As overall activity among stockbrokers is ramping up ahead of this year's pivotal February reporting season, the number of rating upgrades for individual stocks is almost twice as high as the number of downgrades.
Popular themes this month remain sold-down resources stocks (seemingly too cheaply priced thus upgrades follow), and still elevated valuations for defensive industrials for whom questions continue to arise regarding feasible growth in the year(s) ahead.
In the good books
Woolworths (WOW) was upgraded to Outperform from Neutral by Credit Suisse. Credit Suisse thinks accelerating supermarket growth is likely to lead to a re-rating and expects like-for-like sales growth will more closely match rival Coles this year and Woolworths may even better Coles in at least one of the next several quarters. Credit Suisse suspects that the agreement with the ACCC to cap fuel discounts will have less impact on Woolies. The main negative potential for Woolworths is a critical event such as the exit from the Masters business by Lowe's or termination of the project by Woolworths. Still, the broker thinks the likelihood of such an event is low.