I'm Reiterating my Buy rating for Oshkosh Corporation (NYSE: OSK), first recommended on July 6, 2009 at a price of $21.48. If you bought OSK in July, you're up more than 55%.

The Buy call regarding Oshkosh, as they say, is not based on rocket science: it's based on the U.S. Department of Defense.

It goes without saying that, if you're a defense contractor in an equipment sector preferred by the U.S. Department of Defense, you're in the catbird seat. Oshkosh Corporation (NYSE: OSK) is one. Here's why:

In general, analysts see good things ahead for special purpose vehicle manufacturer Oshkosh. Earlier this month, the company won a $1.05 billion contract from the U.S. Army to fund production of 2,224 MRAP all terrain vehicles for the Afghanistan War.

Analyst upgrades:

• JPMorgan upgraded Franklin Resources (NYSE: BEN) to Overweight from Underweight to reflect performance and sales improvements, as well as benefits from the weakening U.S. dollar. The firm has a $94 target on the stock.
• Oppenheimer upgraded FormFactor (NASDAQ: FORM) to Outperform from Perform after channel checks indicated orders are recovering. The firm raised its target on shares to $30 from $22.
• KeyBanc upgraded Oshkosh (NYSE: OSK) to Buy from Hold citing the company's MRAP-ATV contract win, which they view as a "game changer." The firm has a $30 target on the stock.
• Novellus (NASDAQ: NVLS) was upgraded to Neutral from Underperform at Credit Suisse.
• Ternium (NYSE: TX) was upgraded to Buy from Neutral at Goldman.
• Cathay General (NASDAQ: CATY) was upgraded to Buy from Neutral at B. Riley.

Analyst upgrades:

• Deutsche Bank upgraded Portland General Electric (NYSE: POR) to Buy from Hold on valuation as it finds the risk/reward on shares attractive at current levels. The firm raised its target price to $22 from $20.
  
• FBR Capital upgraded Abercrombie & Fitch (NYSE: ANF) to Outperform from Market Perform after channel checks indicated recent sales are driving increased traffic and easing market share losses. The firm raised its target price on shares to $37 from $21.
• Barclays upgraded Yahoo (NASDAQ: YHOO) to Overweight from Equal Weight as it believes the company is well positioned for a rebound in advertising and that the valuation is compelling at current levels. The firm raised its target on shares to $20 from $15.
• Kohl's (NYSE: KSS) was raised to Overweight from Market Weight at Thomas Weisel.
  
• U.S. Steel (NYSE: X) and CB Richard Ellis (NYSE: CBG) were upgraded at Goldman to Neutral from Sell.
  
• Dolby Laboratories (NYSE: DLB) was upgraded at JP Morgan to Overweight from Neutral.

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

• Bristol-Myers Squibb Co. (NYSE: BMY) Q1 profit fell despite strong sales of Plavix and Abilify.
• Check Point Software Technologies Inc. (NASDAQ: CHKP) was downgraded based on its guidance.
• Domino's Pizza Inc. (NYSE: DPZ) strong Q1 results were boosted by early debt retirement.
• DreamWorks Animation SKG Inc. (NYSE: DWA) strong Q1 results were driven by Madagascar 2.
• Endo Pharmaceuticals Holdings Inc. (NASDAQ: ENDP) Q1 results led to an analyst's downgrade.
• E*Trade Financial Corp. (NASDAQ: ETFC) widened its Q1 loss, sending shares sharply lower.

Oshkosh Corp. (NYSE: OSK - option chain) stock is falling sharply today after the company announced it will suspend its quarterly dividend in order to preserve cash. Previously, OSK was yielding somewhere in the neighborhood of 3% annually. Today, OSK also released an adjusted Q2 loss of 0.24 per share (16.02 unadjusted), which was well worse that the expected 0.15 loss. If you think this stock won't be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on OSK.

