Facebook (FB) Is Now a Buy (and 67 Big-Name Upgrades and Downgrades)

Yep—you read that correctly. After spending months in sell territory, Facebook.com Inc. (FB) has made a complete turnaround in a matter of days. Over the weekend, my Portfolio Grader screening tool picked up on a number of key changes:

  • The stock’s Quantitative Grade, which measures the current level of buying pressure, was upgraded from D to B.
  • The Fundamental Grade, which measures Facebook’s financial health on eight levels, was upgraded from C to B. This was caused by
    • Analyst Earnings Revisions, which were upgraded from B to A.
    • Earnings Surprises, which were upgraded from D to A.

Facebook.com Inc.’s change in fortune is all related to its second-quarter earnings announcement, which was released on Friday morning. According to Mark Zuckerberg, the company’s drive to be more mobile friendly is finally paying off. In fact, Facebook’s mobile business accounted for 41% of its advertising revenue last quarter! So compared with Q2 2012, revenues jumped 53% to $1.81 billion. This trounced the $1.62 billion consensus estimate. Meanwhile the company saw adjusted earnings of $0.19 per share, beating the $0.14 consensus earnings estimate by nearly 36%.

Shares of FB surged to a new high after the news and have been climbing since. But the consensus is that there’s further upside from here: Facebook still accounts for just about 4% of the digital advertising market.  The analyst community certainly thinks there’s room for growth. Last Friday’s announcement sparked a race to the top as analysts have hiked up their earnings estimates:

  • Q3: The consensus earnings estimate has jumped 29% to $0.18 per share.
  • Q4: The consensus estimate has risen 24% to $0.21 per share.
  • 2013: The consensus estimate has climbed 23% to $0.70 per share.
  • 2014: The consensus estimate has jumped 19% to $0.93 per share.

The Facebook announcement is a textbook case why earnings season is such an important time for investors. And I believe that there are plenty of surprises—and upsets—to come. So I strongly recommend that you to continue running your stocks through Portfolio Grader; you can do this quickly and easily by saving your portfolio to the system.

In the meantime, let’s look at the 67 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.


Last Week’s Holds, Now Buys

Symbol Company Name Quantitative Grade Fundamental Grade
AME Ametek Inc. B B
APD Air Products & Chemicals Inc. B C
ATVI Activision Blizzard Inc. B B
CHT Chunghwa Telecom Co. Ltd. ADS B C
CIT CIT Group Inc. B C
JCI Johnson Controls Inc. B C
KOF Coca-Cola Femsa S.A.B. de C.V. ADS B C
LLY Eli Lilly & Co. C B
MCK McKesson Corp. A B
MDLZ Mondelez International Inc. Cl A B C
TRIP TripAdvisor Inc. A B
UAL United Continental Holdings Inc. B C

Last Week’s Sells, Now Holds

Symbol Company Name Quantitative Grade Fundamental Grade
AZN AstraZeneca PLC ADS C C
CA CA Inc. D B
CLR Continental Resources Inc. Oklahoma D B
CVX Chevron Corp. D C
DG Dollar General Corp. D C
EEP Enbridge Energy Partners L.P. Cl A C D
ESRX Express Scripts Holding Co D B
MJN Mead Johnson Nutrition Co. D C
NJ Nidec Corp. ADS C D
PLD Prologis Inc. D B
PX Praxair Inc. D C
SSL Sasol Ltd. ADS D C


Last Week’s Buys, Now Holds

Symbol Company Name Quantitative Grade Fundamental Grade
ACN Accenture PLC C B
ADP Automatic Data Processing Inc. C C
AMAT Applied Materials Inc. B D
BAX Baxter International Inc. C C
CB Chubb Corp. C B
CCI Crown Castle International Corp. C C
CMCSK Comcast Corp. Cl A Special C C
COST Costco Wholesale Corp. C C
DHR Danaher Corp. C B
EOG EOG Resources Inc. C C
GWW W.W. Grainger Inc. C B
ICE IntercontinentalExchange Inc. C C
KSU Kansas City Southern C C
MSI Motorola Solutions Inc. C B
NBL Noble Energy Inc. C B
NGG National Grid PLC ADS C C
PNR Pentair Ltd. C C
RSG Republic Services Inc. C C
SHW Sherwin-Williams Co. C C
SNDK SanDisk Corp. D B
STX Seagate Technology Inc. C C
SYK Stryker Corp. B C
SYY Sysco Corp. B C
UL Unilever PLC ADS C B
UNP Union Pacific Corp. C C

Last Week’s Holds, Now Sells

Symbol Company Name Quantitative Grade Fundamental Grade
BBDO Banco Bradesco S/A ADS D C
CAM Cameron International Corp. F C
DE Deere & Co. D B
ERIC Ericsson ADR D D
FTI FMC Technologies Inc. F B
GE General Electric Co. D C
HMC Honda Motor Co. Ltd. ADS D D
JNPR Juniper Networks Inc. D B
JWN Nordstrom Inc. D C
PH Parker-Hannifin Corp D C
RAI Reynolds American Inc. D C
SDRL Seadrill Ltd. D B
VTR Ventas Inc. D B
WY Weyerhaeuser Co. D B


Louis Navellier

Louis Navellier

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