Among the Russell 1000 constituents, fewer stocks had positive MAER ratings this month, but a majority of 54% still carry positive ratings. Since April this is the first month that negative early turns were more prevalent than positive early turns for this month. This change in revisions coming after three months could potentially reflect a law of averages evening out the recent increase in estimate upgrades, as second-quarter earnings reports have been favorable but not entirely outstanding in aggregate.
24/7 Wall St. selected some of the newer and key calls from the report. Oppenheimer’s MAER List group did not make formal price projections, so we included the consensus analyst targets from Thomson Reuters for a reference.
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Health care is the only sector of the MAER List that can boast a solid increase despite all other sectors either declining or holding steady. Materials and financials were the other two sectors that managed to maintain their proportions of positive MAER ratings this month. Energy is likely to offer more potential buy candidates than consumer discretionary, despite their similar proportions of positive ratings. Analysts’ favored sectors remain energy, technology and industrials, and within those sectors some notable buy ideas.
Technology ranks third with 63% positive ratings and with little changing from the previous month. International Business Machines Corp. (NYSE: IBM) is one of the technology companies listed as favorable by this report. Its shares have traded at $188.69, with a consensus target price at $194.79. EMC Corp. (NYSE: EMC), which specializes in data storage and cloud computing, is rated Outperform and on the favorable list as well, with its shares recently being traded at $29.47 and having a consensus target price of $32.03.
Kansas City Southern (NYSE: KSU) was part of the road and rail industry that was discussed favorably in Oppenheimer’s recent sector strategy report from the end of July. Kansas City Southern shares recently have traded at $108.51, with a consensus target price of $118.25
Energy has 12 constituents on the favorable list this month, many of which are exploration and production companies. Chevron Corp. (NYSE: CVX) made the list, with its shares recently trading at $127.38 and with its consensus target price at $135.16. Oppenheimer’s report also mentions Marathon Oil Corp. (NYSE: MRO) as another favorable company to keep an eye on. Its shares have traded at $39.87, with a consensus target price at $45.30.
What is interesting about Ford Motor Co. (NYSE: F) is that consumer companies remained the most prominent on the unfavorable list, though to a slightly lesser degree this month. Nine of those companies were consumer discretionary and four were from consumer staples. Still Ford appeared on the on the favorable list, its shares have recently traded at $17.11, with a consensus target price of $19.87.
The notable stocks with new upturns in revisions corroborated by strong relative magnitudes and supportive price action include (by sector):
- Energy: Chevron, Marathon Oil, Concho Resources
- Industrials: Republic Services
- Consumer discretionary: Ford
- Financials: Equity Residential
- Technology: International Business Machines and EMC
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