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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 25, and I chose the top three companies with a change on ratings.

These significant changes are:

  • TiVo Inc. (NASDAQ:TIVO) changed rating from neutral to buy.
  • DIRECTV (NASDAQ:DTV) changed rating from hold to buy.
  • Gold Fields Limited (NYSE:GFI) 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 or hold 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. TiVo Inc. (TIVO) together with its subsidiaries, provides technology and services for television solutions, including digital video recorders (DVRs) and connected televisions in the United States and internationally. The company offers subscription-based TiVo service, which enhances home entertainment by providing consumers with a way to record, watch, and control live television, as well as to receive videos, pictures, and movies from cable, broadcast, and broadband sources in one interface. It also provides a platform for advertising and audience research measurement services.

Chart Analysis

(click to enlarge)

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

New Rating

Lazard Capital upgraded TiVo from Neutral to Buy after settlement with Verizon.

Fundamental Analysis

Consensus Recommendation

(SOURCE)

Financials

The company reported the second-quarter results on August 30 with the following highlights:

Revenue$65.25 Million
Net Income($27.74 Million)
Cash$122.51 Million

Short Interest

Settlement DateShort InterestAvg Daily Share VolumeDays To Cover
9/14/201212,508,9882,762,3234.528431
8/31/201211,416,2372,943,5763.878356
8/15/201211,730,5961,731,7746.77374

My Fundamental and Chart Analysis

The stock has a $11 price target from the Point and Figure chart. The short interest shows an increase. There have been seventeen insider buying transactions this year. The MACD marks an upward trend and for this reason, I would purchase shares with a target price of $11.

2. DIRECTV (DTV) provides digital television entertainment primarily in the United States and Latin America. The company engages in acquiring, promoting, selling, and distributing digital entertainment programming primarily via satellite to residential and commercial subscribers. It offers direct-to-home (DTH) digital television services, as well as multi-channel video programming distribution services under the DIRECTV and SKY brands. The company provides various channels of digital-quality video entertainment and CD-quality audio programming directly to subscribers' homes or businesses, including approximately 170 national high-definition television channels and 4 3D channels; and video-on-demand service, which provides movie and television programs to broadband-connected subscribers.

Chart Analysis

(click to enlarge)

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

New Rating

Hudson Square upgraded DIRECTV from Hold to Buy.

Fundamental Analysis

Consensus Recommendation

(SOURCE)

Financials

The company reported the second-quarter financial results on August 2 with the following highlights:

Revenue$7.22 Billion
Net Income$716 Million
Cash$2.13 Billion

Short Interest

Settlement DateShort InterestAvg Daily Share VolumeDays To Cover
9/14/201216,560,4593,265,7235.070993
8/31/201216,870,0493,498,8284.821629
8/15/201217,534,8215,023,1743.490785

My Fundamental and Chart Analysis

The stock has a $58 price target from the Point and Figure chart. There have been eleven insider selling transactions this year. The stock is trading at a forward P/E of 9.94. I would buy a small speculative position because the stock is in a bullish channel and the recent "upgrade" recommendation will help overcome the $58 target price.

3. Gold Fields Limited (GFI) engages in the acquisition, exploration, development, and production of gold properties. It holds interests in eight operating mines in South Africa, Peru, Ghana, and Australia. As of February 27, 2012, the company had total attributable precious metal and gold equivalent mineral resources of 217.0 million ounces and mineral reserves of 80.6 million ounces. Gold Fields Limited was founded in 1968 and is based in Sandton, South Africa.

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

BofA/Merrill Lynch upgraded Gold Fields from Neutral to Buy.

Fundamental Analysis

Consensus Recommendation

(SOURCE)

Financials

The company reported the second-quarter financial results on August 23 with the following highlights:

Revenue$1.4 Billion
Net Income$326.30 Million
Cash$649.10 Million

My Fundamental and Chart Analysis

The stock has a $18.39 price target from the Point and Figure chart. There have been sixteen insider buying transactions in September. The stock is trading at a forward P/E of 7.13. I would buy a small speculative position because the MACD marks a change of 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.

Source: 3 Stocks Upgraded On September 25 To Consider

Additional 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.