Analyst Upgrades Lift These Stocks
Edgar is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Profit gains after analysts' upgrades are particularly shown in small-cap stocks, since they are largely impacted when there are less outstanding shares available. Let us dissect a few names in the small-cap names that have seen improved fundamentals and caught the attention of Stifel Nicolaus, Wunderlich and Brean Murray.
Cousins Properties (NYSE: CUZ) is a $775 million real estate investment trust company that pays a hefty dividend yield of 2.5%. This Atlanta based diversified real estate trust company owns and manages a portfolio that consists of primarily four divisions: office/multifamily, retail, industrial, and land. One important aspect to remember about the company is that it qualifies as a real estate investment trust under the Internal Revenue Code, therefore is exempt from federal corporate income taxes if it distributes at least 90% of its taxable income to its stockholders. The stock is still well below its 52-week high of $9.19, but it has recently gained traction as the improving housing maket has provided the stock with the momentum it needs to move forward. I'm bullish on Cousin Properties for the remainder of the year. Analysts at Stifel Nicolaus have upgraded the stock from "hold" to a "buy".
ITC Holdings (NYSE: ITC) has also been upgraded by Wunderlich from "hold" to a "buy". This $3.88 billion company is engaged in electric transmission operations and generates its revenue from operating voltage systems in Michigan's Lower Peninsula and areas of Minnesota, Illinois, Missouri and Kansas. It earns cash through tariff rates charged from transmitting electricity from generating stations to local distribution facilities that are connected to its systems. In recent news, ITC and Mid-Kansas Electric Company, LLC have expanded their partnership agreement to develop transmission project in Kansas. Just like any other utilities company, this stock is for retired folks that are putting more emphasis on dividend consistency rather than price growth. The stock has been channelling for a year now, and even today with the analyst's upgrade it lost steam by the market close, declining 0.16%. I have a neutral to bearish position on the stock going forward.
Last but not least we have SJW Corp. (NYSE: SJW), a $456 million water utilities company that is engaged in purchase, storage, purification, distribution, wholesale and retail sale of water. The company's water supply consists of groundwater from wells, surface water from watershed runoff and diversion, as well as imported water purchased from the Santa Clara Valley water district. The company also provides water service to approximately 35,000 residents in the region between San Antonio and Austin Texas. After missing Q3's earnings results, it beat Q4 earnings by $0.05 reporting a profit of $0.17 per share. I'm neutral to bullish on the stock, as the fundamental outlook for the water utilities sub-industry reflects in the soft recovery of the housing market. Low borrowing rates continue to drive capital investments, while major players benefit from rate hikes and strategic acquisitions. Although some municipalities continue to hope for additional stimulus funding to upgrade their water systems, the trend for the next few years seems favorable. I'm a bull on SJW's price target of $29 and its ability to maintain the 3% dividend yield going forward.
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