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44 Ways To Combat the Earnings Season Pinch

An update to earnings and ratings changes


Before you do anything else today, I want you to circle next Monday, April 8 on your calendar. That’s when Alcoa (NYSE:AA) kicks off first-quarter earnings season—and I suspect that’s when the breadth and power of the stock market will start to deteriorate. That’s because of an earnings shakeout is about to unfold.

It’s no secret that analysts expect just 1.5% earnings growth for the S&P 500—I’ve been talking about it for weeks. However, lately, some of the market’s bellwethers have broken down due lower earnings guidance: Caterpillar (NYSE:CAT), Deere (NYSE:DE), FedEx (NYSE:FDX) and Oracle (NASDAQ:ORCL), to name a few.

Now, the reason that we’re seeing big multinationals getting hit is the stronger U.S. dollar. Between Britain’s credit downgrade, Italy’s botched elections and the Cyprus banking drama, the U.S. dollar has looked relatively attractive next to the pound and the euro. Because multinationals get paid in foreign currencies, their profits get pinched when those currencies depreciate against the U.S. dollar.

Of course, I’ve already established that now’s not the time to cash out. We simply have to take precautions in order to ensure profits in this market. So to prepare let’s look at the 44 big blue chips that have been upgraded and downgraded. After taking a close look at the latest data on institutional buying pressure and each company’s fundamental health, I decided to revise my Portfolio Grader recommendations for each of the stocks listed below.


Last Week’s Holds, Now Buys

Symbol Company Name Quantitative Grade Fundamental Grade
ACN Accenture B B
ED Consolidated Edison B C
ETP Energy Transfer Partners B C
KORS Michael Kors C A
LPL LG Display B C
NLSN Nielsen Holdings B C
NOC Northrop Grumman B B
PAYX Paychex B C
RTN Raytheon B C
SNN Smith & Nephew PLC B C
SO Southern B B
TRI Thomson Reuters B C
WDC Western Digital C B
WM Waste Management B C

Last Week’s Sells, Now Holds

Symbol Company Name Quantitative Grade Fundamental Grade
BBD Banco Bradesco D C
BHI Baker Hughes C D
EOG EOG Resources C D
HPQ Hewlett-Packard C D
MFC Manulife Financial D B
MOS Mosaic D C
PLD Prologis C C
TS Tenaris S.A. D C
VOD Vodafone C C
YUM Yum! Brands C C


Last Week’s Buys, Now Holds

Symbol Company Name Quantitative Grade Fundamental Grade
AGN Allergan C C
BX Blackstone Group C B
CHT Chunghwa Telecom C C
GE General Electric C C
GGP General Growth Properties B C
PCP Precision Castparts C C
PNR Pentair C D
SYK Stryker C C

Last Week’s Holds, Now Sells

Symbol Company Name Quantitative Grade Fundamental Grade
CAH Cardinal Health D B
CNCO Cencosud D B
F Ford D C
FAST Fastenal D C
GM General Motors D C
JPM JPMorgan D B
KYO Kyocera D D
PXD Pioneer Natural Resources D D
STJ St. Jude Medical D C
UNH UnitedHealth Group D B
WLP WellPoint D B

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