The Dow Chemical Company (DOW), Agrium Inc. (USA) (AGU): Monday’s Top Upgrades (and Downgrades)

Priced at a bit more than 16 times earnings, The Dow Chemical Company (NYSE:DOW) appears at first glance to be a bit expensive given its 9.4% projected earnings growth rate. The Dow Chemical Company (NYSE:DOW), however, in contrast to Agrium Inc. (USA) (NYSE:AGU), generates quite a bit more cash from its business than its GAAP numbers reflect. Free cash flow  for the past 12 months amounted to just under $4.36 billion — about 45% more than GAAP earnings suggest. That works out to a 10.1 price to free cash flow ratio (13.3 once you figure debt into the mix).

Toss in a 3.5% dividend yield, and Argus’s suggestion that selling non-core subsidiaries could generate cash to pay down the debt a bit, and this stock looks like a winner.

An upgrade runs through it
And finally, a bit of rare good news for long-suffering Riverbed Technology shareholders: Someone finally likes the stock!

After watching the networking tech stock fall 19% over the past year, as the rest of the stock market ran away from it, analysts at Oppenheimer have decided that enough is enough, and it’s time to start buying Riverbed Technology, Inc. (NASDAQ:RVBD) again. I couldn’t agree more.

While the company’s 555 times price to earnings ratio will certainly give some value investors a severe case of the willies, the fact remains that with $251 million in positive free cash flow to its credit, and that free cash flow number continuing to grow steadily, Riverbed Technology, Inc. (NASDAQ:RVBD) looks like a bargain at just 10.5 times its annual cash profit. Even if the company fails to live up to analyst expectations for 19% long-term profit growth — even if it produces results only half that good — I’d say the stock looks attractive at today’s prices. Oppenheimer may or may not have picked the absolute “bottom” at which to buy this stock. But even if it bounces around, and drops down a bit more, I think the stock’s cheap enough to buy already.

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

Fool contributor Rich Smith has no position in any stocks mentioned. The Motley Fool recommends Riverbed Technology. The Motley Fool owns shares of Riverbed Technology.

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