The Motley Fool Previous Page

This Just In: More Upgrades and Downgrades

Rich Smith
July 18, 2012

At The Motley Fool, we poke plenty of fun at Wall Street analysts and their endless cycle of upgrades, downgrades, and "initiating coverage at neutral." While the pinstripe-and-wingtip crowd is entitled to its opinions, we've got some pretty sharp stock pickers down here on Main Street, too. (And we're not always impressed with how Wall Street does its job.)

Given this, perhaps we shouldn't be giving virtual ink to "news" of analyst upgrades and downgrades. And we wouldn't -- if that were all we were doing. Fortunately, in "This Just In," we don't simply tell you what the analysts said. We also show you whether they know what they're talking about.

Today, we've got a new buy rating for Phillips 66 (NYSE: PSX  ) on tap, followed by a downgrade for Penn West Petroleum (NYSE: PWE  ) , and finally good news for VIVUS (Nasdaq: VVUS  ) shareholders, and American dieters. Let's dive right in.

Get your kicks on Phillips 66
Shares of oil refiner Phillips 66 have traveled a rocky road since being spun off by parent company ConocoPhillips (NYSE: COP  ) a few months ago. After initially spiking, the shares plunged as low as $29 a stub in early May, then bounced around some more before finally finding the gas pedal earlier this month.

This morning, the stock's on afterburners thanks to a new buy rating from Argus Research, which says the shares -- currently priced at $37 and change -- should climb as much as 15% over the next 12 months. Last week, you see, Warren Buffett revealed to Bloomberg that his Berkshire Hathaway (NYSE: BRK-B  ) has taken a 5% stake in the refiner, and apparently that was enough of an endorsement to get Argus to take a look. You should, too.

Priced at the ultralow valuation of less than five times earnings, Phillips 66 justifies about half its market cap simply by paying out the 2.2% dividend yield it promises. As for the rest, long-term profits growth estimates of nearly 7% won't exactly set the world on fire, but they're more than enough to make this stock a bargain. Buffett's right to buy it, Argus to recommend it, and, heck, I think the stock's sufficiently attractive that I'll hop aboard this train and recommend it, too. On Motley Fool CAPS, I'm putting my reputation on the line, and assigning Phillips 66 an "outperform" rating. Want to see how it works out? (I'm kind of curious, too.)

Click this link and follow along.

All oil, all the time
Of course, not all's equal in the oil patch. At the same time as Argus was busy writing up its positive report on Phillips 66, Canadian stock shop RBC Capital Markets was downgrading oil driller Penn West Petroleum to neutral. Across the ocean, Brit banker