Stock Market

Peruse the cesspool of the Internet long enough and you’ll come across admonitions to ignore Wall Street upgrades or more simply, stocks that analysts love. These fools and charlatans don’t know what they’re talking about, keyboard commandos proclaim. While analysts are humans and are subject to errors, they can be incredibly valuable, too.

First, they just have more information and access to research-oriented technologies than the average retail investor. Plus, contrary to pejorative statements on the Internet, Wall Street firms don’t just pick their experts off the streets. Rather, the most prominent market professionals have years of education and real-world experience. Thus, you’re able to reasonably trust stocks to buy with analyst upgrades.

Second, following research guidance allows retail investors to significantly cut down on their assessments of opportunities. That’s not to say that Wall Street upgrades should replace due diligence, quite the contrary. Before any enterprise is added to your “stocks to buy” list, you should carefully weigh the pros and cons. However, analysts can help pinpoint areas of significance while filtering out the noise. Finally, analysts also influence the market, sometimes creating a self-fulfilling prophecy. With that, here are compelling Wall Street upgrades you might have missed.

Consolidated Water (CWCO)

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Billed as an international water solutions company, Consolidated Water (NASDAQ:CWCO) supplies potable water. To do this, the company treats water for reuse. It also specializes in manufacturing and providing water-related products and services to customers in the Cayman Islands, The Bahamas, the U.S., and the British Virgin Islands. While it’s a smaller company with a market capitalization of $408 million, Consolidated’s relevance has served it well.

Even better, CWCO represented one of the beneficiaries of recent Wall Street upgrades. On Aug. 14, analysts at Janney Montgomery Scott upgraded CWCO to a “buy” from “neutral,” citing higher-than-expected second-quarter revenue. Further, the experts raised their price target to $28 from $24. Based on the most recent close, this forecast implies growth of around 8%.

Financially, it must be said that CWCO runs with a hot forward earnings multiple of 26.58x. In sharp contrast, the sector median sits at 15.44x. However, as a utility play, Consolidated unsurprisingly posts consistent profitability. Also, it features a robust balance sheet with a cash-to-debt ratio of 20x.

CareTrust REIT (CTRE)

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Based in San Clemente, California, the CareTrust REIT (NYSE:CTRE) acquires and leases senior housing and healthcare properties across the nation to operators of all sizes, per its website. Further, it states that it operates under a two-fold mission: help healthcare operators realize their growth potential while delivering steady value to CTRE shareholders.

Fundamentally, CTRE benefits from the rapidly aging baby boomer demographic, which will need several years of care and health services. Given this backdrop, it’s no shock that CTRE ranks among the recent Wall Street upgrades. On Aug. 16, analysts at BMO Capital Markets pegged shares as “outperform” from “market perform.” Also, they lifted their price target to $24 from $23.50.

Financially, CareTrust doesn’t exactly print the most alluring of statistics. For example, CTRE trades at 14.37x funds from operations (FFO). However, the sector median stat comes in at 13.02x. Still, CareTrust benefits from a three-year revenue growth rate (per-share basis) of 4.3%, above 65.77% of its peers.

Keurig Dr Pepper (KDP)

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Hailing from Plano, Texas, Keurig Dr Pepper (NASDAQ:KDP) is a multinational soft drink and beverage firm. While a relevant and internationally recognized brand, KDP has incurred a rough outing so far this year. Since the Jan. opener, shares tumbled nearly 5%. And in the trailing one-year period, it gave up more than 15% of its equity value.

Still, the combination of social normalization trends and accrued pressure in the consumer economy may bode well for KDP, making it one of the stocks to buy with analyst upgrades. In other words, people will be looking for ways to save money, and going to the grocery store for beverage products – as opposed to an overpriced coffee shop – is an effective solution. It also is an easier way to save as opposed to going cold turkey.

Subsequently, UBS Group upgraded its assessment of KDP to “buy” from “neutral.” In addition, the firm raised its price target to $42 from $37, implying 24% upside potential. Therefore, it’s one of the more compelling Wall Street upgrades.

