Analysts Give Reasons to Buy these Stocks

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

An upsurge in analyst upgrades took place today, as high-profile firms gave their outlooks for various stocks. Such activity was more than what we usually see during a typical session. Therefore, I am looking at some of the top stock moving calls that took place and examining what was said to move these stocks.

<table> <tbody> <tr> <td> <p>Company</p> </td> <td> <p>Ticker</p> </td> <td> <p>Firm</p> </td> <td> <p>Call</p> </td> </tr> <tr> <td> <p><strong>Philip Morris</strong></p> </td> <td> <p><span class="ticker" data-id="210565">(NYSE: <a href="">PM</a>)</span></p> </td> <td> <p>Goldman Sachs</p> </td> <td> <p>Conviction Buy</p> </td> </tr> <tr> <td> <p><strong>Activision Blizzard</strong></p> </td> <td> <p><span class="ticker" data-id="202876">(NASDAQ: <a href="">ATVI</a>)</span></p> </td> <td> <p>Cowen</p> </td> <td> <p>Note</p> </td> </tr> <tr> <td> <p><strong>Informatica</strong></p> </td> <td> <p><span class="ticker" data-id="204030">(NASDAQ: <a href="">INFA</a>)</span></p> </td> <td> <p>JMP</p> </td> <td> <p>Note</p> </td> </tr> <tr> <td> <p><strong>NRG Energy</strong></p> </td> <td> <p><span class="ticker" data-id="204747">(NYSE: <a href="">NRG</a>)</span></p> </td> <td> <p>Goldman Sachs</p> </td> <td> <p>Conviction Buy</p> </td> </tr> </tbody> </table>

Philip Morris

Phillip Morris rallied 2% and has been one of the best performing stocks of the last three years, and on Friday Goldman Sachs gave reasons that it might be yet another great year for the tobacco company. The firm noted a product under development that is being catered for both the U.S. and Chinese markets. This new product would provide consumers with the experience of smoking without the harmful effects; the firm called this a “next generation product.”

Furthermore, the firm said that PM is the best combination of growth and yield of the large-cap consumer staples stocks. Therefore, Goldman added PM to its “Conviction Buy” list, and personally, I agree. There is no company in history that has had to overcome as much adversity as the tobacco companies, and yet PM keeps ticking higher.

Activision Blizzard

Activision Blizzard rallied higher by more than 5% on Friday after Cowen issued a positive note to managers asking that they ignore the bad industry data. The firm noted that Activision Blizzard had two top 10 games in the month of December and has growing catalysts for upcoming years.

Personally, I think suggesting to buy ATVI is a horrible idea. The company is growing and has strong margins but is fairly valued compared to its fundamentals. ATVI is not a value stock and as consumers continue to switch to mobile and tablets become more engaging, I don’t see the large demand or the “catalysts” for the company.


The oversold technology company Informatica rallied 5% today after JMP’s check indicated better than expected performance. The firm said that the company’s success rate in closing large deals has risen and that Q4 earnings should be above expectations. If the firm is correct then this is a stock that could trade considerably higher, as it has fallen greatly lower in recent months. I’m not ready to buy just yet, but the note itself is encouraging and worth noting.

NRG Energy

NRG Energy is now trading at 52-week highs after Goldman’s call pushed the stock higher by more than 1.5%. Goldman Sachs noted that NRG has the best-in-class free cash flow, which will enable the company to buy back shares and pay off debt. Furthermore, Goldman says the company should benefit from the Texas power market and should announce a positive capital allocation in the upcoming quarter to boost its price movement.

In my opinion, this is a company that has seen four consecutive years of declining margins, but has seen some improvements as of late. The stock is by no means overvalued, but is not cheap either, therefore I think there are better valued elsewhere.

A firm that offers reasons for their call is taken more seriously because they provide substance for their reasons. However, like all analyst calls, there are always two sides to a story -- for every bullish call there is someone else who is bearish. Therefore, use this information as part of your research, but it shouldn't dictate your investment decision. 

BrianNichols has no position in any stocks mentioned. The Motley Fool recommends Activision Blizzard and Informatica. The Motley Fool owns shares of Activision Blizzard. 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!

blog comments powered by Disqus