This morning, OSK opened at $11.37. So far today the stock has hit a low of $10.01 and a high of $11.37. As of 11:35, OSK is trading at $10.18, down $2.06 (-16.8%). The chart for OSK looks neutral and S&P gives OSK a neutral 3 STARS (out of 5) hold ranking.

Analyst upgrades:

• Goldman upgraded Intercontinental Exchange (NYSE: ICE) to Conviction Buy from Neutral and raised their target to $90 from $60. Goldman cites ICE's positioning and potential for upward EPS revisions for the upgrade.
  
• Jefferies upgraded FMC Technologies (NYSE: FTI) to Buy from Hold as they believe solid deepwater activity levels will lead to solid EPS results in 2009 and 2010. The firm raised their price target to $45 from $27.
  
• Friedman Billings upgraded Devon Energy (NYSE: DVN) to Outperform from Market Perform on valuation and expects significant improvement in basis differentials for the company's Barnett production starting the second half of Q2. The firm raised their price target to $60 from $50.
• Elan Corp (NYSE: ELN) was raised to Neutral from Sell at Piper Jaffray.
  
• Banco Santander (NYSE: STD) was upgraded at Keefe Bruyette to Outperform from Market Perform.

Oshkosh Corp (NYSE: OSK - option chain) shares have moved higher today after the Defense Department announced Wednesday after market close that it awarded a $1.1 billion contract to the military division of OSK for work on military trucks. 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 OSK.

OSK opened this morning at $9.08. So far today the stock has hit a low of $9.00 and a high of $10.38. As of 1:25, OSK is trading at its daily high of $10.38, up $1.49 (16.7%). The chart for OSK looks neutral and S&P gives OSK a 3 STARS (out of 5) hold ranking.

For a bullish hedged play on this stock, I would consider a February bull-put credit spread below the $7.50 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 11.1% return in just four months as long as OSK is above $7.50 at February expiration. Oshkosh would have to fall by more than 27% before we would start to lose money. Learn more about this type of trade here.

OSK has been below $7.50 as recently as early December, but the stock has been on the rebound since mid-November and has shown support around $7.75 recently before today's jump higher.

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 OSK.

The focus of last week's preview was on oil and energy companies, and we saw that big oil had a good week, reporting better-than-expected results and record profits driven by high prices in the third quarter. Energy-related companies are well represented again this week and expectations in general remain high.

Early in the week, analysts surveyed by Thomson Financial anticipate that the big earnings gainers will include EOG Resources Inc. (NYSE: EOG), Anadarko Petroleum Corp. (NYSE: APC), and Cimarex Energy Co. (NYSE: XEC), which are expected to post profits of $2.24 per share (up 64.7% from a year ago), $1.48 per share (up 52.7%) and $2.26 per share (up 61.1%) respectively. All three of them have offered positive surprises in recent quarters, and analysts on average recommend buying EOG and Anadarko. Other expected big earnings gainers early in the week include Forest Oil Corp. (NYSE: FST), Pioneer Natural Resources Co. (NYSE: PXD), Comstock Resources Inc. (NYSE: CRK), and MasterCard Inc. (NYSE: MA). The earnings of phosphates producer Innophos Holdings Inc. (NASDAQ: IPHS) are expected to have risen 92.3% to $3.37 per share. Innophos beat estimates in the previous quarter by a whopping 210%, and analysts have been impressed with Innophos's lack of debt and pricing gains despite the slowing economy, so, on average, they recommend buying IPHS.

Also early in the week, analysts expect Goodyear Tire & Rubber Co. (NYSE: GT), Kaiser Aluminum Corp. (NASDAQ: KALU), and Oshkosh Corp. (NYSE: OSK) to report that their profits fell 52.9% to $0.33 per share, 45.1% to $0.67 per share, and 41.2% to $0.67 per share, respectively. These companies have tended to beat estimates in recent quarters, and the consensus recommendations of analysts are to buy them. However, PMI Group Inc. (NYSE: PMI), one of the largest private mortgage insurance providers in the U.S., is expected to take another hit as the housing slump drags on. The California-based company is expected to have widened its net loss from $1.04 per share a year ago to $2.43 per share in the most recent quarter. Its shares are down 84.5% from a year ago, and have been trading recently near their 52-week low.

