Ratings Upgrades Boost Underperformers

Ratings upgrades are benefiting a trio of small-caps that have lagged the stock market.
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BOSTON (TheStreet) -- Ratings upgrades by TheStreet boosted the following small-cap companies to "buy." Most analysts already have "buy" ratings on the companies. They project their shares will rise an average of 15%.

3. Aqua America

(WTR) - Get Report

is a regulated utility that provides water and wastewater services in the U.S. During the past three years, it has increased revenue 7.9% annually, on average. In the fourth quarter, 11 of its 15 largest shareholders enlarged their bets.

Quarter

: Fourth-quarter profit increased 3.9% to $27 million, or 20 cents, as revenue grew 5% to $168 million. The operating margin remained steady at 36%. It has $22 million of cash and $1.5 billion of debt, converting to a debt-to-equity ratio of 1.3.

Stock

: Aqua America has dropped 7.1% during the past year, underperforming U.S. stock-market indices. It trades at a price-to-sales ratio of 3.7, a 31% discount to its peer average. It's expensive based on projected earnings and book value.

Consensus

: Of analysts covering Aqua America, nine, or 69%, advise purchasing its shares and four recommend holding them.

Brean Murray Carret

expects the stock to advance 44% to $26.

Hilliard Lyons

predicts the shares will rise 28% to $23.

2. Greif

(GEF) - Get Report

sells industrial packaging products. During the past three years, it has lifted net income 3% annually, on average. In the fourth quarter, nine of its 15 largest shareholders, including

JPMorgan Chase

(JPM) - Get Report

, purchased more stock.

Quarter

: Greif swung to a fiscal first-quarter profit of $25 million, or 52 cents, from a loss of $2.3 million, or 4 cents, a year earlier. Revenue climbed 6.5%. The operating margin widened from 5.7% to 9.2%. Greif has $89 million of cash and $942 million of debt.

Stock

: Greif has appreciated 32% during the past 12 months, lagging behind major stock-market benchmarks. It sells for a price-to-projected-earnings ratio of 11 and a price-to-book ratio of 2.3, 23% and 15% discounts to peer averages. The shares offer a 2.8% dividend yield.

Consensus

: Of researchers following Greif, four, or 67%, rate its stock "buy," one rates it "hold" and one ranks it "sell."

D.A. Davidson

believes it will rise 35% to $72.

Janney Montgomery Scott

expects the shares to hit $66 and

KeyBank

(KEY) - Get Report

predicts $65.

1. Aecom Technology

(ACM) - Get Report

sells planning, engineering and construction services. During the past year, it has boosted net income 23% and revenue 10%. In the fourth quarter, 10 of its 15 largest shareholders, including

Bank of America

(BAC) - Get Report

, acquired more stock.

Quarter

: Fiscal first-quarter profit increased 12% to $46 million, or 40 cents, as revenue inched up 1.9%. The operating margin remained steady at 4.4%. Aecom has $253 million of cash and $1.8 billion of debt, translating to a debt-to-equity ratio of 0.1.

Stock

: Aecom has risen 5.9% during the past year, trailing U.S. indices. It trades at a price-to-projected-earnings ratio of 13 and a price-to-book ratio of 1.8, 26% and 14% discounts to peer averages. The shares are expensive based on cash flow.

Consensus

: Of firms rating Aecom, 11, or 79%, advocate purchasing its shares and three counsel holding them.

Sterne Agee

thinks the stock will gain 32% to $38.

Barclays

(BCS) - Get Report

believes it will rise to $36 and

Morgan Stanley

(MS) - Get Report

predicts $35.

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-- Reported by Jake Lynch in Boston.