It's the sellers, not the buyers, that drive Avon's (AVP) stock value. What differentiates Avon from other beauty and personal care players such as L'Oreal (LRLCY), Procter & Gamble (PG), Estee Lauder (EL) and Unilever (UL) is not what it sells but how it sells. Avon is the largest direct selling organization in the world, with over 6.2 million sales representative generating annual revenues of nearly $11 billion in 2010.

Avon sells everything from shower-gels to watches to nutritional supplements. While others sell their products through third party establishments like drugstores or mass volume retailers, Avon sells its products directly to the final consumer. Avon's sales representatives are independent contractors that pitch Avon's products to consumers and, upon receiving an order, buy the product from Avon at a discount and earn the difference.

A lot has been written about the slow pace of economic recovery in the U.S. with unemployment levels at close to historical highs at 9.4% (as of December 2010) set in contrast to the feverish growth of emerging markets. It then comes as no surprise that most of the big players in the beauty and personal care industry such as L'Oreal (LRLCY), Estee Lauder (EL), Revlon (REV), Avon (AVP), Procter & Gamble (PG), Unilever (UL), Colgate (CL) and Kimberly Clark (KMB) are increasing their presence in growing markets like China, India and Latin America.

The stock of Avon Products (AVP), first discussed here on May 6, 2009, at a price of $23.12, has meandered for the past three months at/near $29, and it might warrant a stand-aside view, for now.

Concerning Avon's fundamentals, Avon should post an impressive 2010 revenue increase of 6% to 9% led by emerging market sales gain, including Central/Eastern Europe and Latin America. Counter-intuitively, AVP's China market will likely underperform. Avon should also post a 3% to 5% revenue increase in 2011.

Analyst Upgrades

• TCF Financial (TCB) to buy from hold at Deutsche Bank.
• Exelon (EXC) to market perform from underperform at Wells Fargo.
• Nvidia (NVDA) and Boyd Gaming (BYD) upgraded to overweight from equal weight at Barclays.
• Estee Lauder (EL) to buy from neutral at UBS.
• Webster Financial (WBS) to buy from hold at Jefferies.
• Skilled Healthcare (SKH) to outperform from market perform at Morgan Keegan.
• Acorda Therapeutics (ACOR) to outperform from market perform at Leerink.
• NCR Corp. (NCR) to outperform from neutral at Wedbush.
• Barnes & Noble (BKS) to neutral from underperform and Pioneer Natural (PXD) to outperform from neutral at Credit Suisse.
• Autodesk (ADSK) to buy from neutral at Goldman.

Analyst Upgrades

• Intel (INTC) was upgraded to buy from neutral at UBS.
• Wells Fargo upgraded MetroPCS (PCS), Coventry Health (CVH) and Scientific Games (SGMS) to outperform from market perform.
• Estee Lauder (EL) was upgraded to overweight from equal weight at Barclays.
• Simon Property (SPG) was upgraded to buy from hold at Jefferies.
• Citigroup upgraded BreitBurn Energy (BBEP) to buy from hold.

From time to time, Avon Products (AVP) becomes the topic of buyout rumors. And yes, this week it happened again. Actually, investors are giving it some credence. In Tuesday morning trading, the shares of Avon were up 5.6% to 35.03. That's only a couple bucks away from its 52-week high.

The buyout buzz comes from a report in the Daily Mail. According to this UK paper, it appears that L'Oreal is looking at a bid that could be as high as $44 per share, or $19 billion.

Analyst Upgrades

• Merriman upgraded Penn National (PENN) to buy from neutral, citing the company's strong balance sheet and management team. The firm also raised its target range for shares to $34 to $37.60.
• BMO Capital upgraded Cooper Companies (COO) to outperform from market perform and raised its price target to $55 from $46. The firm sees upside to Street estimates and increased visibility.
• Argus upgraded Watson Pharma (WPI) to buy from hold based on valuation.
• Phillips-Van Heusen (PVH) was upgraded to conviction buy from neutral at Goldman.
• Allstate (ALL) was upgraded to overweight from neutral at JPMorgan.
• Weingarten Realty (WRI) was upgraded to neutral from underperform at BofA/Merrill.

Avon Products (AVP) does not have a beautiful chart. It shows a stock that has had trouble making a breakout to the upside. The boring range is defined by a low of $25 and a high of $36.39.

On Thursday, the company reported second-quarter data. Sales rose 8%. On an adjusted basis, net income was 48 cents per share; this compares very nicely to the 38 cents per share booked in the year-ago period. Analysts were hoping for 45 cents per share. Operational cash flow over the last two quarters more than tripled to $241 million.

Revlon (REV) is not a company I typically think of when planning an investment strategy. But the rise in its shares over the last year has put the business on many trading radars. Looking at the fourth quarter report, I myself have to wonder if the story is now worth more investigation.

Sales decreased just under 2% once currency effects are stripped out. Net income as a whole increased 9% to 24 cents per share. Profit from continuing operations did a little better, jumping over 13% to 25 cents per share. This wasn't enough to satisfy the analysts. They were projecting 35 cents per share.

Avon Products (AVP), which I first wrote about on May 6, 2009, at a price of $23.12, has pulled-back with the market's retreat, but I still like the company and the stock. Here's why:

Avon remains the world leader in direct-marketed cosmetics, toiletries, fashion jewelry, and fragrances, with ample growth opportunities in Latin America, China, and Central/Eastern Europe.

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

• Aflac Inc. (AFL) posted better-than-expected Q4 earnings, though revenue fell short, and offered rosy guidance.
• Avon Products Inc. (AVP) posted Q4 earnings growth that met analysts' expectations but shares sold off.
• Cisco Systems inc. (CSCO) higher Q2 earnings topped the consensus estimate but cash flow fell.
• CME Group Inc. (CME) fell short of analysts' Q4 profit expectations, resulting in price-target cuts.
• ExxonMobil Corp. (XOM) posted better-than-expected Q4 earnings and revenue that boosted shares.

If you look at the growth rates, however, things don't appear to be so bad. According to the actual corporate press release, diluted earnings per share increased 15% on a reported basis. Sales shot up 13% (or 8% in terms of local currency). Gross margin also expanded.

The rest of the world is going to help U.S. consumer product manufacturers next year. Look for international growth to push the likes of Colgate-Palmolive (CL), Avon (AVP) and Clorox (CLX) higher in 2010, according to Fitch Ratings. In an interview with Reuters, a director gave the Fitch's outlook for consumer goods.

The household and personal care segments increased revenue every year from 2003 to 2008. So, 2009 was but a bump in the road. Even in a recession, you need toilet paper and shampoo, so expect the spending to come back.