What the fundamentals couldn't help with, the charts did.... on selling. If you don't want to blame the charts, you could always point to Goldman Sachs downgrades and a myriad of everything else. The DJIA and S&P 500 Index broke early-year support levels. We even saw oil cross above $140.00 per barrel in electronic trading. Thankfully, there's no speculation driving up oil, because the speculators buying say they aren't driving up prices.

Q1 GDP was revised up 0.1% to 1.0%, although the data is now as old as the hills. While existing home sales posted a gain, we saw yet another median housing price drop. If this sounds overly pessimistic, it is simply because this is the sort of day it was. It even feels like Dr. Pangloss took the summer off.

Here are the unofficial closing bell levels:

• DJIA 11,456.92 (-354.91)
• S&P500 1,283.42 (-38.55)
• NASDAQ 2,321.37 (-79.89)
• 10YR T-Note 4.033% (-0.082%)
• 52-Week Lows
• Top 10 Analyst Calls

Citigroup Inc. (NYSE: C) was the first casualty on a Goldman Sachs downgrade accompanies by a note that the company may cut the dividend or need cash. Those shares were down 6% at $17.70 in today's final minutes.

MAJOR PAPERS:

• According to people familiar with the matter, The Bear Stearns Companies Inc (NYSE: BSC) CEO James Cayne is expected to step down, but is expected to remain as chairman, the Wall Street Journal reported.
• Northrop Grumman Corporation (NYSE: NOC), in a bid to diversify as a aerospace and naval contractor, is teaming with Oshkosh Truck Corporation (NYSE: OSK) to bid on a contract to build Humvees for the Army and Marine Corps, reported the Wall Street Journal.

OTHER PAPERS:

• The New York Times reported that court records have shown that troubled mortgage lender Countrywide Financial Corporation (NYSE: CFC) fabricated documents related to a Pennsylvania homeowner bankruptcy case.
• Alleging that its lending practices discriminated against minorities, leading to foreclosures, the Baltimore City Council is suing Wells Fargo Bank and Company (NYSE: WFC), the New York Times reported.

MOST NOTEWORTHY: The truck industry, Roo Group (RGRP), Accuray (ARAY) and TomoTherapy (TTPY) were today's noteworthy initiations:

• In the trucking industry, FTN Midwest initiated shares of Cummins Inc (NYSE: CMI) and Navistar International Corp (NASDAQ: NAVZ) with Hold Ratings and Oshkosh Truck Corp (NYSE: OSK) and PACCAR Inc (NASDAQ: PCAR) with Buy ratings.
• ROO Group (NASDAQ: RGRP) was initiated with a Buy rating and a $3.75 target at Think Equity, which believes RGRP is positioned to capitalize as the Internet continues to grow as a broadcast medium for video.
• Soleil initiated shares of Accuray Inc. (NASDAQ: ARAY) with a Buy rating and $30 target. The company is Soleil's top pick in radiation oncology.
• Soleil also initiated shares of TomoTherapy Inc. (NASDAQ: TTPY) with a Buy rating and $25 target, as the firm believes all-in-one imaging and radiation oncology system in HiArt could become the new standard of care.

OTHER INITIATIONS:

• Elan Corp (NYSE: ELN) was initiated with an Outperform rating and $40 target at Leerink Swann, which added shares to the firm's Focus List as it is positive on the Tysabri opportunity.
• Cree Inc (NASDAQ: CREE) was initiated with a Buy rating and $50 target at Amtech, as the firm believes the time for LED adoption has finally arrived and will accelerate in the future.
• Nollenberger initiated shares of ZipRealty (NASDAQ: ZIPR) and Move, Inc (NASDAQ: MOVE) with Neutral ratings.
• CIBC World Markets initiated shares of Whole Foods Market Inc. (NASDAQ: WFMI) with a Sector Underperformer rating and $38 target, expecting the company to be impacted by increasing competition.
• BMO Capital Markets initiated shares of Intel Corp. (NASDAQ: INTC) with an Outperform rating and $10 target.

