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The high-quality shares of diversified chemicals manufacturer and Dow-30 component DuPont (DD - Free DuPont Stock Report) advanced modestly following the company's second-quarter earnings release. The top line increased 19%, to $10.3 billion, compared with our estimate of approximately $9.8 billion. Share net came in at $1.37, nicely ahead of our forecast of $1.30 and a 17% improvement from the prior-year figure. Moreover, the strong performance was broad based.

The Agriculture business benefited from healthy North American demand for its Pioneer seed, while crop protection sales increased across all product lines. Meanwhile, the Performance Chemicals unit experienced solid global demand for titanium dioxide, refrigerants, fluoroproducts, and industrial chemicals. Elsewhere, results at the Safety & Protection unit were driven by greater demand for aramid and nonwoven products in industrial and public sector markets across all major regions.

The favorable year-over-year comparisons will probably continue in the coming quarters. To that end, DuPont has increased its bottom-line guidance for 2011, and we concur. We now anticipate revenues and share earnings of $37.0 billion and $4.00, respectively, up from our previous targets of $35.7 billion and $3.85.

Looking further out, the company appears well positioned to benefit from several important trends. First, the increasing global population and a rising middle class in developing economies ought to drive demand for food production, alternative energy, environmental solutions, and products that enhance personal safety. In addition, the recent acquisition of Danisco, a world-leading maker of food ingredients, serves to establish DuPont at the forefront in the field of agricultural biotechnology.

However, investors should be mindful of an important caveat. As a diversified manufacturer of products for many different markets, the company's fortunes are inextricably linked to the global economy. Too, inflation concerns in emerging markets, the elevated jobless rate in the United States, and sovereign-debt problems in Europe all remain risks to a worldwide recovery. Our estimates may prove somewhat optimistic should an economic reversal occur.

Nevertheless, this top-quality stock (Safety: 1) has strong appreciation potential to 2014-2016, owing to solid top- and bottom-line growth to mid-decade, and beyond. Moreover, the equity's well-supported payout and healthy dividend yield should appeal to conservative, income-minded investors.

About The Company: DuPont is engaged in science and technology in a range of disciplines, including high performance materials, electronics, safety and security, and biotechnology. The company operates on a global scale, manufacturing a wide range of products for distribution and sale to many different markets, including automotive, construction, agricultural, medical, protective apparel, electronics and nutrition.

At the time of this article’s writing, the author did not have positions in any of the companies mentioned.