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 Clorox slipped as low as 2.5% this morning after Morgan Stanley downgraded the cleaning products giant from equal-weight to underweight.

So what: Along with the downgrade, analyst Dara Mohsenian planted a price target of $83 on the stock, representing about 3% worth of downside to yesterday's close. While value investors might be attracted to Clorox's slumping stock price over the past six months, Mohsenian believes that the upside remains limited given the short-term headwinds working against the company.


Now what: According to Morgan Stanley, Clorox's risk/reward trade-off at the current levels isn't exactly favorable. "Slowing US consumer spending and heightened competitive pressure create near-term EPS risk that we think is not reflected in valuation, particularly as CLX's LT EPS growth potential is more muted than peers'," noted Morgan Stanley. However, with the stock now off more than 5% from its 52-week highs and boasting a 3.5% dividend yield, that short-term concern might be an opportunity for patient income investors to pounce on.

More dynamic dividend picks
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 Clorox Shares Might Keep Pulling Back originally appeared on Fool.com.

Fool contributor Brian Pacampara has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. 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.


Increase your money and finance knowledge from home

Managing your Portfolio

Keeping your portfolio and financial life fit!

View Course »

Investing in Emerging Markets

Learn to invest in a globalized world.

View Course »

Add a Comment

*0 / 3000 Character Maximum