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4 Stocks to Keep an Eye on as Analysts Initiate Coverage
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Most investors have immense faith in research work by analysts as they fear that lack of information while exploring on their own might trigger inefficiencies. Here, analysts play a vital intermediary role with their extensive access to relevant data.
Coverage initiation of a stock by analyst(s) usually portrays higher investor inclination. Investors, on their part, often assume that there is something special in a stock to attract analysts to cover it. In other words, they believe that the company coming under the microscope definitely has some value.
Obviously, stocks are not randomly chosen to cover. New coverage on a stock usually reflects a reassuring future envisioned by the analyst(s). At times, increased investors’ focus on a stock motivates analysts to take a closer look at it. After all, who doesn’t love to produce something that is already in demand? Hence, we often find that analysts’ ratings on newly added stocks are more favorable than their ratings on continuously covered stocks.
It is needless to say, the average change in broker recommendation is more preferable than a single recommendation change.
How Does Analyst Coverage Influence Stock Price?
The price movement of a stock is generally a function of the recommendations on it from new analysts. Stocks typically see an upward price movement with a new analyst coverage compared to what is 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 very few 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.
So, it’s a good strategy to bet on stocks that have seen increased analyst coverage.
Below, we have selected four stocks that have seen increased analyst coverage over the past 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 also consider other relevant parameters to make it 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 four of the 11 stocks that passed the screen:
Trinseo S.A. (TSE - Free Report) : Based in Berwyn, PA, this is a global materials company and manufacturer of plastics, latex as well as rubber. This Zacks Rank #2 (Buy) stock has surged 111.6% past year, outperforming the industry’s 46.8% rally. Earnings estimates for the current year have moved up 10.6% over the past 60 days. The company’s earnings are expected to grow 378.1% for the current year.
Integer Holdings Corporation (ITGR - Free Report) : Based in Plano, TX, this company operates as a medical device outsource manufacturer and currently carries a Zacks Rank #3 (Hold). The stock has gained 35% over the past year compared with the industry’s 13.9% rally. The company’s earnings are expected to grow 39% for 2021. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Telefonica Brasil S.A. (VIV - Free Report) : Based in Sao Paulo, Brazil, this company provides communication, information and entertainment solutions in the telecommunication sector in the State of Sao Paulo. This Zacks Rank #3 stock has gained 6.2% in the past year, outperforming the industry’s 19.3% decline. Earnings estimates for the current year have moved up 3.5% over the past 30 days. The company’s earnings are expected to grow 5.4% for 2021.
Eos Energy Enterprises, Inc. (EOSE - Free Report) : Headquartered in Edison, NJ, this company designs, manufactures and deploys battery storage solutions. This Zacks Rank #3 stock has surged 58.4% in the past year, outperforming the industry’s 8.5% growth. Loss estimates for the current year have narrowed to $1.04 from $1.15 over the past 30 days. The company’s bottom line is expected to grow 85.8% for 2021.
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.
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4 Stocks to Keep an Eye on as Analysts Initiate Coverage
Most investors have immense faith in research work by analysts as they fear that lack of information while exploring on their own might trigger inefficiencies. Here, analysts play a vital intermediary role with their extensive access to relevant data.
Coverage initiation of a stock by analyst(s) usually portrays higher investor inclination. Investors, on their part, often assume that there is something special in a stock to attract analysts to cover it. In other words, they believe that the company coming under the microscope definitely has some value.
Obviously, stocks are not randomly chosen to cover. New coverage on a stock usually reflects a reassuring future envisioned by the analyst(s). At times, increased investors’ focus on a stock motivates analysts to take a closer look at it. After all, who doesn’t love to produce something that is already in demand? Hence, we often find that analysts’ ratings on newly added stocks are more favorable than their ratings on continuously covered stocks.
It is needless to say, the average change in broker recommendation is more preferable than a single recommendation change.
How Does Analyst Coverage Influence Stock Price?
The price movement of a stock is generally a function of the recommendations on it from new analysts. Stocks typically see an upward price movement with a new analyst coverage compared to what is 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 very few 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.
So, it’s a good strategy to bet on stocks that have seen increased analyst coverage.
Below, we have selected four stocks that have seen increased analyst coverage over the past 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 also consider other relevant parameters to make it 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 four of the 11 stocks that passed the screen:
Trinseo S.A. (TSE - Free Report) : Based in Berwyn, PA, this is a global materials company and manufacturer of plastics, latex as well as rubber. This Zacks Rank #2 (Buy) stock has surged 111.6% past year, outperforming the industry’s 46.8% rally. Earnings estimates for the current year have moved up 10.6% over the past 60 days. The company’s earnings are expected to grow 378.1% for the current year.
Integer Holdings Corporation (ITGR - Free Report) : Based in Plano, TX, this company operates as a medical device outsource manufacturer and currently carries a Zacks Rank #3 (Hold). The stock has gained 35% over the past year compared with the industry’s 13.9% rally. The company’s earnings are expected to grow 39% for 2021. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Telefonica Brasil S.A. (VIV - Free Report) : Based in Sao Paulo, Brazil, this company provides communication, information and entertainment solutions in the telecommunication sector in the State of Sao Paulo. This Zacks Rank #3 stock has gained 6.2% in the past year, outperforming the industry’s 19.3% decline. Earnings estimates for the current year have moved up 3.5% over the past 30 days. The company’s earnings are expected to grow 5.4% for 2021.
Eos Energy Enterprises, Inc. (EOSE - Free Report) : Headquartered in Edison, NJ, this company designs, manufactures and deploys battery storage solutions. This Zacks Rank #3 stock has surged 58.4% in the past year, outperforming the industry’s 8.5% growth. Loss estimates for the current year have narrowed to $1.04 from $1.15 over the past 30 days. The company’s bottom line is expected to grow 85.8% for 2021.
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