Stocks That Traded Higher with Upgrades - and May Continue

Brian is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

It seems that over the last few weeks analysts have become more vocal with their opinions. These are people and firms who are providing their opinions regarding the outlook for both companies and the economy over the next year and beyond. However, these opinions often have meaning and have the ability to move individual stocks. With that being said, I am looking at several of the big calls on Tuesday, calls that I believe may have lingering effects.

Company

Ticker

Firm

Call

Yoku

(NYSE: YOKU)

Macquarie

Outperform

Unilife Corporation

(NASDAQ: UNIS)

Cantor Fitzgerald

Buy

Ctrip.com

(NASDAQ: CTRP)

Macquarie

Outperform

StealthGas

(NASDAQ: GASS)

Global Hunter

Buy

 

  • Shares of Yoku rallied 13.45% on Tuesday as the oversold stock reacted to a two notch upgrade that was based on current market performance. According to the analyst, checks indicate strong demand for the company’s online video ads and the firm sees ad rates rising another 20-30% in the next year. This is indeed an oversold stock that was in prime position for a bounce higher. However, there is some merit to the outlook, as Yoku does have the likelihood of strong growth in emerging markets and is growing rapidly in its region. Therefore, if rates rise with demand being high then it looks to be a perfect combination to take the stock higher.
  • Small cap medical device company Unilife saw a 9.30% gain on Tuesday as Fitzgerald provided a massive price target of $7.50 - on a $2.35 stock. The outlook was a result of it being undervalued, according to the analyst, as the firm added that its risk profile is looking very good. Furthermore, the firm attributed its outlook to the company’s annual meeting, where some clarity to revenue and pipeline issues should be clarified. As an investor, my problem with this upgrade is that Unilife has very little revenue, high debt, and limited cash. Furthermore, I don’t see anything to warrant the outlook. Yet because of its 51% loss during the last six months, it was poised for a pop, and might trade higher as a result.
  • Ctrip.com is a $3.2 billion travel service provider in China that has seen significant top-line growth. However, according to Macquarie, the growth should continue as the Chinese online market should flourish in the coming years. Personally, this is not a stock I follow closely. However, one point that sticks out to me is its price/sales of nearly 1.0, which is extremely low in the online travel business. Last quarter we saw a quarter-over-quarter increase in margins, which has been a weakness as of late. If the company can continue to show margin strength then it is possible it could in fact trade higher.
  • For a water transportation company, StealthGas has been a complete gold mine for investors, with a 110% return in 2012. Some have suggested that it might now pull back, but not Global Hunter, a firm that gave the stock a price target of $10.00. The firm believes the company has a strong supply/demand outlook. The firm added that its higher charter coverage and strong balance sheet should support additional fleet growth in the year ahead. At this point, I see no reason to disagree, because the company has given us no reason to doubt its ability to perform with consistent growth.

The companies above are all of different sizes and operate in different industries. In fact, they share no similarities, except the fact that each traded higher and received a bullish upgrade on Tuesday. Regardless if you are bullish or bearish, each analyst provided a good reason for the outlook and enough of a reason to imply that these stocks are worth your due diligence, and may rise further. 


BrianNichols has no positions in the stocks mentioned above. The Motley Fool owns shares of Ctrip.com International. Motley Fool newsletter services recommend Ctrip.com International. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!

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