6 Cash-Rich Stocks With Recent Upgrades

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Includes: AMD, KLAC, LUV, PRU, SVU, TCPTF
by: Vytautas Drumelis

I ran a screen for broker rating changes last week or so and picked out the stocks, which have been upgraded by the brokers and have relatively high cash reserves. I use a measure of P/C (Price/Cash) Ratio: The lower the ratio, the more cash in the company account you are buying with the stock.

This list is a quick pick list only. You may require further research into each of the stocks before making an investment decision. However, I believe it can give some food for thought if you are looking for cash-rich stocks and their recent positive fundamental changes.

1) Prudential Financial, Inc. (NYSE:PRU), through its subsidiaries, provides various financial products and services, including life insurance, annuities, retirement-related services, mutual funds and investment management services in the United States, Asia, Europe and Latin America.

On July 17, 2012, Prudential Financial was upgraded from Moderate Buy to Strong Buy by Raymond James.

The company has a Price/Cash Ratio of 1.60 (cash per share: $30.28; last closing price: $48.57). Other market ratios: P/E Ratio of 11.93, Forward P/E Ratio of 6.26, P/S Ratio of 0.47, P/B Ratio of 0.65, PEG Ratio of 1.00.

The median target price projected by analysts is $66.00, which means 35.9% upside potential from Thursday's price of $48.57.

2) Southwest Airlines Co. (NYSE:LUV) operates a passenger airline that provides scheduled air transportation in the United States.

On July 10, 2012, Southwest Airlines was upgraded to Strong Buy from Hold by Sterne, Agee & Leach, Inc.

The company has Price/Cash Ratio of 1.86 (cash per share: $4.93; last closing price: $9.15). Other market ratios: P/E Ratio of 26.14, Forward P/E Ratio of 8.39, P/S Ratio of 0.42, P/B Ratio of 0.99, PEG Ratio of 0.87.

  • On July 9, 2012, Southwest Airlines Co announced that the company, together with its subsidiary, AirTran Airways, Inc., has reached an agreement with Delta Air Lines, Inc., and Boeing Capital Corp., to lease or sublease all 88 of AirTran's Boeing 717 aircraft to Delta.

The median target price projected by analysts is $11.75, which means 28.4% upside potential from Thursday's price of $9.15.

3) Advanced Micro Devices, Inc. (NASDAQ:AMD) operates as a semiconductor company worldwide.

On July 9, 2012, Advanced Micro Devices was upgraded to Strong Buy from Hold by Jefferies & Company.

The company has Price/Cash Ratio of 2.21 (cash per share: $2.20; last closing price: $4.86). Other market ratios: Forward P/E Ratio of 7.71, P/S Ratio of 0.52, P/B Ratio of 3.23.

  • On July 9, 2012, Advanced Micro Devices announced that for the second quarter of 2012, it expects revenue to decrease approximately 11% sequentially. The company previously forecasted second-quarter 2012 revenue to increase 3% , plus or minus 3% sequentially.

The median target price projected by analysts is $6.00, which means 23.5% upside potential from Thursday's price of $4.86.

4) Thompson Creek Metals Company Inc. (TC) engages in mining, milling, processing, and marketing of molybdenum products in the United States and Canada.

On July 9, 2012, Thompson Creek was upgraded to Strong Buy from Hold by Deutsche Bank Securities.

The company has Price/Cash Ratio of 2.95 (cash per share: $0.97; last closing price: $2.85). Other market ratios: P/E Ratio of 2.97, Forward P/E Ratio of 5.59, P/S Ratio of 0.83, P/B Ratio of 0.27.

The median target price projected by analysts is $8.00, which means 180.7% upside potential from Thursday's price of $2.85.

5) Supervalu Inc. (NYSE:SVU), together with its subsidiaries, operates retail and wholesale food stores in the United States.

On July 11, 2012, Supervalu was upgraded to Neutral from Sell by UBS.

The company has Price/Cash Ratio of 3.33 (cash per share: $0.71; last closing price: $2.35). Other market ratios: Forward P/E Ratio of 2.80, P/S Ratio of 0.01, P/B Ratio of 7.86.

The median target price projected by analysts is $4.00, which means 70.2% upside potential from Thursday's price of $2.35.

6) KLA-Tencor Corporation (NASDAQ:KLAC) designs, manufactures, and markets process control and yield management solutions for the semiconductor and related nanoelectronics industries.

On July 12, 2012, KLA-Tencor Corporation was upgraded to Strong Buy from Moderate Buy by Calyon Securities (USA), Inc.

The company has Price/Cash Ratio of 3.48 (cash per share: $14.16; last closing price: $49.34). Other market ratios: P/E Ratio of 11.14, Forward P/E Ratio of 10.26, P/S Ratio of 2.60, P/B Ratio of 2.61, PEG Ratio of 1.11.

The median target price projected by analysts is $61.00, which means 23.6% upside potential from Thursday's price of $49.34.

Comparison Charts

The chart below compares the stock price changes as a percentage for the selected companies for the last one-year period.

Click to enlarge PRU Chart

PRU data by YCharts

Sources: Yahoo Finance, Google Finance, Finviz, YCharts.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.