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These 5 Stocks Look Attractive Following Broker Upgrades
With uncertainty and volatility plaguing the U.S. equity markets, it is very hard for individual investors to design a winning portfolio of stocks. No one wants to see their hard-earned money go down the drain.
Moreover, with multiple stocks flooding the market from every possible corner, at any point of time, it is next to impossible to design one’s portfolio with appropriate stocks in the absence of guidance from experts who are equipped with proper knowhow about the market. The experts in the field of investing are the brokers.
We believe that investors should include broker-favorite stocks like American Airlines, Delek US Holdings, Builders FirstSource, Asbury Automotive and Foot Locker in their watchlist.
Brokers, irrespective of their types (sell-side, buy-side or independent), undertake thorough research of the stocks covered by them. They have at their disposal a lot more information on a company and its prospects than individual investors.
To attain their objective, they go through minute details of the publicly available financial documents apart from attending company conference calls and other presentations. Consequently, the opinion of brokers should act as a valuable guide for investors while deciding their course of action (buy, sell or hold) on a particular stock.
Movement of Earnings Estimates: An Invaluable Pointer
Since brokers follow the stocks in their coverage minutely, they revise their earnings estimates after carefully examining the pros and cons of an event for the concerned company. In fact, a rating upgrade or downgrade by brokers has the potential to immediately influence the price of the stock.
Given the expertise of brokers in investment matters, it is natural for investors to believe that there is a solid reason/logic behind brokers improving their recommendation on a particular stock. In fact, a rating upgrade generally leads to stock price appreciation and vice versa. Estimates can move north for a number of reasons — favorable earnings performance, a bullish guidance, product launch or any favorable macro scenario.
To take care of the earnings performance, we have designed a screen based on improving analyst recommendation and upward estimate revisions over the last four weeks.
Ignore Top line at Your Own Peril
To design a winning strategy, it is not prudent to consider only the bottom line only. In fact, according to some market watchers, a top-line outperformance is more creditable for a stock than a mere earnings beat under some circumstances. Therefore, to make our strategy full-proof, one needs to address top-line concerns as well. We have considered the price/sales ratio, which serves as a strong complementary valuation metric, for screening stocks.
Here are five of the 10 stocks that passed the screen test:
American Airlines is based in Fort Worth, TX. The gradual increase in air-travel demand (particularly for leisure) is aiding AAL. However, high fuel costs are hurting the bottom line.
Over the past 60 days, the stock has seen the Zacks Consensus Estimate for 2022 earnings being revised 69.6% upward. AAL currently carries a Zacks Rank #3 (Hold).
Brentwood, TN-based Delek US Holdings is an independent refiner, transporter and marketer of petroleum products. DK’s extensive downstream operations within the Permian Basin grant it a fairly significant competitive edge over its peers in the long term.
Delek US Holdings currently carries a Zacks Rank #3. The Zacks Consensus Estimate for current-quarter earnings has improved 5.3% over the past 60 days.
Builders FirstSource: Dallas, TX-based BLDR manufactures and supplies building materials. Builders FirstSource has been benefiting from its focus on cost synergies, strategic acquisition and robust demand from solid housing and repair and remodeling activities.
Builders FirstSource is currently Zacks #3 Ranked. The Zacks Consensus Estimate for current-quarter earnings has improved 39.7% over the past 60 days.
Asbury: Asbury is one of the largest automotive retailers of new and used vehicles, and related services in the United States. The acquisition of Larry H. Miller Dealerships has bolstered Asbury’s regional footprint and will add nearly $5.7 billion in expected annualized revenues. ABG’s ambitious plan to generate $32 billion in revenues by 2025 instills optimism. The company’s end-to-end e-commerce platform—Clicklane—is on track to generate around $1 billion in sales in 2022 and $2.2 billion by the end of 2023.
Asbury carries a Zacks Rank #3 presently. ABG surpassed the Zacks Consensus Estimate for earnings in each of the last four quarters. The average beat is 11.2%.
Foot Locker’s digital business has been performing well. Over the past few years, Foot Locker has been investing significantly to reinforce its digital presence and augment its direct-to-consumer operations. Foot Locker is trying to improve its performance through operational and financial initiatives.
Foot Locker carries a Zacks Rank #3 presently. FL surpassed the Zacks Consensus Estimate for earnings in each of the last four quarters, with the average beat being 11.2%.
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 backtest 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.
About Screen of the Week
Zacks.com created the first and best screening system on the web earning the distinction as the "#1 site for screening stocks" by Money Magazine. But powerful screening tools is just the start. That is why Zacks created the Screen of the Week to highlight profitable stock picking strategies that investors can actively use.
Strong Stocks that Should Be in the News
Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has more than doubled the market from 1988 through 2016. Its average gain has been a stellar +25% per year. See these high-potential stocks free >>.
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
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Zacks.com featured highlights American Airlines, Delek US Holdings, Builders FirstSource, Asbury Automotive and Foot Locker
For Immediate Release
Chicago, IL – December 12, 2022 – Stocks in this week’s article are American Airlines (AAL - Free Report) , Delek US Holdings (DK - Free Report) , Builders FirstSource (BLDR - Free Report) , Asbury Automotive (ABG - Free Report) and Foot Locker (FL - Free Report) .
