We’re only a few weeks into first-quarter earnings season and already the analyst community has slashed their overall earnings estimates: The average S&P 500 company is now expected to post a slight dip in earnings. This, and the fact that the seasonal pension funding season is over, has given some in the “sell in May and go away” crowd an excuse to flee the market. So the “bad news” is that the market is now officially oversold.
We knew this was coming, but if the recent bumpiness has you nervous, you can keep this in mind. First, as I mentioned earlier, if history repeats itself, Wall Street will likely bounce around over the next few weeks before firming up sometime next month. So this near-term bumpiness presents some tantalizing buying opportunities.
First, high-yield stocks are looking more attractive by the hour. With the average S&P 500 stock yielding nearly 2.1%, the stock market is much better than you can get through most savings accounts. When chasing yields, just be sure to do your homework and screen dividend stocks for fundamental health.
The other opportunity is in companies that are surprising Wall Street with their first quarter sales and earnings results. You can use Portfolio Grader to get a sense of which companies are likely to beat estimates; take note of how a company scores in terms of “Analyst Earnings Revisions” and “Earnings Surprises.”
Even though the stock market might be oscillating day to day, volatility is now moderating and I suspect that we can use these daily oscillations to step up and buy these premium stocks. But before you buy, let’s look at the 50 big blue chips that have been upgraded and downgraded this weekend. 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.
Upgrades
Last Week’s Holds, Now Buys
| Symbol | Company Name | Quantitative Grade | Fundamental Grade |
| AFL | AFLAC | B | B |
| APH | Amphenol | B | B |
| BBVA | Banco Bilbao Vizcaya Argentaria | B | B |
| BEAM | Beam In | B | B |
| BRFS | BRF SA ADR | B | B |
| DISH | DISH Network | B | D |
| ETR | Entergy | B | C |
| KO | Coca-Cola | B | C |
| MA | MasterCard | C | B |
| SNDK | SanDisk | B | C |
| TSM | Taiwan Semiconductor Manufacturing | B | B |
| VIP | VimpelCom | B | B |
| VRTX | Vertex Pharmaceuticals | A | F |
| VRX | Valeant Pharmaceuticals | B | C |
Last Week’s Sells, Now Holds
| Symbol | Company Name | Quantitative Grade | Fundamental Grade |
| BBBY | Bed Bath & Beyond | D | B |
| CMG | Chipotle Mexican Grill | D | B |
| CRM | salesforce.com | D | C |
| EL | Estee Lauder | D | B |
| EXC | Exelon | C | D |
| INFY | Infosys | D | C |
| MJN | Mead Johnson | D | B |
| RBS | Royal Bank of Scotland | C | D |
| SAN | Banco Santander | C | D |
| SBUX | Starbucks | D | B |
| VIV | Telefonica Brasil | D | C |
Downgrades
Last Week’s Buys, Now Holds
| Symbol | Company Name | Quantitative Grade | Fundamental Grade |
| BAP | Credicorp | C | B |
| BTI | British American Tobacco | C | B |
| CTRX | Catamaran | C | C |
| CX | Cemex SAB | B | C |
| GE | General Electric | C | C |
| GPC | Genuine Parts | C | C |
| MTB | M&T Bank | C | B |
| STX | Seagate Technology | C | B |
| TWC | Time Warner Cable | C | B |
Last Week’s Holds, Now Sells
| Symbol | Company Name | Quantitative Grade | Fundamental Grade |
| ABB | ABB | D | C |
| BXP | Boston Properties | D | D |
| EOG | EOG Resources | D | D |
| EQR | Equity Residential | D | C |
| ESV | Ensco PLC | D | C |
| FDX | FedEx | D | C |
| FTI | FMC Technologies | D | C |
| HAL | Halliburton | D | C |
| HOG | Harley-Davidson | D | C |
| IBM | International Business Machines | F | B |
| L | Loews | D | D |
| NSC | Norfolk Southern | D | D |
| DROK | Rockwell Automation | D | C |
| USB | U.S. Bancorp | D | C |
| XOM | Exxon Mobil | D | B |
