These Are the Three (3) Most Upgraded Stocks For Q2

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Follow The Upgrades To These Stocks

When we began working on this post the idea was to write up the three most upgraded stocks so far in Q2. We discovered that all three of the most upgraded stocks in Q2 were energy stocks. In fact, energy stocks hold the top four (4) positions, hold 5 of the top 6, and they hold 8 of the top 10 spots along with many in the 11-20 range. The other two spots in the top 10 include a mining company and a health care play that we find interesting as well.



MarketBeat.com – MarketBeat

Energy Is The Most Upgraded Sector In Q2

When you look at the price of oil (NYSEARCA: USO) and the estimates for energy earnings it is easy to understand why the sector is getting so much love from the analysts. Earnings in the sector are up 268% in Q1 versus last year and that is more than 2300 basis points better than what the market expected at the start of the reporting cycle. Looking forward, the sector is expected to post nearly 200% EPS growth in the 2nd quarter and that figure is up 5700 bps from the start of the quarter and rising, as is the full-year estimate. The full-year estimate is the most tepid of all, only 100%, but the estimates for Q3 and Q4 are still trailing. The takeaway is the FY consensus estimate is up 2600 basis points since the beginning of the second quarter and oil prices are on the rise too.

Looking at the chart of WTI, this market is going higher. There is no way to lower prices if there is tightening supply and increased demand. Also, there is always the possibility of supply disruptions. The U.S. has a long-term low in strategic reserve, gasoline, and diesel stocks. This is another factor driving higher prices. We expect WTI to retest the all-time high by the summer, and then it could move higher. The bottom line is that energy prices have risen dramatically, resulting in huge profits in a low-yielding sector. Exxon (NYSE: XOM), the top holding in the XLE Energy Sector SPDR (NYSEARCA: XLE), trades at less than 10X its earnings while yielding more than 3.5%. These numbers are attractive to us.
These Are the Three (3) Most Upgraded Stocks For Q2

Diversified Miner Tech Resources Limited Pushed Higher By Analysts

Tech Resources (NYSE: TECK) is not a high-yielding stock but it is a deep value in diversified mining. The company operates in many countries around the globe, mining gold, copper and zinc as well as some chemicals. Due to the strength in several markets, the stock received a string price target increase. We expect this trend to continue after the next earnings report. As it is, the Marketbeat.com consensus estimate is firm Buy and that has held steady over the last 12 months. The Marketbeat.com consensus price target, however, is up in the 12, 3, and 1-month comparisons, the only negative is that price action is only 6% below the consensus target but we see it trending higher over the next quarter or two at least.
These Are the Three (3) Most Upgraded Stocks For Q2

Cigna Is On Break Out Watch

Health insurer Cigna (NASDAQ: CI) rounds out today’s list and comes in 7th in terms of upgrades and price target increases over the last 90 days. This company not only received price target increases following the last earnings report but new coverage as well. The consensus rating of this company is a firm Buy, with firming. However, the price target is rising in the 3- and 1-month comparisons. The consensus target is approximately 8% higher than the current price action, but would be a new record if it was reached. The consensus target is trending higher, and the technical action is also bullish. Based on the chart, we expect to see this stock break out within the next few weeks if not days, and move up to the $280 to $290 region soon after.
These Are the Three (3) Most Upgraded Stocks For Q2



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