These 5 Stocks Look Attractive Following Broker Upgrades
With uncertainty and volatility plaguing the U.S. equity markets, it is very hard for individual investors to design a winning portfolio of stocks. No one wants to see their hard-earned money go down the drain.
Moreover, with multiple stocks flooding the market from every possible corner, at any point of time, it is next to impossible to design one’s portfolio with appropriate stocks in the absence of guidance from experts who are equipped with proper knowhow about the market. The experts in the field of investing are the brokers.
We believe that investors should include broker-favorite stocks like American Airlines, Delek US Holdings, Builders FirstSource, Asbury Automotive and Foot Locker in their watchlist.
Brokers, irrespective of their types (sell-side, buy-side or independent), undertake thorough research of the stocks covered by them. They have at their disposal a lot more information on a company and its prospects than individual investors.
To attain their objective, they go through minute details of the publicly available financial documents apart from attending company conference calls and other presentations. Consequently, the opinion of brokers should act as a valuable guide for investors while deciding their course of action (buy, sell or hold) on a particular stock.
Movement of Earnings Estimates: An Invaluable Pointer
Since brokers follow the stocks in their coverage minutely, they revise their earnings estimates after carefully examining the pros and cons of an event for the concerned company. In fact, a rating upgrade or downgrade by brokers has the potential to immediately influence the price of the stock.
Given the expertise of brokers in investment matters, it is natural for investors to believe that there is a solid reason/logic behind brokers improving their recommendation on a particular stock. In fact, a rating upgrade generally leads to stock price appreciation and vice versa. Estimates can move north for a number of reasons — favorable earnings performance, a bullish guidance, product launch or any favorable macro scenario.
To take care of the earnings performance, we have designed a screen based on improving analyst recommendation and upward estimate revisions over the last four weeks.
Ignore Top line at Your Own Peril
To design a winning strategy, it is not prudent to consider only the bottom line only. In fact, according to some market watchers, a top-line outperformance is more creditable for a stock than a mere earnings beat under some circumstances. Therefore, to make our strategy full-proof, one needs to address top-line concerns as well. We have considered the price/sales ratio, which serves as a strong complementary valuation metric, for screening stocks.
Here are five of the 10 stocks that passed the screen test:
American Airlines is based in Fort Worth, TX. The gradual increase in air-travel demand (particularly for leisure) is aiding AAL. However, high fuel costs are hurting the bottom line.
Over the past 60 days, the stock has seen the Zacks Consensus Estimate for 2022 earnings being revised 69.6% upward. AAL currently carries a Zacks Rank #3 (Hold).
Brentwood, TN-based Delek US Holdings is an independent refiner, transporter and marketer of petroleum products. DK’s extensive downstream operations within the Permian Basin grant it a fairly significant competitive edge over its peers in the long term.
Delek US Holdings currently carries a Zacks Rank #3. The Zacks Consensus Estimate for current-quarter earnings has improved 5.3% over the past 60 days.
Builders FirstSource: Dallas, TX-based BLDR manufactures and supplies building materials. Builders FirstSource has been benefiting from its focus on cost synergies, strategic acquisition and robust demand from solid housing and repair and remodeling activities.
Builders FirstSource is currently Zacks #3 Ranked. The Zacks Consensus Estimate for current-quarter earnings has improved 39.7% over the past 60 days.
Asbury: Asbury is one of the largest automotive retailers of new and used vehicles, and related services in the United States. The acquisition of Larry H. Miller Dealerships has bolstered Asbury’s regional footprint and will add nearly $5.7 billion in expected annualized revenues. ABG’s ambitious plan to generate $32 billion in revenues by 2025 instills optimism. The company’s end-to-end e-commerce platform—Clicklane—is on track to generate around $1 billion in sales in 2022 and $2.2 billion by the end of 2023.
Asbury carries a Zacks Rank #3 presently. ABG surpassed the Zacks Consensus Estimate for earnings in each of the last four quarters. The average beat is 11.2%.
Foot Locker’s digital business has been performing well. Over the past few years, Foot Locker has been investing significantly to reinforce its digital presence and augment its direct-to-consumer operations. Foot Locker is trying to improve its performance through operational and financial initiatives.
Foot Locker carries a Zacks Rank #3 presently. FL surpassed the Zacks Consensus Estimate for earnings in each of the last four quarters, with the average beat being 11.2%.
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 backtest 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.
For the rest of this Screen of the Week article please visit Zacks.com at: https://www.zacks.com/stock/news/2027101/these-5-stocks-look-attractive-following-broker-upgrades
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.
About Screen of the Week
Zacks.com created the first and best screening system on the web earning the distinction as the "#1 site for screening stocks" by Money Magazine. But powerful screening tools is just the start. That is why Zacks created the Screen of the Week to highlight profitable stock picking strategies that investors can actively use.
Strong Stocks that Should Be in the News
Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has more than doubled the market from 1988 through 2016. Its average gain has been a stellar +25% per year. See these high-potential stocks free >>.
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Join us on Facebook: https://www.facebook.com/ZacksInvestmentResearch
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Contact: Jim Giaquinto
Company: Zacks.com
Phone: 312-265-9268
Email: pr@zacks.com
Visit: https://www.zacks.com/
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.