Don't let it get away!
Keep track of the stocks that matter to you.
Help yourself with the Fool's FREE and easy new watchlist service today.
While Fools should generally take the opinion of Wall Street with a grain of salt, it's not a bad idea to take a closer look at particularly stock-shaking upgrades and downgrades -- just in case their reasoning behind the call makes sense.
What: Shares of Denbury Resources (NYSE: DNR ) slipped about 1% this morning after Goldman Sachs downgraded the oil and natural gas company from neutral to sell.
So what: Along with the downgrade, analyst Joseph Stewart planted a price target of $17 on the stock, representing just 6% worth of upside to yesterday's close. While contrarians might be attracted to the stock's recent plunge, Stewart believes Denbury's appreciation potential remains limited given its seemingly weak growth prospects.
Now what: According to Goldman, Denbury's risk/reward trade-off is rather unattractive at this point. "We view DNR as a high quality, slow and steady oil company, but we expect its relatively weak outlook for growth and returns along with a lack of material upcoming positive catalysts to lead to underperformance relative to the rest of our coverage group," noted Stewart. "While DNR is the best pure play on CO2 Enhanced Oil Recovery among US E&Ps, in our view, we project the company to generate a CF/DAS CAGR of only 2% during 2014E-16E, the lowest among the US onshore E&Ps under coverage, which boast an average of 21%." With the stock off more than 15% over just the past three months and sporting a forward P/E in the low teens, however, it's tough to believe that those headwinds aren't already baked into the valuation.
More compelling income opportunities
One of the dirty secrets that few finance professionals will openly admit is the fact that dividend stocks as a group handily outperform their non-dividend-paying brethren. The reasons for this are too numerous to list here, but you can rest assured that it's true. However, knowing this is only half the battle. The other half is identifying which dividend stocks in particular are the best. With this in mind, our top analysts put together a free list of nine high-yielding stocks that should be in every income investor's portfolio. To learn the identity of these stocks instantly and for free, all you have to do is click here now.