Algonquin Power & Utilities Corp T.AQN

Motley Fool and Analysts' Recommendations

[AlwaysLong683]

I used to read articles on various stock picks by he ironically named Motley Fool (I think they used to appear free on Yahoo Finance - not sure if that's still the case....?).

I soon discovered that some of their bullish arguments were bullish-it in my view. Read enough MF articles and they are bound to recommend a stock you may be curious about sooner or later. I may be mistaken, but I believe the Motley Fool used to recommend low-cost index investing many, many years ago. Now, I'm not sure how many "columnists" they have recommending boatloads of stocks or what their expertise is, but if you write bullish articles on enough stocks, some are bound to be good calls just based on probability alone.

I haven't read a MF article in a long time because I don't find them useful, but for those who do, you may wish to use their bullish stock recommendations first as a curiousty, then, if interested, as a starting point for further research along with a healthy dose of skepticism. 

As far as anaylsts' recommendations go, I'm sure there are analysts out there with better track records or more wisdom than others and it may be worthwhile to read their analyses to gain information that you otherwise may have been unaware of. But, as you can see with AQN (and many, many others over the past year), analysts make recommendations at a given target price, then when things go south, they simply "revise" their price target downwards based on the "new" information.

Generally speaking, I find analysts' recommendations tp be far too bullish. I suspect part if it is if they are negative on a stock, that company may not be as accommodating in answering their questions or providing them with information either during quarterly earnings calls or anytime in between. Also, investors feel better when commentary is optimistic about a company even if such praise isn't justified, and if analysts all of a sudden started screaming "sell everything!" it likely wouldn't be good for business re. the firm they work for.

Thus, I view a "Hold" recommnedation the same as a "Sell" recommendation. You see lots of "Buy" recommendations and a signficant amount of "Hold", but "Sell" is usually very rare, even when otherwise entirely justified. If an analyst recommends "Hold", they are not recommending selling your shares, so they are not ticking off the company. Consequently, when I look at a summary of analysts' projections, my personal strategy (again, just as a starting point to further due diligence on a name), is:

Buys = Buys

Holds + Sells = Sells

This takes some of the bullish bias I believe exists in the analyst world out of the equation, and I proceed with my due diligence with this in mind.

However, one caveat is what I call "analyst whiplash": Analysts may have a Buy rating on a stock, the stock tanks, they change their rating to Hold after the fact when the stock is already at or near bottom, then the stock rebounds (provided the reasons why the stock fell in the first place were overblown), and people who owned it during the "Buy" recommendation then sell during the "Hold" recommendation get hit at both ends, so you have to do your homework re. whether the price decline is warranted and base your trade decisions after you've done an unbiased, thorough review of the name.

Just food for thought.

Best of luck to everyone.

[rusty777]

Good Morning Always Long I ten to agree with you regarding Motley Fool.  I subscribed at one point and virtually every day I was bombarded with "upgrade offers" while the basic subscription gave me nothing, and what it did give me was worthless. Buyer Beware on this one - it is nothig like what they portray themselves GLTA Rusty

[besttobe]

I am buying. based on my own DD. AQN is a good company, with delays. The is a gift.  Anaylist work for investment houses that raise money for public companies. like AGN for a commission/shares. Totally biased.  GLTA

[AlwaysLong683]

What a coincidence..... Motley Fool's latest commentary on AQN

[ol_griz]

Price on this day was $10.23. One of the few occasions when B2BQ actually came close to declaring his buy in a timely manner.  20% profit my donkey.