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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 28, and I chose the top three companies with a change in ratings.

The companies with significant changes are:

  • Atwood Oceanics (ATW) changed rating from neutral to buy.

  • Actuant Corporation (ATU) changed rating from neutral to buy.

  • Research In Motion Limited (RIMM) changed rating from market perform 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 close 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 the change from hold, market perform or neutral to buy. It is considered a very significant change because 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 improvement of the companies' cash. These are two keys to perform a follow-up or think in any purchase of these stocks.

Here is a look at the three stocks:

1. Atwood Oceanics Inc an offshore drilling contractor, engages in the drilling and completion of exploratory and developmental oil and gas wells worldwide. The company owns 10 mobile offshore drilling units located in the U.S. Gulf of Mexico, South America, the Mediterranean Sea, west Africa, Southeast Asia, and Australia. It also has an ultra-deepwater semisubmersible, two ultra-deepwater drillships, and three high-specification jack ups under construction.

Chart Analysis

(click to enlarge)

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

New Rating

Guggenheim upgraded Atwood Oceanics from Neutral to Buy with a price target of $57.00 (from $44.00).

Fundamental Analysis

Consensus Recommendation

(Source)

Financials

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

Revenue$178.60 Million
Net Income$51.71 Million
Cash$78.98 Million

Short Interest

Settlement DateShort InterestAvg Daily Share VolumeDays To Cover
9/14/20122,617,850463,9295.642782
8/31/20122,686,064276,8939.700729
8/15/20122,672,074394,9706.765258

My Fundamental and Chart Analysis

The stock has a $43.29 price target from the Point and Figure chart. The short interest shows a decrease. There have been seven insider selling transactions this year. The stock is trading at a forward P/E of 9.07. The MACD marks a downward trend and for this reason, I would purchase shares in the range $43.29-$43.30, with a target price of $49.75 (52 week high).

2. Actuant Corporation designs, manufactures, and distributes industrial products and systems worldwide. The company’'s Industrial segment provides hydraulic tools, heavy lifting solutions, work holding solutions, and concrete stressing products to the maintenance, industrial, infrastructure, and production automation markets. Its Energy segment offers joint integrity products, which consist of hydraulic torque wrenches, bolt tensioners, and portable machining equipment; and umbilical, rope, and cable solutions to the oil and gas, power generation, and energy markets.

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

SunTrust Robinson Humphrey upgraded Actuant from Neutral to Buy with a price target of $34.50.

Fundamental Analysis

Consensus Recommendation

(Source)

Financials

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

Revenue$429.21 Million
Net Income$34.40 Million
Cash$80.14 Million

Short Interest

Settlement DateShort InterestAvg Daily Share VolumeDays To Cover
9/14/20126,061,426640,1139.469306
8/31/20126,034,449361,44416.695391
8/15/20126,439,130507,23012.694695

My Fundamental and Chart Analysis

The stock has a $26.92 price target from the Point and Figure chart. There have been six insider selling transactions this year. The stock is trading at a forward P/E of 12.66. The MACD marks a downward trend and for this reason, I would purchase shares in the range $26.92-$27, with a target price of $31.33 (52 week high).

3. Research In Motion Limited designs, manufactures, and markets wireless solutions for the mobile communications market worldwide. It provides platforms and solutions for access to information, including email, voice, instant messaging, short message service, Internet and Intranet-based browsing, and multimedia content through developing integrated hardware, software, and services. The company’'s BlackBerry smartphones use wireless, push-based technology that delivers data to mobile users’ business and consumer applications. Its BlackBerry smartphone portfolio includes BlackBerry Bold series, BlackBerry Torch series, BlackBerry Curve series, and the BlackBerry PlayBook tablet. The company’s BlackBerry enterprise solutions comprise BlackBerry enterprise server, BlackBerry enterprise server express, BlackBerry mobile voice system, and hosted BlackBerry services.

Chart Analysis

(click to enlarge)

  • The MACD marks an upward trend. RSI is in a good position.

New Rating

Cormark upgraded Research In Motion Ltd. from Market Perform to Buy with a C$12 target.

Fundamental Analysis

Consensus Recommendation

(Source)

Financials

The company reported second-quarter financial results on September 27 with the following highlights:

Revenue$2.81 Billion
Net Income($518 Million)
Cash$711 Million

Short Interest

Settlement DateShort InterestAvg Daily Share VolumeDays To Cover
9/14/201282,637,08116,214,5965.096463
8/31/201287,479,97112,013,4297.281849
8/15/201286,666,20922,117,3733.918468

My Fundamental and Chart Analysis

The stock has a $11.43 price target from the Point and Figure chart. Short interest has decreased in a month. There have been seven insider buying transactions this year The stock is trading at an incalculable forward P/E. I would buy a small speculative position at $7.5 because the MACD marks an upward trend and there's 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.

Disclaimer: 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 28 To Consider