Exxon Mobil Corporation (XOM), Shoe Carnival, Inc. (SCVL), Universal Technical Institute, Inc. (UTI): Tuesday’s Top Upgrades (and Downgrades)

Priced at just 9.4 times earnings, Exxon Mobil Corporation (NYSE:XOM) shares are pegged for only 3.5% long-term earnings growth. On the other hand, they pay a decent dividend (2.5%), and the company’s a rich producer of free cash flow — $21.9 billion over the past 12 months.

Is that good enough, though, to justify owning the stock? Maybe — if all you’re looking for is a steady income stream paying out more than the local bank will give you for holding on to your savings account. Growth-wise, though, I still see Exxon Mobil Corporation (NYSE:XOM)’s potential as limited. Even with its strong cash production, this stock costs close to 19 times annual free cash flow, after all. When you get right down to it, therefore, I actually agree with Wall Street on this one. As the preeminent producer of a product the world needs to keep running, Exxon may not necessarily be a stock you want to sell — but it’s simply too expensive to recommend buying anymore.

A Universal, Technical… sell rating
I find myself even more in agreement with today’s featured sell rating — this one hailing from the analysts at Argus Research, and targeting vo-tech educator Universal Technical Institute, Inc. (NYSE:UTI). The company just lost backing last month from a bank that had been providing educational loans to its students. But the real problem here is the valuation.

Universal Technical Institute, Inc. (NYSE:UTI), you see, costs a whopping 39 times the profits it earned last year. It’s even more expensive relative to next year’s projected profits — 55 times the forward P/E. And it’s even more expensive relative to the real cash profits that it’s not earning. Free cash flow at the firm, which in recent years had soared as high as $30 million, is now a miserable negative $1.3 million.

Although the company’s generous 3.2% annual dividend yield may tempt dividend investors, the risks here look simply too great to justify a buy recommendation — or even a hold. Universal Technical Institute, Inc. (NYSE:UTI) is now rated a sell by Argus, and it deserves the failing grade is written by Rich Smith.

Fool contributor Rich Smith has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

The article Tuesday’s Top Upgrades (and Downgrades) originally appeared on Fool.com.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.