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Nokia Corporation (NOK), RadioShack Corporation (RSH), International Paper Company (IP), and Joy Global Inc. (JOY) had received positive upgrades from analysts recently. In this article, these four stocks will be analyzed fundamentally and technically. Investing strategies will also be reviewed.

Nokia Corporation

NOK was down 3.18% and closed at $3.65 on February 28, 2013. NOK had been trading in the range of $1.63-$5.57 in the past 52 weeks. NOK has a market cap of 13.67B and a beta of 1.57.

On February 27, 2013, Argus upgraded NOK from Hold to Buy with a $6 price target. Analysts have a mean target price of $3.73 and a median target price of $3.13 for NOK. Analysts, on average, are estimating an EPS of $-0.06 with revenue of $8.74B for the current quarter ending in March, 2013. For 2013, analysts are predicting an EPS of $0.07 with revenue of $38.58B, which is 2.70% lower than 2012.

There are a few positive factors for NOK:

  • Positive updates from Lumia phones
  • Lower P/B and P/S of 1.3 and 0.4 (vs. the industry averages of 2.2 and 1.6)
  • NOK has a total cash of $13.43B with a total debt of $7.18B. NOK has a book value of $2.81 per share

Technically, the MACD (12, 26, 9) indicator is bearish. The momentum indicator, RSI (14), is indicating a bearish lean at 39.44. NOK is currently trading below its 50-day MA of $4.10 and above its 200-day MA of $3.04, as seen from the chart below.

(click to enlarge)

Source: StockCharts.com

How to Invest

For conservative, bullish investors, it is safer until technical indicators, MACD and RSI (14), turn neutral or bullish, before establishing the long-term positions. Investors need to watch out for $3.43 (S1 pivot point) and $3.04 (200-day MA) as supporting levels. Investors can also review the following ETFs to gain exposure to NOK:

  • NASDAQ CEA Smartphone Index Fund (FONE), 2.86% weighting
  • Multi-Asset Income ETF (CVY), 1.22% weighting

RadioShack Corporation

RSH was down 8.54% and closed at $3.00 on February 28, 2013. RSH had been trading in the range of $1.90-$7.28 in the past 52 weeks. RSH has a market cap of $298.69M with a beta of 1.53.

On February 27, 2013, Raymond James upgraded RSH from Underperform to Market Perform. Analysts have a mean target price of $2.59 and a median target price of $2.50 for RSH. Analysts are estimating an EPS of $-0.08 with revenue of $973.13M for the current quarter ending in March, 2013. For 2013, analysts are projecting an EPS of $-0.38 with revenue of $40.01B, which is 5.70% less than 2012.

There are a few negative factors for RSH:

  • Lower revenue growth (3-year average) of 1.2 (vs. the industry average of 7.5)
  • Lower operating margin of -1.1% and net margin of -1.5% (vs. the industry averages of 4.4% and 4.2)
  • Weaker ROE of -8.8 (vs. the average of 17.6)
  • Higher debt/equity of 0.7 (vs. the average of 0.3)

Technically, the MACD (12, 26, 9) indicator is showing a bearish trend. RSI (14) is declining and is near neutral at 49.24. RSH is currently trading above its 50-day MA of $2.69 and 200-day MA of $2.95, as seen from the chart below.

(click to enlarge)

Source: StockCharts.com

How to Invest

Despite the analyst's recent upgrade, it is suggested for investors to stay on the side line until seeing the fundamental improvements for RSH. In the short term, it is important to watch out for the key supporting levels at 200-day MA and 50-day MA.

International Paper Company

IP was down 0.09% and closed at $44.01 on February 28, 2013. IP had been trading in the range of $27.29-$44.74 in the past 52 weeks. IP has a market cap of $19.33B with a high beta of 2.21.

IP received multiple upgrades recently. On February 27, 2013, Longbow Research upgraded IP from Neutral to Buy with a price target of $56.00. On February 25, 2013, JPMorgan upgraded IP from Neutral to Overweight with a price target of $51.00 (from $46.00). Lastly, on February 26, 2013, Jefferies initiated coverage on IP with a Buy rating and $52 price target saying a price hike and higher dividend are within reach. The analyst also commented,

We are initiating coverage on IP with a Buy, driven by our positive view on the containerboard industry and the company's strong FCF profile. As the industry continues to show improved pricing power and discipline, and management proves it's committed in returning cash to shareholders, we believe the stock will get re-rated.