Teledyne Technologies (TDY)

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Founded in 1960, Teledyne Technologies (NYSE:TDY) is an American industrial conglomerate. Ranking among the hidden gem stocks to buy, Teledyne rightfully brags that many of the products and services consumers use every day are undergirded by the enterprise. From innovations centering on aerospace and defense to electronics design and development, it’s certainly difficult to avoid its influence.

However, the market has been slow to recognize the opportunity in TDY. Since the start of the year, shares barely poked their head above parity. Still, TDY represents one of the Wall Street upgrades. On Aug. 14, Goldman Sachs pegged shares a “buy,” a promotion from its previous “neutral” rating. Also, Goldman upped the price target to $495 from $423.

Financially, Teledyne benefits from consistent profitability. Notably, its trailing-year net margin clocks in at 13.75%, above 86.16% of its peers. Moreover, the company’s three-year revenue growth rate is 10.7%, above 69%. During the same period, its EBITDA growth rate hit an impressive 19.9%.

Callon Petroleum (CPE)

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Energy-related stocks that analysts love have been on fire lately and Callon Petroleum (NYSE:CPE) may be on the cusp of joining the party. Due to a combination of multiple factors including supply-related concerns amid geopolitical flashpoints, investors have re-engaged the sector. That may end up helping CPE, which presently lags behind its peers. Since the start of the year, shares gained just a hair over 2%.

Still, as one of the Wall Street upgrades, Callon’s fortunes may change for the better. On Aug. 16, experts at Citigroup pegged CPE as a “buy.” This represents a promotion from their previous assessment of “neutral.” In addition, they bumped up their price target to $45 from $40. Should shares hit the estimate, it would imply growth of over 27%.

Overall, the financial profile for Callon is largely a work in progress, with promising elements combined with areas needing improvement. For example, the company prints a trailing-year net margin of 35.11%, beating out 85.86% of sector rivals. However, it’s not the most consistently profitable hydrocarbon business. Still, it does trade for a lowly forward multiple of 4.28x.

Getty Images (GETY)

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An odd and admittedly risky enterprise, Getty Images (NYSE:GETY) still ranks among the recent Wall Street upgrades, thereby commanding respect. A visual media firm, Getty supplies stock images, editorial photography, video, and music for businesses and consumers. Per its public profile, the company carries over 477 million assets. Further, it targets three markets: creative professionals, the media, and corporate clients.

Given the troubled nature of some of Getty’s core focus areas (especially digital media), I can understand hesitation toward GETY. However, it’s also one of the stocks to buy with analyst upgrades. Specifically, on Aug. 15, experts at Imperial Capital pegged GETY as “outperform,” a sentiment pivot from “in-line.” Also, their price target stands at $5.75, which implies more than 38% upside potential.

What’s more impressive than this assessment is that it’s not the most optimistic call – not by a long shot. Overall, the Street rates GETY as a strong buy. Further, the average price target clocks in at $6.29, implying over 51% upside potential.

NextDecade (NEXT)

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A sustainable energy specialist, NextDecade (NASDAQ:NEXT) claims to accelerate the path to a net-zero future. To do this, NextDecade focuses on a more efficient means of utilizing liquefied natural gas through planned carbon capture and storage projects. As well, the company acquires the underlying energy commodity via responsible sourcing. Since the start of the year, NEXT gained slightly over 24% of its equity value.

Even with the strong performance so far this year, NEXT is quite choppy. In the past 365 days, shares lost nearly 33%. Still, it ranks among the recent Wall Street upgrades. On Aug. 15, analysts at Stifel Nicolaus lifted their assessment of NEXT to “buy” from “hold.” In addition, they posted a significant improvement in their per-share pricing expectation to $9 from $7.50.

To be fair, NextDecade’s financials could use some work, even though it does benefit from a cash-to-debt ratio of 40.33x. Despite the flaws, NEXT is one of the top stocks to buy with analyst upgrades, featuring a unanimous strong buy consensus.

On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.

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