Avoid The Mistake That Investors Are Making Right Now

After finishing the week on a quiet note, Wall Street is off to the races today. The Dow and the S&P 500 are up around 0.8% while the NASDAQ has gapped up over 1%. And that makes sense, considering that many of today’s biggest winners are from the tech sector—particularly high-yield plays like Hewlett Packard Co. (HPQ), International Business Machines Corp. (IBM), Intel Corp. (INTC) and Microsoft Corp. (MSFT).

But a word to the wise: While these stock companies all pay respectable dividends, I don’t want you to follow the crowd. This is a classic case of people bottom fishing, and I expect this strategy to bite them back later. Just a quick run-through in Portfolio Grader shows you that not a single one of these stocks pulls off a buy rating. The strongest of the four, MSFT, is a C-rated hold while the others are outright sells. One only has to look this year’s estimates to see why:

  • Hewlett-Packard is due for a 13.6% drop in earnings.
  • International Business Machines is expected see sales fall 0.8%.
  • Intel Corp.’s earnings are expected to fall 12.2%.
  • Microsoft is headed towards just 1.1% bottom-line growth.

This is just one example of why it pays to run your stocks through my Portfolio Grader tool. This stock screening tool is based on cold hard data rather than hype. As the choppy summer trading season kicks off, it will be more important than ever to ignore the market’s knee-jerk reactions and let the data, not your emotions, dictate your actions.

On that note, let’s look at the 56 big blue chips that have been upgraded and downgraded this weekend. After taking a close look at the latest data on institutional buying pressure and each company’s fundamental health, I decided to revise my Portfolio Grader recommendations for each of the stocks listed below.

Upgrades

Last Week’s Holds, Now Buys

Symbol Company Name Quantitative Fundamental
AEG Aegon N.V. ADS B C
BAC Bank of America Corp. B D
BAP Credicorp Ltd. B B
C Citigroup Inc. B C
CTRX Catamaran Corp B C
CX Cemex SAB de CV ADR B C
DG Dollar General Corp. B B
GWW W.W. Grainger Inc. B B
HES Hess Corp. B C
NKE Nike Inc. Cl B B B
PFG Principal Financial Group Inc. B B
PNR Pentair Ltd. B C
RSG Republic Services Inc. A C
SNN Smith & Nephew PLC ADS B C
TWC Time Warner Cable Inc. B C
UAL United Continental Holdings Inc. B C
WM Waste Management Inc. B C

Last Week’s Sells, Now Holds

Symbol Company Name Quantitative Fundamental
ABB ABB Ltd. ADS C C
AMAT Applied Materials Inc. C C
BG Bunge Ltd. C D
CHK Chesapeake Energy Corp. C C
CME CME Group Inc. Cl A C D
FDX FedEx Corp. C C
FTI FMC Technologies Inc. D C
GD General Dynamics Corp. C D
GLW Corning Inc. D C
HAL Halliburton Co. C C
HOG Harley-Davidson Inc. D B
ING ING Groep N.V. ADS D B
LO Lorillard Inc. D B
MSFT Microsoft Corp. D B
NSC Norfolk Southern Corp. D C
ROK Rockwell Automation Inc. C C
SNE Sony Corp. ADS C D
TOT Total S.A. ADS D C
UPS United Parcel Service Inc. Cl B C D

Downgrades

Last Week’s Buys, Now Holds

Symbol Company Name Quantitative Fundamental
AON AON Plc C B
CNI Canadian National Railway Co. C C
COV Covidien PLC C C
EQIX Equinix Inc. C C
KO Coca-Cola Co. C C
MA MasterCard Inc. Cl A C B
MSI Motorola Solutions Inc. C C
RRC Range Resources Corp. C C
VRX Valeant Pharmaceuticals B C

Last Week’s Holds, Now Sells

Symbol Company Name Quantitative Fundamental
AGU Agrium Inc. D C
AMZN Amazon.com Inc. D C
BBBY Bed Bath & Beyond Inc. D B
BHI Baker Hughes Inc. D D
CCL Carnival Corp. D C
ENI Enersis S.A. ADS D C
EXC Exelon Corp. D D
INFY Infosys Ltd. ADR D C
INTU Intuit Inc. D C
MAR Marriott International Inc. D B
MJN Mead Johnson Nutrition Co. D C

Sincerely,

Louis Navellier

Louis Navellier

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