Topic: Growth Stocks

The Wall Street Stock Forecaster Hotline – Friday, May 23, 2008

Article Excerpt

MOODY’S CORP. $34.16, New York symbol MCO, fell over 20% this week due to accusations that it deliberately inflated the credit ratings of some complex debt securities. A media report alleges that after the company discovered a computer error in early 2007, it changed its rating methodology instead of downgrading these securities. Moody’s has denied the allegations. Rating agencies like Moody’s have come under fire in the past few months over the high ratings they assigned to securities backed by subprime mortgages and other risky loans. We have no reason to doubt Moody’s integrity. As well, the securities in question represent a tiny fraction of Moody’s business. However, this situation will likely spark further class-action lawsuits and greater regulation over the ratings industry. Moody’s is still a hold. MCGRAW-HILL COMPANIES LTD. $39.92, New York symbol MHP, gets 75% of its earnings from its Standard & Poor’s rating business. Consequently, the stock fell 10% this week on the Moody’s allegations. However, McGraw-Hill’s expanding school textbook…