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How to Find Top-Ranked Stocks to Buy Heading into August
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Wall Street spent the first day and a half of a busy week sending stocks higher despite the unknowns right around the corner. The buying appears to showcase that investors are growing more confident that the Fed will hike by 0.25% on Wednesday and then be finished with their hawkish tightening efforts.
The other most important factor driving stock prices, earnings, are also ready to turn the corner according to Zacks data. The second quarter is set to mark the bottom for earnings, with Q3 ready to dip slightly. S&P 500 earnings are then projected to bounce back in a huge way in the fourth quarter and not look back in 2024 or 2025.
In the forward-looking world of Wall Street, the end of tightening and a soon-to-be earnings rebound has helped propel the fantastic first half and a strong July. That said, it is very possible the market experiences plenty more post-release selloffs and profit taking, similar to Tesla and Netflix last week.
Image Source: Zacks Investment Research
Despite the possibility of near-term volatility and selling, the foundation supporting the bull market appears intact. Even one of Wall Street’s biggest bears, Morgan Stanley’s Mike Wilson, recently admitted that he was ‘wrong’ about the 2023 stock market.
With this in mind, investors can utilize the Filtered Zacks Rank 5 Stock Screen to help find potentially winning stocks heading into August and beyond that have boosted their earnings guidance.
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.
• % 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.
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 are two of the five stocks that qualified for the Filtered Zacks Rank 5 strategy today…
Cadence Design posted a beat-and-raise quarter on Tuesday morning, July 25. Cadence is a leader in electronic systems design. Its modeling and computational software helps in the design process of semiconductors and many other crucial and cutting-edge technologies that drive the economy.
Cadence’s earnings revisions chart highlights its impressive growth over the last few years and what is likely to come in the coming years. CDNS currently lands a Zacks Rank #1 (Strong Buy), but that ranking could change as more analysts provide updated results following its Q2 earnings release on Tuesday.
Image Source: Zacks Investment Research
Cadence boasts Nvidia ((NVDA - Free Report) ) as a key customer because the GPU giant loves its modeling and simulation capabilities. Cadence is one of two major players in its realm and CDNS is more vital than ever as the chips venture into the sub-5 nanometer world. Plus, Cadence is benefiting from the AI boom.
Cadence shares have destroyed the Zacks Tech sector over the last decade and the past 12 months, up 1,500% and 40% respectively to trade near fresh highs. CDNS shares were down around 1.2% through morning trading following its release as investors start to utilize earnings as an opportunity to take home profits on Cadence and other 2023 stars.
Cadence is now flirting with its 21-day moving average and sitting about 5% below its recent records. CDNS is far from cheap in terms of forward earnings, but it trades at a 26% discount to its own decade-long highs and its PEG ratio of 2.8 marks a 52% discount to its highs. Plus, 10 of the 12 brokerage recommendations Zacks has are “Strong Buys.” All that said, some investors might want to wait for more of a pullback, while others with long-term outlooks could avoid the market-timing game.
Boise Cascade is one of the top producers of engineered wood products and plywood in North America. Boise Cascade is also a huge player in the wholesale distribution of building products in the U.S. BCC posted an impressive stretch of top-line expansion over the last decade, highlighted by 18% growth in 2020 and 45% expansion in 2021, driven by the Covid housing and home improvement boom. Boise Cascade followed that up with another 6% sales growth last year.
Despite higher rates and a slowing economy, U.S. housing starts are rebounding. And Boise Cascade is prepared to benefit from long-term demographic trends and the ongoing undersupply of single-family homes that have kept housing demand high. Plus, homebuilders didn’t overbuild during Covid, which leaves plenty of near-term and long-term upside.
Image Source: Zacks Investment Research
Clearly, Boise Cascade was going to find it nearly impossible to follow its recent stretch. But BCC topped our Q1 EPS estimate by 34% and its earnings outlook, which had held steady, is starting to improve for fiscal 2023 and FY24. Boise Cascade’s Q2 earnings estimate has jumped 12% in the last few months, with FY24’s outlook 14% higher.
Boise Cascade’s Building Products – Wood products industry is currently in the top 15% of over 250 Zacks industries. And the company’s balance sheet is very impressive, with $1 billion in cash and equivalents and $3.4 billion in total assets vs. $580 million in current liabilities and $1.2 billion in total liabilities. The company’s dividend currently yields 0.6%, with a tiny 4% payout ratio that offers big long-term upside.
Boise Cascade is set to release its Q2 results on Tuesday, August 1.
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.
