We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
5 Stocks to Snap Up on Coverage Initiation by Analysts
Read MoreHide Full Article
Coverage initiation on a stock by analyst(s) is critical for making investment decisions. This is because analysts provide key information on a stock, which is of great value to investors. There’s no denying that the lack of consistency in information creates inefficiencies that might result in misinterpretation of stocks.
Initiation of coverage by analysts usually depicts increased investor inclination. Investors, on their part, often assume that there is something in the stock that has attracted analyst attention. In other words, they believe that the company coming under the radar definitely has some value which can be tapped into. At times, increased investor focus on a stock encourages analysts to take a closer look.
Then again, average change in broker recommendation is always preferred over a single recommendation change.
Impact on Price Movement
The price movement of a stock generally depends on the recommendations on it from new analysts. Usually, stocks see an upward price movement on new analyst coverage compared to what was witnessed with a rating upgrade under an existing coverage. Positive recommendations – Buy and Strong Buy – generally lead to a significantly positive price reaction than Hold recommendations. On the contrary, analysts hardly initiate coverage with a Strong Sell or Sell recommendation.
Now, if an analyst gives a new recommendation on a company that has limited or no existing coverage, investors start paying more attention to it. Also, any new information attracts portfolio managers to build a position in the stock.
Below, we have selected five stocks that have seen increased analyst coverage over the last few weeks.
Screening Criteria
Number of Broker Ratings now greater than the Number of Broker Ratings four weeks ago (This will shortlist stocks that have recent new coverage).
Average Broker Rating less than Average Broker Rating four weeks ago ('Less than' means 'better than' four weeks ago).
Increased analyst coverage and improving average rating are the primary criteria of this strategy but one should consider other relevant parameters to make the strategy foolproof.
Here are the other screening parameters:
Price greater than or equal to $5 (as a stock below $5 will not likely create significant interest for most investors).
Average Daily Volume greater than or equal to 100,000 shares (if volume isn’t enough, it will not attract individual investors).
Here are five of the 14 stocks that passed the screen:
North American Construction Group Ltd. (NOA - Free Report) : Headquartered in Acheson, Canada, this company provides mining and heavy construction services to the resource development and industrial construction sectors. Although this Zacks Rank #1 (Strong Buy) stock has underperformed its industry year to date, its earnings estimates for 2020 have moved up 46.5% over the past 30 days, depicting analysts’ optimism over the company’s earnings growth potential. The company’s earnings are expected to grow 11.5% this year. You can see the complete list of today’s Zacks #1 Rank stocks here.
Mr. Cooper Group Inc. (COOP - Free Report) : Based in Coppell, TX, this company provides servicing, origination, and transaction-based services related principally to single-family residences. This Zacks Rank #1 stock has gained 36.6% year to date against the industry’s 28.2% decline. Its earnings estimates for 2020 have moved 85.3% north over the past 30 days. The company’s earnings are expected to grow 105.3% this year.
Primoris Services Corporation (PRIM - Free Report) : This Dallas, TX-based specialty contractor and infrastructure company also sports a Zacks Rank #1. This stock has gained 20.4% year to date compared with the industry’s 18.7% growth. Its earnings estimates for 2020 have climbed 39.3% over the past 30 days.
CarParts.com, Inc. (PRTS - Free Report) : This Torrance, CA-based online provider of aftermarket auto parts and accessories currently carries a Zacks Rank #2 (Buy). The stock has gained 565.9% year to date against the industry’s 0.3% decline. Its bottom-line estimates have increased to earnings of 1 cents per share from a loss of 9 cents per share over the past seven days.
Aldeyra Therapeutics, Inc. (ALDX - Free Report) : Headquartered in Lexington, MA, this biotechnology company carries a Zacks Rank #2. The stock has gained 20.3% year to date against the industry’s 4.7% decline. Loss estimates for 2020 have narrowed down to $1.27 per share from $1.52 over the past 30 days.
You can get the rest of the stocks on this list by signing up now for your 2-week free trial to the Research Wizard and start using this screen in your own trading. Further, you can also create your own strategies and test them first before taking the investment plunge.
The Research Wizard is a great place to begin. It's easy to use. Everything is in plain language. And it's very intuitive. Start your Research Wizard trial today. And the next time you read an economic report, open up the Research Wizard, plug your finds in, and see what gems come out.
Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.
