Why RBC Bearings Will Keep Rolling Back
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 RBC Bearings closed down 1% yesterday after Bank of America downgraded the ball bearings manufacturer from buy to neutral.
So what: Along with the downgrade, analyst Kristine Liwag reiterated her price target of $66, representing just 6% worth of upside to where the stock sits now. The stock has rallied nicely over the past six months on improving demand and consolidation in the industry, but Liwag thinks that the current valuation leaves investors with limited appreciation potential.
Now what: B of A expects the stock to see some resistance in the short term. "In our opinion, RBC's recent stock outperformance performance can be attributed to 1) a ramp-up in commercial aerospace, 2) improvement in ISM data PMI index since mid-2013 and 3) M&A activity in the bearings industry," noted B of A. "However, defense is likely to be a near-term headwind for the company as the US government shutdown interrupts military maintenance and procurement." With RBC shares up about 50% over the past three months and trading at a P/E of 26, I'd agree with B of A that not enough risk is being discounted into the valuation.
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 RBC Bearings Will Keep Rolling Back originally appeared on Fool.com.Fool contributor Brian Pacampara has no position in any stocks mentioned, and neither does The Motley Fool. 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 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.