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.

• 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.

Jim Cramer, never one to rest on a single industry segment, discussed the quest for youthfulness tonight on his ever-popular MAD MONEY show.

If you want your body to look like a teenager's but your bank balance to scream "old fogey," Cramer advises that you avoid Bare Escentuals, Inc. (NASDAQ:BARE). He calls it a fad that isn't going anywhere, and says if you own it you should "ring the register." It was spun off by an LBO firm, but now it's too late; the company won't make you money. Cramer had regrets over this one: he didn't tell a caller on Friday to sell, and wished he had.

Better options if you want to capitalize on America's quest for eternal youth? Cramer likes Allergan, Inc. (NYSE:AGN) for its Botox and Medicis Pharmaceutical Corporation (NYSE:MRX) for its competing product. He counselled against the big, luxury names in the space: Avon Products Group (AVP), The Estee Lauder Co. (NYSE:EL) or Revlon, Inc. (NYSE:REV). Cosmetic companies are unreliable to Cramer.

Cramer did say International Flavors & Fragrances Inc. (NYSE:IFF) is a good alternative, even though it is close to a 52-week high. He thinks the company is much better with scents and steady end markets. Soon it will split into two businesses, he says, as it creates sweet ingredients that it sells to large companies like P&G. He said IFF only trades at 16x forward earnings and it has consistent 10% earnings growth. The best pick of the bunch? IFF, Cramer says.

[Photo Michael McCauslin]