Analyst Upgrades

• Bunge (BG) to buy from hold at Deutsche Bank.
• Textron (TXT) to overweight from neutral at JPMorgan.
• CSX (CSX) to buy from neutral and Pulte Group (PHM) to conviction buy from neutral at Goldman.
• Aol (AOL) to buy from neutral at UBS.
• Kohlberg Capital (KCAP) to outperform from market perform at JMP Securities.
• Owens Corning (OC) to buy from neutral at BofA/Merrill.
• Jefferies (JEF) to buy from neutral at Ticonderoga.
• Harris (HRS) to outperform from perform at Oppenheimer.

Back in the summer of 2010 when the market was down, the gulf was full of spewing oil and investors were running away from bad news stocks shocked most notably by BP (BP) oil spill, I decided to post a contrarian story reminding readers that the fear was overblown and created a buying opportunity.

"My pal Warren" has said for years that we should buy on fear and sell on greed. The toxic stock portfolio was a result of this sentiment.

This is the fourth update to my ranting eight months ago that acquiring six of the most hated, and most highly traded stocks with constant negative headlines would outperform the overall market. The theory has born fruit as the toxic stocks are ahead and the difference is increasing over time.

Analyst Upgrades

• Tyson Foods (TSN) to buy from hold at Deutsche Bank.
• Carmike Cinemas (CKEC) to buy from neutral at Merriman.
• Ambow Education (AMBO) to conviction buy from neutral at Goldman.
• Johnson Controls (JCI) to overweight from equal weight at Barclays.
• Dynex Capital (DX) to outperform from market perform at JMP Securities.
• Ensco (ESV) to outperform from neutral at Credit Suisse.
• York Water (YORW) to buy from hold at Brean Murray.
• Mid-America Apartment (MAA) to market perform from underperform at FBR Capital.
• Cheniere Energy Partners (CQP) to hold from sell at Citigroup.
• Forest Oil (FST) to positive from neutral at Susquehanna.
• Tractor Supply (TSCO) to outperform from neutral at RW Baird.

Analyst Upgrades

• Wells Fargo (WFC) to conviction buy from neutral at Goldman.
• Adobe (ADBE) to buy from neutral at UBS.
• Fifth Third Bancorp (FITB) to outperform from market perform at FBR Capital.
• Vail Resorts (MTN) and Goldcorp (GG) to buy from hold at Deutsche Bank.
• OmniVision (OVTI) to overweight from neutral at JPMorgan.
• Penn Virginia (PVA) to hold from sell at Canaccord.
• Hub Group (HUBG) to outperform from market perform at Morgan Keegan.

If you would have known that $100 oil was coming just two days ago due to major geopolitical strife in Libya and elsewhere in North Africa and the Middle East, the thought might be that the bull market would be a sudden bear market. So far that is not the case and the market was not even down a full percentage point today.

Here were today's unofficial closing bells:

Dow Jones 12,105.78 -107.01 (-0.88%)
S&P 500 1,307.40 -8.04 (-0.61%)
Nasdaq 2,722.99 -33.43 (-1.21%)

Every quarter, investors eagerly await the disclosures for the holdings of top-notch hedge fund managers. Which stocks are being dumped? What are the new purchases?

Just look at billionaire hedge fund manager John Paulson. Over the past couple of years, he has been a big holder of gold stocks. And yes, in light of the terrible plunge in the precious metal in January, investors are wondering if Paulson is still a bull.

Here are the next four of my 2011 picks. I am behind schedule, after publishing the first 5 earlier in the week (see: Chasing Value: 2011 Stock Picks -- 5 of 11). This year instead of starting completely anew, I am adjusting my 2010 picks. There is no sense in abandoning good ideas just because the calendar turned a page.

You will actually find support of running themes I have been writing about over the past few months. One of these is the idea of making a contrarian investment in a basket of stocks that have been both scalded and scolded in the headlines. Six stocks were included in such a group that I called the "toxic stocks" (see: Chasing Value: Toxic Stock Update #3 -- BAC, BP, C, GE, GS, RIG).

Analyst Upgrades

• Wynn Resorts (WYNN) to overweight from neutral at JPMorgan.
• Oracle (ORCL) and Alliance Data Systems (ADS) to outperform from neutral at Macquarie.
• Saint Joe (JOE) to outperform from market perform at Keefe Bruyette.
• Starwood Hotels (HOT) to neutral from underperform at RW Baird.
• Middlesex Water (MSEX) to buy from neutral at Janney Capital.
• Consol Energy (CNX) to buy from hold at BB&T.