Analysts have a mean target price of $49.07 and a median target price of $49.00 for IP. Analysts, on average, are estimating an EPS of $0.73 with revenue of $7.03B for the current quarter ending in March, 2013. For 2013, analysts are predicting an EPS of $3.75 with revenue of $29.10B, which is 4.50% higher than 2012.

There are a few positive factors for IP:

  • Higher revenue growth (3-year average) of 6.0 (vs. the industry average of 2.9)
  • Stronger ROE of 12.3 (vs. the average of 10.9)
  • Lower P/E, P/B, and P/S of 23.5, 2.8, and 0.7 (vs. the industry average of 38.0, 2.9, and 0.8)
  • Lower Forward P/E of 10.1 (vs. the S&P 500's average of 14.0)
  • IP generates an operating cash flow of $2.97B with a levered free cash flow of $377.00M
  • IP offers an annual dividend yield of 2.73%

Technically, the MACD (12, 26, 9) indicator is showing a bullish trend. RSI (14) is indicating a strong bullish lean at 63.03. IP is currently trading above its 50-day MA of $41.00 and 200-day MA of $34.84, as seen from the chart below.

(click to enlarge)

Source: StockCharts.com

How to Invest

For bullish investors, a credit put option spread of April 20, 2013 $39/$41 put can be reviewed. Investors can also review the following ETFs (with top 3 weighting) to gain exposure to IP:

  • Timber ETF (CUT), 4.68% weighting
  • S&P Global Timber & Forestry Index Fund (WOOD), 4.11% weighting
  • Materials Select Sector SPDR (XLB), 3.85% weighting

Joy Global Inc.

JOY was up 0.10% and closed at $63.34 on February 24, 2013. JOY had been trading in the range of $47.69-$93.10 in the past 52 weeks. JOY has a market cap of $6.85B with a high beta of 2.12.

On February 28, 2013, Credit Agricole upgraded JOY from Underperform to Buy with a price target of $78.00 (from $72.00). Analysts have a mean target price of $73.0 and a median target price of $74.00 for JOY. Analysts, on average, are estimating an EPS of $1.63 with revenue of $1.30B for the current quarter ending in April, 2013. For 2013, analysts are projecting an EPS of $6.20 with revenue of $5.07B, which is 10.40% lower than2012.

There are a few positive factors for JOY:

  • Higher revenue growth (3-year average) of 16.3 (vs. the industry average of 0.9)
  • Higher operating margin of 20.7% and net margin of 13.5% (vs. the industry averages of 12.5% and 7.2%)
  • Stronger ROE of 33.6 (vs. the average of 24.9)
  • Lower debt/equity of 0.5 (vs. the average of 1.4)
  • Lower P/E and P/B of 8.8 and 2.6 (vs. the industry averages of 11.7 and 2.7)
  • Lower Forward P/E of 8.0 (vs. the S&P 500's average of 14.0)
  • JOY generates an operating cash flow of $442.86M with a levered free cash flow of $1.05B
  • JOY currently offers an annual dividend yield of 1.11%

Technically, the MACD (12, 26, 9) just turned bullish in the last trading day. RSI (14) is currently near neutral at 51.79. JOY is currently trading between its 50-day MA of $63.93 and $58.23, as seen from the chart below.

(click to enlarge)

Source: StockCharts.com

How to Invest

It is important to see if JOY can break through its 50-day MA to determine its short-term direction. For bullish investors, a credit put option spread of April 20, 2013 $55/$57.5 put can be reviewed. Investors can also review the following ETFs to gain exposure to JOY:

  • Market Vectors Coal ETF (KOL), 6.86% weighting
  • PureFunds ISE Mining Services ETF (MSXX), 5.75% weighting
  • IQ Global Resources ETF (GRES), 2.21% weighting

Note: All prices are quoted from the closing of February 28, 2013. Investors and traders are recommended to do their own due diligence and research before making any trading/investing decisions.

Source: 4 Stocks With Positive Upgrades And How To Invest