Why Transocean Ltd. Pulled Back Today

Why Transocean Ltd. Pulled Back 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 Transocean Ltd. slipped nearly 2% today after RBC Capital downgraded the contract drilling giant to sector perform from outperform.

So what: Along with the downgrade, analyst Kurt Hallead lowered his price target to $54 (from $56), representing about 12% worth of upside to yesterday's close. While contrarians might be attracted to the stock's slump in recent months, Hallead believes that uncertainty surrounding dayrates and utilization should continue to limit Transocean's appreciation potential.

Now what: RBC expects Transocean to earn $5.19 per share in 2014, which is about 7% below the current Wall Street consensus. "We believe that it is too early to tell how far dayrates and utilization will slip in the current market environment," noted RBC. "We have recently reduced our dayrate estimates and built increased risk into our model for downtime between contracts." With the stock now off about 20% from its 52-week highs and currently boasting a 4.5% dividend yield, however, that short-term uncertainty might be providing patient Fools with a solid long-term income opportunity.

More reliable ways to build wealth
Dividend stocks can make you rich. It's as simple as that. While they don't garner the notoriety of high-flying growth stocks, they're also less likely to crash and burn. And over the long term, the compounding effect of the quarterly payouts, as well as their growth, adds up faster than most investors imagine. With this in mind, our analysts sat down to identify the absolute best of the best when it comes to rock-solid dividend stocks, drawing up a list in this free report of nine that fit the bill. To discover the identities of these companies before the rest of the market catches on, you can download this valuable free report by simply clicking here now.

The article Why Transocean Ltd. Pulled Back Today originally appeared on Fool.com.

Fool contributor Brian Pacampara has no position in any stocks mentioned. The Motley Fool owns shares of Transocean. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2014 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Originally published