4 Stocks With Upgrades: XRX, DRB, CLI, STR

NEW YORK ( TheStreet) -- The following stocks were upgraded to buy at TheStreet Ratings on Thursday: Xerox ( XRX), Dolby Laboratories ( DLB), Mack-Cali Realty ( CLI) and Questar ( STR).

Xerox

The document equipment company reported last month fourth-quarter earnings of $375 million, or 26 cents a share, an increase from year-earlier earnings of $171 million, or 12 cents.

"We believe the stock is weak because of 4Q11 results being at the low end of the company's guidance, significant reduction in 2012 outlook, and perception that Xerox lacks exciting growth opportunities," Gabelli analysts wrote in a Jan. 26 report. "While we don't see near-term upsides, we believe Xerox can continue to demonstrate its robustness in terms of at least single digit growth in top line and stable operating cash flow generation. We are maintaining our long-term BUY recommendation on Xerox."

Shares of Xerox were upgraded to buy from hold on Thursday by TheStreet Ratings.

"The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income, attractive valuation levels, notable return on equity and largely solid financial position with reasonable debt levels by most measures," TheStreet Ratings wrote. "We feel these strengths outweigh the fact that the company shows low profit margins."

Xerox has an estimated price-to-earnings ratio for next year of 6.67; the average for electronic and office equipment companies is 7.77. For comparison, Pitney Bowes ( PBI) has a forward P/E of 8.88.

Of the 12 analysts who cover Xerox, six rated it a buy. Five analysts gave it a hold rating and one rated it a sell.

TheStreet Ratings gives Xerox a B grade with a $9.67 price target. The stock closed Wednesday at $8.33 and has risen 4.65% year to date.

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Dolby Laboratories

The entertainment products provider announced on Tuesday that it sued ArcSoft, one of its licensees, for not meeting contractual obligations.

"DLB announced today that it is increasing its stock repurchase programby an additional $100 million, bringing the approximate amount availablefor future repurchases of Dolby's Class A Common Stock to $436 million," Collins Stewart analysts wrote in a Feb. 8 report. They added, "Due to the increased stock repurchase program, we are raising our 2012 EPS ests from $2.54 to $2.56 vs. consensus ests of $2.54. Additionally, we are raising our 2013 EPS ests from $2.39 to $2.43 vs. consensus ests of $2.46."

Dolby Laboratories was upgraded to buy from hold by TheStreet Ratings.

"The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, expanding profit margins, good cash flow from operations and notable return on equity," TheStreet Ratings wrote. "We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself."

Dolby Laboratories has a forward P/E of 13.94; the average for broadcasting and entertainment companies is 14.43. For comparison, Sirius ( SIRI) and Cablevision ( CVC) have forward P/Es of 22.29 and 12.52, respectively.

Seven of the 13 analysts who cover Dolby Laboratories rated it a hold; the other six gave it a buy rating.

TheStreet Ratings gives Dolby Laboratories a B grade with a $43.15 price target. The stock closed Wednesday at $38.09 and has increased 24.84% year to date.


Mack-Cali Realty

The real estate investment trust reported last week fourth-quarter earnings of $16.1 million, or 18 cents a share, an increase from year-earlier earnings of $6.6 million, or 9 cents.

"While the suburban office markets remain challenging for anylandlord, CLI continues to execute, maintaining occupancy levels well abovemarket averages," Keefe, Bruyette & Woods analysts wrote in a Feb. 9 report. "With its fortress-like balance sheet (debt to mkt cap 42%) and premium yield (6.2%), we believe CLI has defensive attributes in a difficult environment."

Shares of Mack-Cali were upgraded to buy from hold by TheStreet Ratings.

Mack-Cali has a forward P/E of 37.13; the average for industrial and office REITs is 70.75. For comparison, Vornado Realty Trust ( VNO) and Boston Properties ( BXP) both have higher forward P/Es of 41.22 and 61.73, respectively.

Of the 13 analysts who cover Mack-Cali, seven rated it a hold. Three analysts gave it a buy rating and another three rated it a sell.

TheStreet Ratings gives Mack-Cali a B- grade with a $33.07 price target. The stock closed Wednesday at $28.59 and has risen 7.12% year to date.

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Questar

The natural gas company reported Tuesday fourth-quarter earnings of $61.6 million, or 34 cents a share, a decline from year-ago earnings of $63.7 million, or 36 cents.

"Although the utility benefited from a 1.1% expansionin its customer base, these benefits were more than offset by higher operatingexpenses," D.A. Davidson analysts wrote in a report Wednesday.

Shares of Questar were upgraded to buy from hold by TheStreet Ratings.

"The company's strengths can be seen in multiple areas, such as its notable return on equity, expanding profit margins and solid stock price performance," TheStreet Ratings wrote. "We feel these strengths outweigh the fact that the company shows weak operating cash flow."

Questar has a forward P/E of 15.42; the average for gas distribution companies is 17.65. For comparison, Spectra Energy ( SE) has a forward P/E of 15.24; Oneok's ( OKE) is 21.86.

Six of the 11 analysts who cover Questar rated it a hold. Four analysts gave it a buy rating and one gave it a sell rating.

TheStreet Ratings gives Questar a B grade with a $22.88 price target. The stock closed Wednesday at $19.57 and has dropped 1.46% year to date.

-- Written by Alexandra Zendrian

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