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5 Stocks to Watch Out For on Recent Broker Rating Upgrades
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One often falters in life due to lack of proper guidance. This is true for the investing world as well. With a deluge of stocks flooding the market at any point of time, an investor may make a wrong choice while designing a portfolio in the absence of proper know-how.
Moreover, time constraint makes the task even harder. Choice of improper stocks can adversely impact returns, thereby ruining the objective of investing hard-earned money in the highly unpredictable stock market.
Broker Advice – The Savior
To avoid such an unfortunate scenario, investors, more often than not rely on guidance provided by brokers who are deemed to be experts in the field.
Of the three types of brokers/analysts (sell-side, buy-side and independent) present in the investment world, sell-side analysts are most common. Various brokerage firms employ them to provide unbiased opinion to investors after thorough research. Buy-side analysts are employed by hedge funds, mutual funds etc. while the independent ones simply sell their reports to investors. Brokers not only scrutinize the publicly available financial documents but also attend company conference calls and other presentations.
Given the above scenario, it is in the best interest of investors to pay heed to such well-researched information. Estimate revisions serve as an important pointer regarding the price of a stock.
Framing a Winning Strategy
We have designed a screen to shortlist stocks based on improving analyst recommendation and upward revisions to earnings estimates over the last four weeks. Also, since the price/sales ratio is a strong complementary valuation metric in the presence of analyst information, it has also been included. The price/sales ratio takes care of the company’s top line thereby making the strategy foolproof.
Screening Criteria
# (Up- Down Rating)/ Total (4 weeks) =Top #75: This gives the list of top 75 companies that have witnessed net upgrades over the last 4 weeks.
% change in Q (1) est. (4 weeks) = Top #10: This gives the top 10 stocks that have witnessed earnings estimate revisions over the past 4 weeks for the upcoming quarter.
To ensure that the strategy is a winning one, covering all bases, we have added the following screening parameters:
Price-to-Sales = Bot%10: The lower the ratio the better, companies meeting this criteria are in bottom 10% of our universe of over 7,700 stocks with respect to this ratio.
Price greater than 5: A stock trading below $5 will not likely create significant interest for most investors.
Average Daily Volume greater than 100,000 shares over the last 20 trading days: Volume has to be significant to ensure that these are easily traded.
Market value ($ mil) = Top #3000: This gives us stocks that are the top 3000 if one judges by market capitalization.
Com/ADR/Canadian= Com: This eliminates the ADR and Canadian stocks.
Here are five of the 10 stocks that made it through the screen:
ArcBest Corporation (ARCB - Free Report) provides freight transportation services and solutions. This Zacks Rank #1 (Strong Buy) company is based in Fort Smith, AR. The Zacks Consensus Estimate for current-year earnings improved 23% over the last 60 days. You can see the complete list of today’s Zacks #1 Rank stocks here.
Molina Healthcare, Inc. (MOH - Free Report) is a multi-state managed care organization participating exclusively in government-sponsored healthcare programs such as the Medicaid program and the State Children's Health Insurance Program, catering to low-income persons. The company, based in Long Beach, CA, has an impressive history with respect to earnings per share, having outshined the Zacks Consensus Estimate in each of the trailing four quarters. The average beat for this Zacks Rank #1 stock is 82.6%.
Avis Budget Group, Inc. (CAR - Free Report) provides vehicle rental services through a network of approximately 10,000 car and truck rental locations in the United States, Canada, Australia, New Zealand, Latin America, the Caribbean, and parts of Asia. The Zacks Consensus Estimate for current-year earnings improved 94% over the last 60 days. The company carries a Zacks Rank #3 (Hold).
Cincinnati Bell Inc. is based in Cincinnati, OH and carries a Zacks Rank #2 (Buy). The company provides business customers with outsourced data center colocation operations and related managed services in world class, state-of-the-art data center facilities. The expected EPS growth rate (three to five years) for the company is 2%.
Leawood, KS-based AMC Entertainment Holdings, Inc. (AMC - Free Report) is engaged in the theatrical exhibition business. This Zacks Rank #3 company has an impressive history with respect to earnings per share. It outshined the Zacks Consensus Estimate in three of the last four quarters, with the average beat being 62.9%.
