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Speculating on companies that have recently changed their ratings can be a good short-term strategy. Normally, companies will see increases in their prices after these changes. The ratings are updated daily and can therefore change daily. They can change because of a change in the analyst's estimate of the stock's fair value, a change in the analyst's assessment of a company's business risk, or a combination of any of these factors.

I assessed companies which were upgraded on September 24, and I chose the top three companies with a change on ratings.

These significant changes are:

  • Robert Half International Inc (NYSE:RHI) changed rating from neutral to buy.
  • SVB Financial (NASDAQ:SIVB) changed rating from neutral to buy.
  • Netspend Holdings Inc (NASDAQ:NTSP) changed rating from neutral to buy.

These ratings are a way to qualify how the analyst views the potential for stock price appreciation. When an analyst changes his/her rating, the security's price may change. This depends on how closely investors follow the analyst's recommendations. An upgrade generally tends to increase the price, while a downgrade does the opposite. However, it is not only the change but the reason for the change that is important to understand.

These three stocks are valued for a change from neutral to buy. It is considered a very significant change because their ratings had remained static for a long time. This change has to strongly favor the valuation of the companies mentioned above as well as the vision of future investors. Normally, these changes for the better are due to lower debt and improvements in the companies' cash position. These are two keys to perform a follow-up or think in terms of a purchase of these stocks.

Here is a look at the three stocks:

1. Robert Half International Inc. provides staffing and risk consulting services in North America, South America, Europe, Asia, and Australia. Its Accountemps division offers temporary staffing in the fields of accounting, tax, and finance. The company’s OfficeTeam division places temporary and full-time office and administrative personnel, ranging from word processors to office managers. Its Robert Half Finance & Accounting division engages in the placement of full-time accounting, financial, tax, and banking personnel. The company’s Robert Half Technology division provides information technology contract consultants; and places full-time employees in the areas, ranging from multiple platform systems integration to end-user support, including specialists in programming, networking, systems integration, database design, and help desk support.

Chart Analysis


(Click to enlarge)

- The MACD marks a change of upward trend. RSI is in a good position.

New Rating

BofA/Merrill Lynch upgraded Robert Half from Neutral to Buy.

Fundamental Analysis

Consensus Recommendation

(SOURCE)

Financials

The company reported the second-quarter results on August 3 with the following highlights:

Revenue $1.02 Billion
Net Income $45.10 Million
Cash $258.57 Million

Short Interest

Settlement Date Short Interest Avg Daily Share Volume Days To Cover
9/14/2012 9,019,973 1,802,851 5.003172
8/31/2012 8,074,498 1,297,528 6.222986
8/15/2012 7,245,387 1,079,919 6.709195

My Fundamental and Chart Analysis

The stock has a $32.32 price target from the Point and Figure chart. The short interest shows an increase. There have been three insider selling transactions this year. The MACD marks a change of upward trend and for this reason, I would purchase shares with a target price of $32.32 (52 wk high).

2. SVB Financial Group (SIVB) a diversified financial services company, provides various banking and financial products and services. The company offers deposit products, such as traditional deposit and checking accounts, certificates of deposit, money market accounts, and sweep accounts, as well as lockbox and merchant services; and lending products and services, including traditional term loans, equipment loans, asset-based loans, revolving lines of credit, accounts-receivable-based lines of credits, capital call lines of credits, and credit cards. It also provides cash management products and services comprising wire transfer and automated clearing house payment services, collection services, disbursement services, electronic funds transfers, and online banking services.

Chart Analysis


(Click to enlarge)

- The MACD marks a change of upward trend. The stock is in a bullish channel. RSI is in a good position.

New Rating

Sterne Agee upgraded SVB Financial from neutral to buy with a price target of $71.00.

Fundamental Analysis

Consensus Recommendation

(SOURCE)

Financials

The company reported the second-quarter financial results on August 8 with the following highlights:

Assets $21,289.77 Billion
Net Income $47.60 Million
Cash $1.41 Billion

Short Interest

Settlement Date Short Interest Avg Daily Share Volume Days To Cover
9/14/2012 1,194,664 278,197 4.294309
8/31/2012 1,156,810 263,948 4.382719
8/15/2012 1,013,233 256,565 3.949225

My Fundamental and Chart Analysis

The stock has a $65 price target from the Point and Figure chart. There have been thirty-one insider selling transactions this year. The stock is trading at a forward P/E of 16.51. I would buy a small speculative position in the range of $61 because the MACD marks a change of upward trend and the recent "upgrade" recommendation will help overcome the $65 target price.

3. Netspend Holdings Inc (NTSP) together with its subsidiaries, provides general purpose reloadable (NYSEMKT:GPR) prepaid debit and payroll cards, and alternative financial service solutions to underbanked and other consumers in the United States. Its GPR cards offer access to FDIC-insured depository accounts with a menu of pricing and features tailored to underbanked consumers needs; and serves as access devices to an FDIC-insured depository account with a bank. The company also provides various products and services to its cardholders, such as direct deposit, interest-bearing savings accounts, bill pay functionality, card-to-card transfer capability, personal financial management tools, and online and mobile phone card account access, as well as overdraft protection through its issuing Banks, and complimentary insurance coverage services.

Chart Analysis


(Click to enlarge)

- The MACD marks an upward trend. The stock is in a bullish channel. RSI is in a good position.

New Rating

SunTrust Robinson Humphrey upgraded NetSpend from neutral to buy with a price target of $12.50.

Fundamental Analysis

Consensus Recommendation

(SOURCE)

Financials

The company reported the second-quarter financial results on August 8 with the following highlights:

Revenue $85.33 Million
Net Income $10.16 Million
Cash $31.17 Million

Short Interest

Settlement Date Short Interest Avg Daily Share Volume Days To Cover
9/14/2012 7,195,776 458,005 15.711130
8/31/2012 6,964,091 761,331 9.147258
8/15/2012 6,140,917 1,310,572 4.68567

My Fundamental and Chart Analysis

The stock has a $10.5 price target from the Point and Figure chart. Short interest has increased in a month. There have been one insider buying transactions this year. The stock is trading at a forward P/E of 14.29. I would buy a small speculative position because the MACD marks an upward trend and the recent "upgrade" recommendation.

*Chart data sourced from stockcharts, all other data sourced from Nasdaq.com and yahoo.com as well as the webs of the previously mentioned companies.

Business disclosure: Investors buy and/or sell at their own risk. I declare that I may day-trade any stock at any time mentioned in this article. For me "long" is until I sell and few tell you that. I do not "short" stocks and few tell you that too. I also get paid one penny per view from SA and other than being published by SA and my own private stock account, I have zero connection to Wall Street and few tell you that too.

Source: 3 Stocks Upgraded On September 24 To Consider