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Jorge Aura
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For over 10 years I have been involved with the financial world. I am currently an independent investor with amateur level.
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  • 3 Stocks Upgraded On October 1 To Consider 0 comments
    Oct 2, 2012 7:36 PM | about stocks: DUK, IACI, MLI

    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 October 1, and I chose the top three companies with a change on ratings.

    These significant changes are:

    • IAC/InterActiveCorp (NASDAQ:IACI) changed rating from hold to buy.
    • Duke Energy Corporation (NYSE:DUK) changed rating from hold to buy.
    • Mueller Industries Inc (NYSE:MLI) 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 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 a purchase of these stocks.

    Here is a look at the three stocks:

    1. IAC/InterActiveCorp (IACI) engages in the Internet business in the United States and internationally. The company’s Search segment develops, markets, and distributes various downloadable toolbars; provides search, reference, and content services through its destination search and other Websites, including Ask.com and Dictionary.com; and aggregates and integrates local advertising and content for distribution to publishers on Web and mobile platforms, as well as markets and distributes mobile applications through which it provides search and additional services. Its Match segment offers subscription-based and advertiser-supported online personals services through its Websites comprising Match.com, Chemistry.com, OurTime.com, BlackPeopleMeet.com, and OkCupid.com, as well as through mobile applications and Meetic-branded Websites.

    Chart Analysis

    (click to enlarge)

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

    New Rating

    Needham & Company upgraded IAC/InterActiveCorp from Hold to Buy with a price target of $65.00.

    Analyst at Needham $ Company, Kerry Rice, said:

    We are upgrading IAC to a BUY rating from HOLD given the strength of its Search Application growth, which should propel Search revenue and profitability ahead of expectations. Additionally, we believe the turnaround of Meetic is progressing and incremental marketing spend could accelerate IAC's Online Personals revenue ahead of expectations in 2013.

    Fundamental Analysis

    Consensus Recommendation

    (SOURCE)

    Financials

    The company reported the second-quarter results on August 1 with the following highlights:

    Revenue$680.61 Million
    Net Income$43.33 Million
    Cash$807.19 Million

    Short Interest

    Settlement DateShort InterestAvg Daily Share VolumeDays To Cover
    9/14/20123,359,587847,8243.962600
    8/31/20123,088,880674,6684.578370
    8/15/20122,290,559825,7022.774075


    My Fundamental and Chart Analysis

    The stock has a $55 price target from the Point and Figure chart. The short interest shows an increase. There have been nine insider selling transactions this year. The stock is trading at a forward P/E of 14.94. The MACD marks a change of upward trend and for this reason, I would purchase shares in the range $52.15-$52.30, with a target price of $55 (52 weeks high).

    2. Duke Energy Corporation (DUK) together with its subsidiaries, operates as an energy company in the United States and Latin America. The company operates in three segments: U.S. Franchised Electric and Gas, Commercial Power, and International Energy. The U.S. Franchised Electric and Gas segment generates, transmits, distributes and sells electricity in central and western North Carolina, western South Carolina, central, southwestern Ohio, north central and southern Indiana, and northern Kentucky; and transports and sells natural gas. This segment supplies electric service to 4 million residential, general service, and industrial customers; and provides regulated transmission and distribution services for natural gas to 500,000 customers in southwestern Ohio and northern Kentucky, as well as sells electricity on wholesale to incorporated municipalities, electric cooperative utilities, and other load serving entities. It generates electricity through nuclear, coal-fired, hydroelectric, combustion turbine, and combine cycle stations.

    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

    Argus upgraded Duke Energy from Hold to Buy.

    Fundamental Analysis

    Consensus Recommendation

    (SOURCE)

    Financials

    The company reported the second-quarter financial results on August 7 with the following highlights:

    Revenue$1.61 Billion
    Net Income$211 Million
    Cash$477 Million

    Short Interest

    Settlement DateShort InterestAvg Daily Share VolumeDays To Cover
    9/14/20125,626,4873,096,3861.817114
    8/31/20125,763,8183,253,9421.771334
    8/15/20126,452,7395,040,9221.280071

    My Fundamental and Chart Analysis

    The stock has a $66.25 price target from the Point and Figure chart. There have been nineteen insider selling transactions this year. The stock is trading at a forward P/E of 14.53. The MACD marks an upward trend and for this reason, I would purchase shares in the range $63.5-64, with a target price of $66.24.

    3. Mueller Industries Inc (MLI) engages in the manufacture and sale of copper, brass, plastic, and aluminum products in the United States, Canada, Mexico, Great Britain, and China. It operates in two segments, Plumbing and Refrigeration, and Original Equipment Manufacturers (OEM). The Plumbing and Refrigeration segment offers copper tubes in straight lengths and coils for plumbing applications; copper and plastic fittings, line sets, and related components for use in water distribution systems, heating systems, air-conditioning, and refrigeration applications, as well as for drainage, waste, and vent systems.

    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

    Buckingham Research upgraded Mueller Industries from Neutral to Buy with a price target of $57.00.

    Fundamental Analysis

    Consensus Recommendation

    (SOURCE)

    Financials

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

    Revenue$594.09 Million
    Net Income$17.91 Million
    Cash$373.68 Million

    Short Interest

    Settlement DateShort InterestAvg Daily Share VolumeDays To Cover
    9/14/2012628,087113,8925.514760
    8/31/2012633,12587,4547.239520
    8/15/2012653,551124,1755.263145

    My Fundamental and Chart Analysis

    The stock has a $48.5 price target from the Point and Figure chart. Short interest has decreased in a month. There have been nine insider selling transactions this year The stock is trading at a forward P/E of 16.16. I would buy a small speculative position at $47.6 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.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

    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.

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