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Find Stocks to Buy in July that are Gaining More Attention on Wall Street
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The bulls showed they are prepared to fight to keep the rally going and possibly close out June on a high note, after a recent pullback sent the Nasdaq down to a potentially key technical level.
The tech-heavy index jumped around 1% through morning trading on Tuesday to see it pop right up off its 21-day moving average, while the S&P 500 was up around 0.7% to prevent it from possibly testing that same shorter-dated moving average.
The benchmark and the Nasdaq both remain solidly above their 50-day and 200-day moving averages. Investors are also seemingly trying to make sure that the S&P 500 remains above that 4300 level, which marked the highs following the summer 2022 rally.
The stock market could experience more profit-taking in the coming weeks and remain on a healthy bullish course for the second half. In fact, a pullback, followed by some sideways weeks from Tesla, Nvidia, and other big 2023 winners is likely welcome following the massive first-half surge.
This scenario could be beneficial to investors and the market as it could prevent a selloff down the road. Plus, there are signs that more money is coming off the sidelines and flowing into underperforming areas of the market.
The backdrop supporting stocks, from earnings stability and the projected return to EPS growth in 2024 to the end of the Fed’s rate hikes, also appears to remain in place. Therefore, investors likely want to stay exposed to the market in the second half.
One way for investors to find potentially market-beating stocks to buy in July is to search for stocks gaining analyst coverage. The idea is pretty simple: analysts are more inclined to start covering a stock that they view as having substantial upside potential vs. picking up coverage only to say stay away.
Here is how to use our new analyst coverage screen to help investors find stocks to buy in July and for the second half of 2023.
New Analyst Coverage
Broker recommendations play their part no matter how investors feel about them. And we seemingly all take a look no matter what. Individual investors, large institutional portfolio managers, and everyone in between are likely pleased to see one of their stocks get an upgraded rating or a new analyst cover the company.
Investor interest can generate more analyst coverage. This helps explain why analysts jump on young, much-hyped and talked about tech companies. Then, as new coverage is initiated, the company and the stock become more visible, which in turn often leads to more demand potential and therefore the possibility of higher prices.
Plus, analysts almost always initiate coverage with a positive recommendation. And the logic follows because why spend all the time and write a research report on a company not widely tracked only to say it’s not good?
When it comes to companies with little to no analyst coverage, one new recommendation can sometimes give portfolio managers the validation they need to build a position. And the more money they can invest, the more they can potentially influence prices.
The best way to use this information is to search for companies with analyst coverage that has increased over the last 4 weeks. We just look at the number of analyst recommendations today and compare it to the number of analyst recommendations 4 weeks ago.
The rule of thumb here is that an increase in coverage leans bullish and a decrease signals bearish behavior. It is also worth pointing out that, in general, the change in the average broker recommendation is a better indicator than the actual recommendation itself.
On top of that, it is typically more bullish if the increase went from none to one or if the coverage was minimal to begin with. (As the number of analysts climbs the addition of new coverage isn’t earth-shattering.) In the end, increased coverage is still better than decreased coverage, unless the coverage is heading in the wrong direction.
Now let’s try this screen…
• Number of Broker Ratings now greater than the Number of Broker Ratings four weeks ago
(This shows stocks where new coverage has recently been added.)
• Average Broker Rating less than Average Broker Rating four weeks ago
(By 'less than', we mean 'better than' four weeks ago.)
• Prices greater than or equal to 5
(We’re applying all of the above parameters to stocks above $5 a share since many money managers won't even look at stocks under $5)
• Average Daily Volume greater than or equal to 100,000 shares
(If there's not enough volume, even individual investors won't want it).
Here is one of the 12 stocks that came through the screen today…
Ligand Pharmaceuticals Incorporated ((LGND - Free Report) ) - (from 2 analysts four weeks ago to 3)
Ligand is a revenue-generating biopharmaceutical firm focused on drug discovery, early-stage drug development, product reformulation, and partnering. Ligand aims to stand out in the traditionally more speculative biopharmaceutical space by developing or acquiring technologies that help pharmaceutical companies discover and develop medicines in order to create more value for shareholders than is commonplace in the space.
Ligand blew away our adjusted earnings estimates by 121% last quarter. Plus, its improved earnings outlook helps it land a Zacks Rank #1 (Strong Buy) right now. Ligand’s Medical - Biomedical and Genetics industry land in the top 40% of over 250 Zacks industries, and it lands “B” grades for Value and Momentum in our Style Scores system, alongside an “A” grade for Growth.
Ligand shares have climbed by 9% in 2023 to top its Zacks Econ Sector’s 3% drop. LGND stock also currently trades 58% below its average Zacks price target. And Ligand trades at a slight discount to its Sector at 21.8X forward 12-month earnings.
Many screeners won't let you search for the number of analysts covering a stock, let alone comparing the amount of coverage they had weeks or even months ago. But you can with the Research Wizard. And you can backtest it all. Find out how to pick the right stocks right now by taking a free trial to the Research Wizard stock picking and backtesting program.
Want more articles from this author? Scroll up to the top of this article and click the FOLLOW AUTHOR button to get an email each time a new article is published.
