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Find 'Strong Buy' Stocks During Q1 Earnings Season

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The market began the week of April 19 with two days of declines, as more earnings results start to roll in from more blue-chip firms, including Netflix (NFLX - Free Report) , United Airlines (UAL - Free Report) , and many others.

The rough start to the week could be sparked by nothing more serious than profit-taking after the S&P 500 and the Dow jumped to new highs last week and the Nasdaq continued its resurgence. Taking money off the table ahead of earnings, which always brings uncertainty, is a reasonable play even though the big banks kicked things off with a bang last week.

Despite the recent dip, the broader market fundamentals are still flashing bullish signals. And the U.S. economy has started to roar back as things reopen amid largely efficient vaccine distribution efforts.

Therefore, investors might want to add strong stocks to their portfolios while the market dips, especially given the improving S&P 500 earnings outlook (also read: Big Banks Foreshadow the Improving 2021 Earnings Picture).

Zacks Rank #1 (Strong Buy) stocks outperform the market in both good and bad times. However, there are over 200 stocks that earn a Zacks Rank #1 at any given time. Therefore, it’s helpful to understand how to apply filters to the Zacks Rank in order to narrow the list down to a more manageable and tradable set of stocks.

Parameters

Clearly, there are only three items on this screen. But together, these three filters can result in some impressive returns.

• Zacks Rank equal to 1

Starting with a Zacks Rank #1 is often a strong jumping off point because it boasts an average annual return of roughly 24.4% per year since 1988.

• % Change (Q1) Est. over 4 Weeks greater than 0

Positive current quarter estimate revisions over the last four weeks.

The Zacks Rank looks at earnings estimate revisions for the current year (F1) and the next year (F2). The additional component factors in current quarter (Q1) estimate revisions. The idea is pretty simple.

A company that has experienced downward revisions for the current quarter could soon see longer-term negative revisions. Meanwhile, if a company has earned positive earnings revisions for its current quarter, it might signal that more upward revisions could be coming down the road, which would make it an attractive buy.

• % Broker Rating Change over 4 Week equal to Top # 5

Top 5 stocks with the best average broker rating changes over the last four weeks.

In this screen, we are searching for positive broker rating changes or upgrades over the last four weeks. On top of that, we want to cut down on the number of stocks that come through. So, we configured the screen to select the top 5 stocks with the best broker rating upgrade.

Investors should note that broker ratings typically lean toward the upside. Therefore, our screen makes sure that the brokers are getting more bullish, or at the least not getting less bullish (or even bearish) on the stock.

It is worth noting that the actual broker ratings do not matter as much as the upgrade itself, because stocks with broker rating upgrades have been proven to outperform their counterparts that do not earn positive broker rating changes or downgrades.

This strategy comes loaded with the Research Wizard and is called bt_sow_filtered zacks rank5. It can be found in the SoW (Screen of the Week) folder.

Here is one of the five stocks that qualified for the Filtered Zacks Rank 5 strategy today…

Rocky Brands, Inc. (RCKY - Free Report)

See the rest of the stocks on this list and start trading the Filtered Zacks Rank 5 (or any of our other strategies) in your own account. Remember, the key to successful screening is finding screens that have produced profitable results in the past. And that's exactly what you get with the Research Wizard stock picking and backtesting program.

Get the rest of the stocks on this list and start looking for the newest companies that fit these criteria. It's easy to do. And it could help you find your next big winner. Start screening for these companies today with a free trial to the Research Wizard. You can do it.

Click here to sign up for a free trial to the Research Wizard today.

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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/

Today's Stocks from Zacks' Best Screens

Now would you like to screen for the latest stocks from Zacks' most successful strategies? From 2016 through 2020, while the market gained 103.9%, we saw results like these: Filtered Zacks Rank5 +424.1%, New Highs +429.0%, Technical Analysis and Fundamental Analysis +477.8%, andValue Method 1 +580.0%.

You're invited to screen the latest stocks in seconds by trying Zacks' Research Wizard stock-picking program. Or use the Wizard to create your own market-beating strategies. No credit card needed, no cost or obligation.

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In-Depth Zacks Research for the Tickers Above


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United Airlines Holdings Inc (UAL) - free report >>

Netflix, Inc. (NFLX) - free report >>

Rocky Brands, Inc. (RCKY) - free report >>