We are back in the mode where research upgrades suddenly matter. It's been so long since we've seen this pattern that most people I talk to think it is suspicious at best and a sign of excess at worst.
I think they are wrong. I remember that analyst comments used to matter -- depending upon who was talking -- and if an analyst changed his or her view on a stock it had impact. Witness today, we got a Colgate-Palmolive Company (CL) upgrade from Suntrust's Bill Chappell -- and it's a big deal. The stock is running because Chappell says the earnings drought is over. The company's had a couple of subpar quarters, so this is very good news.
Of course, when it runs, the rumor guys say that it is going higher because it's going to merge with someone or be bought by Kraft-Heinz Company (KHC) . Who cares? It's an impact upgrade and there's nothing wrong with the dean of this group saying Colgate is a buy, and the stock rallies.
Hey, it is a two-sided coin. JP Morgan's Stephen Tusa comes out and says the dividend for General Electric (GE) could be in jeopardy. The company rapidly responds with the dividend as a "top priority." Oh come on. If you mean it, have the company's board issue a statement saying "it will be preserved at these levels."
Why aren't I more worried about this phenomenon? Because until the Great Recession, upgrades used to matter. They are signs that things are better than we think, and we should buy these stocks ahead of when they report.
Now the one thing that I would say is that in the old days before Reg FD, when analysts got information that no one else had, upgrades and downgrades meant much more than they do now. But I have been watching these analysts' moves, and their impact is equal on both sides. A downgrade hammers a stock and an upgrade moves it up.
Which of these are my favorites, today? Even though I don't like Snap, Inc (SNAP) , the Credit Suisse preview saying that Snap could be better than we think might be worth a couple of points. I like the Barclay's piece that says First Data Corp (FDC) , an Action Alerts PLUS name, could be at an inflection point. That's something I have been waiting for. And I thought the Schlumberger Ltd (SLB) downgrade by BMO had resonance because it talks about actual earnings risk. Again, I like a downgrade that says numbers are too high, even as my trust owns it. I suspect that the stock will have more risk than I thought.
But the most important call by far is the Suntrust upgrade of Colgate, because the analyst raised his price target from $65 to $85 -- a large bump -- and because Colgate has been such a disappointment. Given that Procter & Gamble's (PG) stock has run a great deal because of the proxy fight with Nelson Peltz, it's natural to think that Colgate could move higher -- even as PG is only up 8% and Colgate is up 14%, as Colgate historically been a faster-growing company.
My conclusion: After not being all that interested in Colgate, this piece tells me the stock could be a buy. That's what this new era of research holds out for us. I like it and I think you should heed it, because Suntrust has been right and I think they will be right again.
Join Jim Cramer, CNBC's Jon Najarian and Other Experts Oct. 28 in New York
Jim Cramer will host CNBC's Jon Najarian, TD Ameritrade's JJ Kinahan, famed analytics expert Marc Chaikin and other market mavens on Oct. 28 in New York City to share successful strategies for active investors.
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When: Saturday, Oct. 28, 8 a.m.-3 p.m.
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