Image: Bigstock
5 Stocks to Snap Up on Coverage Initiation by Analysts
Coverage initiation on a stock by analyst(s) is critical for making investment decisions. This is because analysts provide key information on a stock, which is of great value to investors. There’s no denying that the lack of consistency in information creates inefficiencies that might result in misinterpretation of stocks.
Initiation of coverage by analysts usually depicts increased investor inclination. Investors, on their part, often assume that there is something in the stock that has attracted analyst attention. In other words, they believe that the company coming under the radar definitely has some value which can be tapped into. At times, increased investor focus on a stock encourages analysts to take a closer look.
Then again, average change in broker recommendation is always preferred over a single recommendation change.
Impact on Price Movement
The price movement of a stock generally depends on the recommendations on it from new analysts. Usually, stocks see an upward price movement on new analyst coverage compared to what was witnessed with a rating upgrade under an existing coverage. Positive recommendations – Buy and Strong Buy – generally lead to a significantly positive price reaction than Hold recommendations. On the contrary, analysts hardly initiate coverage with a Strong Sell or Sell recommendation.
Now, if an analyst gives a new recommendation on a company that has limited or no existing coverage, investors start paying more attention to it. Also, any new information attracts portfolio managers to build a position in the stock.
Below, we have selected five stocks that have seen increased analyst coverage over the last few weeks.
Screening Criteria
Number of Broker Ratings now greater than the Number of Broker Ratings four weeks ago (This will shortlist stocks that have recent new coverage).
Average Broker Rating less than Average Broker Rating four weeks ago ('Less than' means 'better than' four weeks ago).
Increased analyst coverage and improving average rating are the primary criteria of this strategy but one should consider other relevant parameters to make the strategy foolproof.
Here are the other screening parameters:
Price greater than or equal to $5 (as a stock below $5 will not likely create significant interest for most investors).
Average Daily Volume greater than or equal to 100,000 shares (if volume isn’t enough, it will not attract individual investors).
Here are five of the 14 stocks that passed the screen:
North American Construction Group Ltd. (NOA - Free Report) : Headquartered in Acheson, Canada, this company provides mining and heavy construction services to the resource development and industrial construction sectors. Although this Zacks Rank #1 (Strong Buy) stock has underperformed its industry year to date, its earnings estimates for 2020 have moved up 46.5% over the past 30 days, depicting analysts’ optimism over the company’s earnings growth potential. The company’s earnings are expected to grow 11.5% this year. You can see the complete list of today’s Zacks #1 Rank stocks here.
Mr. Cooper Group Inc. (COOP - Free Report) : Based in Coppell, TX, this company provides servicing, origination, and transaction-based services related principally to single-family residences. This Zacks Rank #1 stock has gained 36.6% year to date against the industry’s 28.2% decline. Its earnings estimates for 2020 have moved 85.3% north over the past 30 days. The company’s earnings are expected to grow 105.3% this year.
Primoris Services Corporation (PRIM - Free Report) : This Dallas, TX-based specialty contractor and infrastructure company also sports a Zacks Rank #1. This stock has gained 20.4% year to date compared with the industry’s 18.7% growth. Its earnings estimates for 2020 have climbed 39.3% over the past 30 days.
CarParts.com, Inc. (PRTS - Free Report) : This Torrance, CA-based online provider of aftermarket auto parts and accessories currently carries a Zacks Rank #2 (Buy). The stock has gained 565.9% year to date against the industry’s 0.3% decline. Its bottom-line estimates have increased to earnings of 1 cents per share from a loss of 9 cents per share over the past seven days.
Aldeyra Therapeutics, Inc. (ALDX - Free Report) : Headquartered in Lexington, MA, this biotechnology company carries a Zacks Rank #2. The stock has gained 20.3% year to date against the industry’s 4.7% decline. Loss estimates for 2020 have narrowed down to $1.27 per share from $1.52 over the past 30 days.
You can get the rest of the stocks on this list by signing up now for your 2-week free trial to the Research Wizard and start using this screen in your own trading. Further, you can also create your own strategies and test them first before taking the investment plunge.
The Research Wizard is a great place to begin. It's easy to use. Everything is in plain language. And it's very intuitive. Start your Research Wizard trial today. And the next time you read an economic report, open up the Research Wizard, plug your finds in, and see what gems come out.
Click here to sign up for a free trial to the Research Wizard today.
Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.
Disclosure: Performance information for Zacks’ portfolios and strategies are available at: https://www.zacks.com/performance