Chris Lau, Kapitall: Stock upgrades can mean higher volatility but not necessarily higher return. Answer? Add to your watch list.
When a stock gets an analyst upgrade, the price appreciation that follows could mean profit taking shortly afterwards. Despite the short term volatility, investors might get better performance by simply adding upgraded stocks to their watch list. Once the activity dies down, investors might find a better entry point.
Read more from Kapitall: Try these 7 rallying Indian stocks as country gears up for elections
In the 3D printing sector, Stratasys (SSYS) is slightly above $100. The stock is down 27 percent from its 52 week high reached at the start of 2014. Goldman Sachs took a liking to the company by starting coverage of Stratasys as a “buy.” 3D Systems (DDD) is even more attractive, since its shares are down 50 percent from its high.In the software sector, VMware, Inc. (VMW) is a mere 8.6 percent from its yearly high. It was recently upgraded to Outperform from Crédit Lyonnais Securities Asia (“CLSA”). Demand for virtualization software is likely to remain strong, because it helps corporations reduce the cost of managing physical servers. When VMware reports on April 22, 2014, analysts expect the company to earn $0.79 per share. F5 Networks (FFIV), whose shares are also slightly below a yearly high, was upgraded by Stifel to “buy.” Channel checks were cited by analysts as having improving trends. F5 and VMware have an ongoing collaboration agreement to jointly develop security and access control solutions for customers. Valuation 3D printing companies remain expensive investing ideas, despite a pullback in their shares from yearly highs. F5 and VMware are more conservative investments, and are expected to deliver a strong quarter. The firms may even provide a strong guidance, which will mean more upside for investors.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV