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.
Upgrades
Last Week’s Holds, Now Buys
| Symbol | Company Name | Quantitative Grade | Fundamental Grade |
| ACN | Accenture | B | B |
| BT | BT Group PLC | 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 |
Downgrades
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 |