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
Find Stocks to Buy in July that are Gaining More Attention on Wall Street
The bulls showed they are prepared to fight to keep the rally going and possibly close out June on a high note, after a recent pullback sent the Nasdaq down to a potentially key technical level.
The tech-heavy index jumped around 1% through morning trading on Tuesday to see it pop right up off its 21-day moving average, while the S&P 500 was up around 0.7% to prevent it from possibly testing that same shorter-dated moving average.
The benchmark and the Nasdaq both remain solidly above their 50-day and 200-day moving averages. Investors are also seemingly trying to make sure that the S&P 500 remains above that 4300 level, which marked the highs following the summer 2022 rally.
The stock market could experience more profit-taking in the coming weeks and remain on a healthy bullish course for the second half. In fact, a pullback, followed by some sideways weeks from Tesla, Nvidia, and other big 2023 winners is likely welcome following the massive first-half surge.
This scenario could be beneficial to investors and the market as it could prevent a selloff down the road. Plus, there are signs that more money is coming off the sidelines and flowing into underperforming areas of the market.
The backdrop supporting stocks, from earnings stability and the projected return to EPS growth in 2024 to the end of the Fed’s rate hikes, also appears to remain in place. Therefore, investors likely want to stay exposed to the market in the second half.
One way for investors to find potentially market-beating stocks to buy in July is to search for stocks gaining analyst coverage. The idea is pretty simple: analysts are more inclined to start covering a stock that they view as having substantial upside potential vs. picking up coverage only to say stay away.
Here is how to use our new analyst coverage screen to help investors find stocks to buy in July and for the second half of 2023.
New Analyst Coverage
Broker recommendations play their part no matter how investors feel about them. And we seemingly all take a look no matter what. Individual investors, large institutional portfolio managers, and everyone in between are likely pleased to see one of their stocks get an upgraded rating or a new analyst cover the company.
Investor interest can generate more analyst coverage. This helps explain why analysts jump on young, much-hyped and talked about tech companies. Then, as new coverage is initiated, the company and the stock become more visible, which in turn often leads to more demand potential and therefore the possibility of higher prices.
Plus, analysts almost always initiate coverage with a positive recommendation. And the logic follows because why spend all the time and write a research report on a company not widely tracked only to say it’s not good?
When it comes to companies with little to no analyst coverage, one new recommendation can sometimes give portfolio managers the validation they need to build a position. And the more money they can invest, the more they can potentially influence prices.
The best way to use this information is to search for companies with analyst coverage that has increased over the last 4 weeks. We just look at the number of analyst recommendations today and compare it to the number of analyst recommendations 4 weeks ago.
The rule of thumb here is that an increase in coverage leans bullish and a decrease signals bearish behavior. It is also worth pointing out that, in general, the change in the average broker recommendation is a better indicator than the actual recommendation itself.
On top of that, it is typically more bullish if the increase went from none to one or if the coverage was minimal to begin with. (As the number of analysts climbs the addition of new coverage isn’t earth-shattering.) In the end, increased coverage is still better than decreased coverage, unless the coverage is heading in the wrong direction.
Now let’s try this screen…
• Number of Broker Ratings now greater than the Number of Broker Ratings four weeks ago
(This shows stocks where new coverage has recently been added.)
• Average Broker Rating less than Average Broker Rating four weeks ago
(By 'less than', we mean 'better than' four weeks ago.)
• Prices greater than or equal to 5
(We’re applying all of the above parameters to stocks above $5 a share since many money managers won't even look at stocks under $5)
• Average Daily Volume greater than or equal to 100,000 shares
(If there's not enough volume, even individual investors won't want it).
Here is one of the 12 stocks that came through the screen today…
Ligand Pharmaceuticals Incorporated ((LGND - Free Report) ) - (from 2 analysts four weeks ago to 3)
Ligand is a revenue-generating biopharmaceutical firm focused on drug discovery, early-stage drug development, product reformulation, and partnering. Ligand aims to stand out in the traditionally more speculative biopharmaceutical space by developing or acquiring technologies that help pharmaceutical companies discover and develop medicines in order to create more value for shareholders than is commonplace in the space.
Ligand blew away our adjusted earnings estimates by 121% last quarter. Plus, its improved earnings outlook helps it land a Zacks Rank #1 (Strong Buy) right now. Ligand’s Medical - Biomedical and Genetics industry land in the top 40% of over 250 Zacks industries, and it lands “B” grades for Value and Momentum in our Style Scores system, alongside an “A” grade for Growth.
Ligand shares have climbed by 9% in 2023 to top its Zacks Econ Sector’s 3% drop. LGND stock also currently trades 58% below its average Zacks price target. And Ligand trades at a slight discount to its Sector at 21.8X forward 12-month earnings.
Many screeners won't let you search for the number of analysts covering a stock, let alone comparing the amount of coverage they had weeks or even months ago. But you can with the Research Wizard. And you can backtest it all. Find out how to pick the right stocks right now by taking a free trial to the Research Wizard stock picking and backtesting program.
Click here to sign up for a free trial to the Research Wizard today.
Want more articles from this author? Scroll up to the top of this article and click the FOLLOW AUTHOR button to get an email each time a new article is published.
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.