Friday’s Top Upgrades (and Downgrades): Zillow Inc (Z), National Grid plc (ADR) (NGG)

With Zillow priced at more than 304 times earnings, there’s simply no way to justify the valuation — not even if the company achieves its targeted 30% growth rate. Not even if it doubles it. RBC’s recommendation notwithstanding, this stock’s not priced to outperform. It’s priced to sell.

National Grid plc (ADR) (NYSE:NGG)’s shockingly good dividend
Had enough of Wall Street analysts hawking dividend-less, overpriced stocks? Take a gander instead at National Grid plc (ADR) (NYSE:NGG), recipient of an upgrade to “overweight” from the analysts at HSBC this morning.

While National Grid plc (ADR) (NYSE:NGG) is not much of a sprinter — its growth rate is expected to fall below 4% over the next five years — it’s hard to argue with the stock price, or the strong dividend payouts. According to data from S&P Capital IQ, this gas and electric utility is paying a hefty 5.4% annual dividend yield right now. And in addition to being the most generous dividend-payer of the three stocks named today, it’s also the cheapest stock, costing barely 11 times annual earnings per share.

On the downside, National Grid plc (ADR) (NYSE:NGG) doesn’t generate a whole lot of free cash flow. Trailing FCF at the utility is only $1.4 billion, versus a reported $3.7 billion in GAAP profits. Still, while an investor could wish the company generated a bit more cash from its business than is currently the case, the fact remains: Of the three stocks put forward by Wall Street so far today, this one is far and away the best buy option out there.

Fool contributor Rich Smith has no position in any stocks mentioned. The Motley Fool recommends National Grid plc (ADR) (NYSE:NGG)and Zillow Inc (NASDAQ:Z). The Motley Fool owns shares of Zillow.

The article Friday’s Top Upgrades (and Downgrades) originally appeared on Fool.com and is written by Rich Smith.

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