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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5 Stocks to Watch Out For on Recent Broker Rating Upgrades
One often falters in life due to lack of proper guidance. This is true for the investing world as well. With a deluge of stocks flooding the market at any point of time, an investor may make a wrong choice while designing a portfolio in the absence of proper know-how.
Moreover, time constraint makes the task even harder. Choice of improper stocks can adversely impact returns, thereby ruining the objective of investing hard-earned money in the highly unpredictable stock market.
Broker Advice – The Savior
To avoid such an unfortunate scenario, investors, more often than not rely on guidance provided by brokers who are deemed to be experts in the field.
Of the three types of brokers/analysts (sell-side, buy-side and independent) present in the investment world, sell-side analysts are most common. Various brokerage firms employ them to provide unbiased opinion to investors after thorough research. Buy-side analysts are employed by hedge funds, mutual funds etc. while the independent ones simply sell their reports to investors. Brokers not only scrutinize the publicly available financial documents but also attend company conference calls and other presentations.
Given the above scenario, it is in the best interest of investors to pay heed to such well-researched information. Estimate revisions serve as an important pointer regarding the price of a stock.
Framing a Winning Strategy
We have designed a screen to shortlist stocks based on improving analyst recommendation and upward revisions to earnings estimates over the last four weeks. Also, since the price/sales ratio is a strong complementary valuation metric in the presence of analyst information, it has also been included. The price/sales ratio takes care of the company’s top line thereby making the strategy foolproof.
Screening Criteria
# (Up- Down Rating)/ Total (4 weeks) =Top #75: This gives the list of top 75 companies that have witnessed net upgrades over the last 4 weeks.
% change in Q (1) est. (4 weeks) = Top #10: This gives the top 10 stocks that have witnessed earnings estimate revisions over the past 4 weeks for the upcoming quarter.
To ensure that the strategy is a winning one, covering all bases, we have added the following screening parameters:
Price-to-Sales = Bot%10: The lower the ratio the better, companies meeting this criteria are in bottom 10% of our universe of over 7,700 stocks with respect to this ratio.
Price greater than 5: A stock trading below $5 will not likely create significant interest for most investors.
Average Daily Volume greater than 100,000 shares over the last 20 trading days: Volume has to be significant to ensure that these are easily traded.
Market value ($ mil) = Top #3000: This gives us stocks that are the top 3000 if one judges by market capitalization.
Com/ADR/Canadian= Com: This eliminates the ADR and Canadian stocks.
Here are five of the 10 stocks that made it through the screen:
ArcBest Corporation (ARCB - Free Report) provides freight transportation services and solutions. This Zacks Rank #1 (Strong Buy) company is based in Fort Smith, AR. The Zacks Consensus Estimate for current-year earnings improved 23% over the last 60 days. You can see the complete list of today’s Zacks #1 Rank stocks here.
Molina Healthcare, Inc. (MOH - Free Report) is a multi-state managed care organization participating exclusively in government-sponsored healthcare programs such as the Medicaid program and the State Children's Health Insurance Program, catering to low-income persons. The company, based in Long Beach, CA, has an impressive history with respect to earnings per share, having outshined the Zacks Consensus Estimate in each of the trailing four quarters. The average beat for this Zacks Rank #1 stock is 82.6%.
Avis Budget Group, Inc. (CAR - Free Report) provides vehicle rental services through a network of approximately 10,000 car and truck rental locations in the United States, Canada, Australia, New Zealand, Latin America, the Caribbean, and parts of Asia. The Zacks Consensus Estimate for current-year earnings improved 94% over the last 60 days. The company carries a Zacks Rank #3 (Hold).
Cincinnati Bell Inc. is based in Cincinnati, OH and carries a Zacks Rank #2 (Buy). The company provides business customers with outsourced data center colocation operations and related managed services in world class, state-of-the-art data center facilities. The expected EPS growth rate (three to five years) for the company is 2%.
Leawood, KS-based AMC Entertainment Holdings, Inc. (AMC - Free Report) is engaged in the theatrical exhibition business. This Zacks Rank #3 company has an impressive history with respect to earnings per share. It outshined the Zacks Consensus Estimate in three of the last four quarters, with the average beat being 62.9%.
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.