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
How to Find Top-Ranked Stocks to Buy Heading into August
Wall Street spent the first day and a half of a busy week sending stocks higher despite the unknowns right around the corner. The buying appears to showcase that investors are growing more confident that the Fed will hike by 0.25% on Wednesday and then be finished with their hawkish tightening efforts.
The other most important factor driving stock prices, earnings, are also ready to turn the corner according to Zacks data. The second quarter is set to mark the bottom for earnings, with Q3 ready to dip slightly. S&P 500 earnings are then projected to bounce back in a huge way in the fourth quarter and not look back in 2024 or 2025.
In the forward-looking world of Wall Street, the end of tightening and a soon-to-be earnings rebound has helped propel the fantastic first half and a strong July. That said, it is very possible the market experiences plenty more post-release selloffs and profit taking, similar to Tesla and Netflix last week.
Image Source: Zacks Investment Research
Despite the possibility of near-term volatility and selling, the foundation supporting the bull market appears intact. Even one of Wall Street’s biggest bears, Morgan Stanley’s Mike Wilson, recently admitted that he was ‘wrong’ about the 2023 stock market.
With this in mind, investors can utilize the Filtered Zacks Rank 5 Stock Screen to help find potentially winning stocks heading into August and beyond that have boosted their earnings guidance.
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.
• % 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.
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 are two of the five stocks that qualified for the Filtered Zacks Rank 5 strategy today…
Cadence Design Systems ((CDNS - Free Report) )
Cadence Design posted a beat-and-raise quarter on Tuesday morning, July 25. Cadence is a leader in electronic systems design. Its modeling and computational software helps in the design process of semiconductors and many other crucial and cutting-edge technologies that drive the economy.
Cadence’s earnings revisions chart highlights its impressive growth over the last few years and what is likely to come in the coming years. CDNS currently lands a Zacks Rank #1 (Strong Buy), but that ranking could change as more analysts provide updated results following its Q2 earnings release on Tuesday.
Image Source: Zacks Investment Research
Cadence boasts Nvidia ((NVDA - Free Report) ) as a key customer because the GPU giant loves its modeling and simulation capabilities. Cadence is one of two major players in its realm and CDNS is more vital than ever as the chips venture into the sub-5 nanometer world. Plus, Cadence is benefiting from the AI boom.
Cadence shares have destroyed the Zacks Tech sector over the last decade and the past 12 months, up 1,500% and 40% respectively to trade near fresh highs. CDNS shares were down around 1.2% through morning trading following its release as investors start to utilize earnings as an opportunity to take home profits on Cadence and other 2023 stars.
Cadence is now flirting with its 21-day moving average and sitting about 5% below its recent records. CDNS is far from cheap in terms of forward earnings, but it trades at a 26% discount to its own decade-long highs and its PEG ratio of 2.8 marks a 52% discount to its highs. Plus, 10 of the 12 brokerage recommendations Zacks has are “Strong Buys.” All that said, some investors might want to wait for more of a pullback, while others with long-term outlooks could avoid the market-timing game.
Boise Cascade ((BCC - Free Report) )
Boise Cascade is one of the top producers of engineered wood products and plywood in North America. Boise Cascade is also a huge player in the wholesale distribution of building products in the U.S. BCC posted an impressive stretch of top-line expansion over the last decade, highlighted by 18% growth in 2020 and 45% expansion in 2021, driven by the Covid housing and home improvement boom. Boise Cascade followed that up with another 6% sales growth last year.
Despite higher rates and a slowing economy, U.S. housing starts are rebounding. And Boise Cascade is prepared to benefit from long-term demographic trends and the ongoing undersupply of single-family homes that have kept housing demand high. Plus, homebuilders didn’t overbuild during Covid, which leaves plenty of near-term and long-term upside.
Image Source: Zacks Investment Research
Clearly, Boise Cascade was going to find it nearly impossible to follow its recent stretch. But BCC topped our Q1 EPS estimate by 34% and its earnings outlook, which had held steady, is starting to improve for fiscal 2023 and FY24. Boise Cascade’s Q2 earnings estimate has jumped 12% in the last few months, with FY24’s outlook 14% higher.
Boise Cascade’s Building Products – Wood products industry is currently in the top 15% of over 250 Zacks industries. And the company’s balance sheet is very impressive, with $1 billion in cash and equivalents and $3.4 billion in total assets vs. $580 million in current liabilities and $1.2 billion in total liabilities. The company’s dividend currently yields 0.6%, with a tiny 4% payout ratio that offers big long-term upside.
Boise Cascade is set to release its Q2 results on Tuesday, August 1.
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.
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/