenue of $20.23 billion. P&G expects profit for the current quarter of between 95 to 97 cents; Wall Street expectations are for 97 cents. The company raised its full year outlook by 2 cents to $3.46 to $3.49 to reflect a one-time tax benefit.

"The fiscal year is off to a good start," said A.G. Lafley, Chairman of the Board and Chief Executive Officer, in the earnings release. "P&G continues to deliver broad-based top and bottom-line growth across its portfolio of businesses and geographies. This momentum, along with a robust initiative pipeline for the year, gives us confidence that P&G will deliver another strong year of growth."

Shares of P&G, which are up about 12% this year, fell in pre-market action.

MOST NOTEWORTHY: The Personal Care, Household Products and Cosmetics industry, Horsehead Holdings and China Sunergy were today's noteworthy initiations:

• Wachovia initiated coverage of the HPC industry with an Overweight rating, starting shares of Avon Products Incorporated (NYSE: AVP), The Procter & Gamble Company (NYSE: PG) and Kimberly-Clark Corporation (NYSE: KMB) with Outperform ratings and The Clorox Company (NYSE: CLX) and The Estee Lauder Companies Inc (NYSE: EL) with Market Perform ratings.
• CIBC started shares of Horsehead Holdings (NASDAQ: ZINC) with a Sector Outperformer rating and $30 target, as they believe the valuation discount to other North American zinc producers will narrow as investors become more aware of the name.
• Jefferies would avoid shares of China Sunergy Co Ltd (NASDAQ: CSUN) in the near-term as the company resolves issues regarding its access to polysilicon. The firm initiated shares with a Hold rating and $8 target.

OTHER INITIATIONS:

• Goldman reinstated LSI Corporation (NYSE: LSI) with a Neutral rating and $8 target.
• ThinkEquity initiated Advanced Analogic Technologies Incorporated (NASDAQ: AATI) with a Buy rating and $15 target.
• Deutsche Bank resumed coverage of Spirit Aerosystems Holdings Inc (NYSE: SPR) with a Hold rating and $36 target.

CEOs like to talk about "traction." It is part of the CEO lingo. Having traction is a good thing. It means your company is going somewhere.

Chairman and CEO Andrea Jung said Avon's (NYSE:AVP) turnaround is gaining traction, according to the Associated Press. But, the company's stock is down 8% to $35.70 after announcing earnings. Second-quarter 2007 revenue grew 12% year over year to $2.3 billion.

Net income in the second quarter 2007 was $113 million, or $0.26 per share, compared with $151 million, or $0.33 per share in the year-ago quarter. The market didn't like that part and sent the stock plunging almost 9%.

Avon's big problem is that its sales are growing in places like China and Latin America, but in its home market the company is going nowhere. During the last quarter, Avon's US sales were flat at $620 million. And operating income for the region fell 32% to $41.5 million. If the company had not done very well in Latin America during the period, things would have been much worse for the overall bottom line.

Avon seems to be going through endless restructurings. And, it shows. The shares are now trading at the same value that they were in the spring of 2004

That's traction.

Avon Products (NYSE: AVP) volume and volatility elevated into 7/31 EPS.

• AVP is recently up $0.73 to $40.36. AVP will report EPS on July 31st.
  
• AVP call option volume of 9,189 contracts compares to put volume of 1,499 contracts. AVP August option implied volatility of 38 is above its 26-week average of 25 according to Track Data, suggesting larger price fluctuations.

Abercrombie & Fitch (NYSE: ANF) volume and volatility increases on unconfirmed LBO chatter.

• ANF is recently up $1.51 to $72.36 on unconfirmed private equity LBO chatter.
  
• ANF has a market cap of $6.3 billion with zero long term debt. BAMO has a $95 price target on ANF.
  
• ANF call option volume of 7,380 contracts compares to put volume of 439 contracts. ANF August option implied volatility of 36 is above its 26-week average of 31 according to Track Data, suggesting larger risk.

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

Under activist CEO Andrea Jung, Avon Products Inc. (NYSE: AVP) has turned itself around and is posting excellent numbers across the board and around the world. Investors interested in international stocks should still take a look at Avon which, despite being an American company, now earns slightly more than half its revenues from markets abroad. The stock opened the year trading at $33.60 and closed July 12 at $39.55, up 19% thus far this year. Not only do 2007 numbers look good compared to 2006, which was admittedly horrible, but as the reorganization efforts continue to gain traction worldwide, the numbers will only get better.

Here follows a summary of Avon's recent earnings report:

1Q 2007 total revenue grew 9% to $2.2 billion, with all 6 global divisions posting profits. Net income for 1Q TRIPLED to $150 million. The number of Avon representatives rose 4% to more than five million, making Avon the world's largest direct seller. Avon is spending $15 million to provide leadership and sales training for this potent sales channel. Operating profit rose 176%, (not a typo!) to $238 million despite continuing restructuring costs of $27 million. Thus far, FY 2007 cash flow is ahead of FY 2006 cash flow and the company repurchased $130 million of its stock during 1Q 2007. FY 2006 was marked by huge restructuring costs inlcuding inventory write offs and numerous products lines being discontinued. Most of the mess is behind Avon, a fact demonstrated by around the world increases in both revenues and profits.