Analyst summaries provided by TheFlyOnTheWall.com (subscription required).

Each year Steven Halpern, editor of TheStockAdvisors.com, surveys the leading financial newsletter advisors asking for their favorite stocks for the coming year. This article is part of his 24th annual Top Picks Report.

Oshkosh Truck (NYSE: OSK) is the favorite conservative idea for 2007 from Jon Markman, editor of Strategic Advantage. "I do not expect a recession within a six-month horizon, which increases my confidence in picking a cyclical company such as Oshkosh -- especially since there is so much fear that the economy is headed straight for a recession.

"OSK -- which designs and manufactures a wide range of commercial, fire, emergency, and military trucks and truck bodies under several trademarks, including Oshkosh, Pierce, McNeilus, Medtec, Jerr-Dan, BAI, London, and Geesink -- is now cheap on every valuation measure that I consider important.

"The stock has fallen about 35% from its May highs in recent weeks. Investors were worried about its future growth rate, and there has been some skepticism about a large acquisition that was announced a month ago.

"Moreover, next year it will likely qualify as one of my Core Select List stocks, as it has provided positive earnings, revenue, cash flow, and capital appreciation for the past nine years straight. The company earns a high return on capital, and is one that I believe you can own for years. You should start buying OSK for a late 2007 target of $67 and a $95 target for 2009."

To see Jon's favorite speculative idea for 2007, click here.

Oshkosh Truck Corporation (NYSE:OSK) makes heavy-payload tactical trucks for the U.S. Department of Defense (DoD) and has recently acquired Jerr-Dan, the towing equipment manufacturer, from Littlejohn & Co. for a reported $80 million.

Oshkosh truck is currently trading at about $44 and has a recorded 52-week range of $42.10 to $65.69. We'll need to watch carefully how the changes in the way our government does business will affect this company. The company has a very strong history, but as the Bush administration's military industrial machine has taken such a severe hit in this midterm election, we must also consider the effects on "defense contractors."

MOST NOTEWORTHY: Home Depot (HD), Amazon.com (AMZN) and General Electric (GE) top today's massive downgrade list.

• Goldman Sachs downgraded Home Depot Inc. (NYSE: HD) to Neutral from Buy citing recent management departures and need for reinvestment for the downgrade. Target to $40 from $41.
• ThinkEquity downgraded Amazon.com Inc. (NASDAQ: AMZN) to Source of Funds from Accumulate. The firm cites disappointment in Amazon's Unbox and need for further investment in order to compete with competitors who appear to offer easier downloads. ThinkEquity also lowered their target of Amazon.com to $30 from $36.
• General Electric Co. (NYSE: GE) was downgraded by Merrill Lynch to Neutral from Buy on valuation.

OTHER DOWNGRADES:

• A.G. Edwards downgraded American Eagle Outfitters Inc. (NASDAQ: AEOS) to Hold from Buy, citing relative valuation and expectations for decelerated earnings growth. Goldman Sachs downgraded Viacom Inc. (NYSE: VIA, VIA.B). Goldman lowered Viacom\'s long-term growth rate given the lack of visibility into Paramount\'s turnaround. The broker sees more upside in News Corp (NWS) shares. Robert W.
• Baird downgraded Oshkosh Truck Corp (NYSE: OSK) to Neutral from Outperform based on expectations that investors will react cautiously to the JLG acquisition due to increased financial risk.
• And finally, Merrill Lynch removed Adobe Systems Inc. (NASDAQ: ADBE) from their Focus 1 list.

Analyst summaries provided by TheFlyOnTheWall.com (subscription required).