In the middle of the summer with the stock market smoldering from the economic aftershocks of the BP (BP) oil spill, I decided to post a contrarian story emphasizing a very common refrain among value investors, "my pal Warren" being head of the class: buy on fear (sell on greed). This notion is continuing to work for what I called the toxic stock portfolio.

This is the third update to my ranting five months ago that six of the most reviled and most highly traded stocks featured by daily bad press as a group would outperform the overall market. It has, with the big winner rising from being one of the biggest losers.

Qualcomm (QCOM) is scheduled to report Q4 EPS on Nov. 3 and host an analyst meeting on Nov. 17. November option implied volatility is at 34, December and January is at 28, near its 26-week average of 29, according to Track Data, suggesting larger near-term price movement.

Transocean (RIG) is expected to report Q3 EPS on November 4. November option implied volatility is at 55, December is at 47, January is at 46, versus its 26-week average of 43, according to Track Data, suggesting larger near-term price movement.

Options Update is by Stock Specialist Paul Foster of theflyonthewall.com.

Today is election day. Currently, intrade.com is projecting a 97% chance that the Republicans will take control of the House of Representatives and a 48% chance that they will win the Senate. What could a landslide win for the Republican Party mean for the stock market?

Some observers are suggesting that gridlock in Washington, along with a more business friendly atmosphere, could be a catalyst for stock prices to rise. This, however, is offset by concerns about cuts in government spending. The private economy is sputtering, and near-term spending cuts could have a detrimental effect on the recovery. Therefore, instead of focusing on the broader market, investors may want to look at some specific sectors that may benefit from a Republican victory.

Three interesting areas are oil services, financials, and healthcare. The thinking is that some of the regulatory headwinds facing these sectors may be lifted if the political atmosphere in Washington D.C. changes. Some observers believe that a Republican-led House of Representatives will be able to chip away at some of the Obamacare legislation. This should benefit large pharmaceutical companies such as Merck (MRK) and Pfizer (PFE).

It will be a busy week. Republicans are poised to gain control of the House of Representatives and gain governorships in Tuesday's mid-term elections. Also, the Federal Reserve is expected to announce another round of quantitative easing Wednesday, following the FOMC meeting. Major retailers are scheduled to report October same-store sales Thursday, while the October unemployment rate, announced on Friday, is expected to remain at 9.6%.

Toyota's (TM) fiscal second-quarter results will be one of the highlights on the earnings front this week. After three periods of way underestimating Toyota's earnings, have the analysts surveyed by Thomson Reuters got it right this time? The stock sure could use a boost. Teva Pharmaceuticals (TEVA) is in a similar situation; i.e., high expectations for this week's quarterly results but a stock in need of a boost. Marathon (MRO) and Starbucks (SBUX) are also expected to post strong earnings growth this week, but both stocks are riding high.

A very common refrain among value investors, "my pal Warren" being head of the class, is buy on fear (sell on greed), and it is working with the toxic stock portfolio.

This is the second update to my ranting twelve weeks ago that the six most highly traded stocks receiving the most bad press would be a great contrarian investment, and that this group would outperform the overall market without much difficulty.

It was true earlier, and it is still true today as the DJIA topped 11,000 again. The toxic stocks list includes Bank of America (BAC), Citigroup (C), General Electric (GE), BP (BP), Goldman Sachs (GS) and Transocean (RIG).

Intuitive Surgical (ISRG) closed down $15.32 to $290.26 on Monday. Goldman Sachs initiated a sell rating on ISRG. October put option implied volatility is at 38, November and January is at 42, versus its 26-week average of 37, according to Track Data, suggesting larger November price movement.

Transocean (RIG) closed up $2.30 to $62.36. RIG calls are active on 51K calls (30K puts) with concentrated volume in November calls. October call option implied volatility is at 37, November is at 41, January is at 37, versus its 26-week average of 43, according to Track Data, suggesting decreasing price movement.

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

In case you need to be reminded to look closely at the books, today's poster boy for erroneous ledgers, Bernie Maddoff, should be a constant reminder. Furthermore, when you are looking at the books, remember that Benjamin Graham, mentor to "my pal Warren," advised buying stocks for less than their intrinsic value. And book value is the starting point in attempting to establish that.

Two weeks ago, I posted an update on my toxic stock picks. These were six unloved stocks where I felt the stage was set for market beating returns. The same is true again for today's market-beating group, although it is not the headlines that tied this group together, but their standout bargain metrics.