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: Nomura Securities initiated coverage on Wal-Mart Stores (NYSE: WMT ) this morning with a buy rating, suggesting that the retail gorilla is poised to bounce back.
So what: Along with the upgrade, analyst Robert Drbul planted a price target of $85 on the stock, representing about 13% worth of upside to yesterday's close. While momentum investors might be turned off by the stock's sluggishness in recent months, Drbul thinks that Wal-Mart is too cheap to pass up given its long track record of solid returns and decent growth opportunities.
Now what: According to Nomura, Wal-Mart's risk/reward trade-off is pretty attractive at this point. "While top-line results at Walmart remain challenged, we believe the company continues to manage its business well, and to deliver consistent returns for its shareholders," noted Drbul. "While the stock has historically traded at a low-double-digit discount to the XLP consumer staples index, it is now trading at a 20% discount, which we believe could narrow given upside opportunities through the company's e-commerce business and an uptick in traffic in the U.S. stores." With Wal-Mart trading at a forward P/E of 13 and sporting a 2.5% dividend yield, it's easy to understand Nomura's bullish stance.
More reliable ways to build wealth
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.