While Fools should generally take the opinion of Wall Street with a grain of salt, it's not a bad idea to take a look at particularly stock-shaking analyst upgrades and downgrades -- just in case their reasoning behind the call makes sense.
What: Shares of Exelon (NYSE: EXC ) slipped 1% today after Jefferies downgraded the electricity company from hold to underperform.
So what: Along with the downgrade, analyst Paul Fremont lowered his price target to $24.50 (from $29), representing about 15% worth of downside to yesterday's close. While contrarian investors might be attracted to the stock's steady plunge over the past six months, Fremont believes that there's still room to fall given Exelon's seemingly below-average assets and cash flow generation.
Now what: Jefferies isn't too high on Exelon's prospects going forward. "The company currently trades at a group average P/E but, in our view, should trade at a discount based on the significant contribution of supply and other low multiple businesses to Exelon Generation results," noted Jefferies. "Additionally, the high cash spending of Exelon on nuclear fuel and maintenance results in very little free cash flow generated by the company." With Exelon shares now off 25% from its 52-week highs and sporting a 4%-plus dividend yield, however, I've got to think that the current price is closer to the floor than the ceiling.
More compelling income opportunities
Dividend stocks can make you rich. It's as simple as that. While they don't garner the notoriety of high-flying growth stocks, they're also less likely to crash and burn. And over the long term, the compounding effect of the quarterly payouts, as well as their growth, adds up faster than most investors imagine. With this in mind, our analysts sat down to identify the absolute best of the best when it comes to rock-solid dividend stocks, drawing up a list in this free report of nine that fit the bill. To discover the identities of these companies before the rest of the market catches on, you can download this valuable free report by simply clicking here now.