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Find Great Under-the-Radar Stocks to Buy Using New Analyst Coverage
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Wall Street has made it through a decent chunk of the fourth quarter earnings season, including results from six of the seven so-called Magnificent 7 tech stocks, without running into too many bearish hurdles. The S&P 500 is trading near its recent all-time highs and the outlook for corporate earnings is holding up rather well despite slowing global economic expansion.
The strong start to 2024 and the improved market breadth (nine out of 11 S&P 500 sectors are up in the last three months) likely leaves investors searching for strong stocks to buy in February and beyond.
One way to find potentially winning stocks is to search for companies gaining more attention from Wall Street analysts.
The concept 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 find strong stocks to buy now and in the months and years ahead.
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 five stocks that came through the screen today…
Vista Oil & Gas ((VIST - Free Report) ) - (from 2 analysts four weeks ago to 3)
Vista Oil & Gas, S.A.B. de C.V. is an energy company primarily focused on the exploration and production of oil and gas. Vista Oil & Gas operates primarily in Argentina and Mexico geographical segments, and its revenue skyrocketed in FY22 and FY21.
Vista Oil & Gas stands to benefit in the near-term and the long-run given the ongoing need for oil and gas around the world despite the growth of alternative energy and EVs.
Image Source: Zacks Investment Research
Vista Oil & Gas is projected to post 2% revenue growth in FY23 and then return to big top-line expansion in 2024, to the tune of 40% expected sales growth to reach $1.64 billion vs. $1.14 billion in FY22. The company’s bottom line outlook is even more impressive, with VIST projected to grow its adjusted earnings by 63% in FY23 and another 20% in FY24.
Vista Oil & Gas stock has soared over 1,000% in the last three years to blow away the broader Zacks Oil and Energy Sector’s 46% climb. The stock is up 90% during the trailing 12 months and it trades below fresh highs at around $32 per share.
Despite the massive run, VIST stock still trades 32% below its average Zacks price target. Plus, all three of the brokerage recommendations that Zacks has are “Strong Buys.”
Image Source: Zacks Investment Research
A recent dip has VIST stock back around neutral RSI levels. Better yet, Vista Oil & Gas trades at a 40% discount to the Zacks Oil and Energy Sector and not too far above its three-year median despite its massive outperformance at 5.4X forward 12-month earnings.
Vista Oil & Gas currently lands a Zacks Rank #3 (Hold) and is expected to release its fourth quarter financial results on February 20.
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: Shutterstock
Find Great Under-the-Radar Stocks to Buy Using New Analyst Coverage
Wall Street has made it through a decent chunk of the fourth quarter earnings season, including results from six of the seven so-called Magnificent 7 tech stocks, without running into too many bearish hurdles. The S&P 500 is trading near its recent all-time highs and the outlook for corporate earnings is holding up rather well despite slowing global economic expansion.
The strong start to 2024 and the improved market breadth (nine out of 11 S&P 500 sectors are up in the last three months) likely leaves investors searching for strong stocks to buy in February and beyond.
One way to find potentially winning stocks is to search for companies gaining more attention from Wall Street analysts.
The concept 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 find strong stocks to buy now and in the months and years ahead.
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 five stocks that came through the screen today…
Vista Oil & Gas ((VIST - Free Report) ) - (from 2 analysts four weeks ago to 3)
Vista Oil & Gas, S.A.B. de C.V. is an energy company primarily focused on the exploration and production of oil and gas. Vista Oil & Gas operates primarily in Argentina and Mexico geographical segments, and its revenue skyrocketed in FY22 and FY21.
Vista Oil & Gas stands to benefit in the near-term and the long-run given the ongoing need for oil and gas around the world despite the growth of alternative energy and EVs.
Image Source: Zacks Investment Research
Vista Oil & Gas is projected to post 2% revenue growth in FY23 and then return to big top-line expansion in 2024, to the tune of 40% expected sales growth to reach $1.64 billion vs. $1.14 billion in FY22. The company’s bottom line outlook is even more impressive, with VIST projected to grow its adjusted earnings by 63% in FY23 and another 20% in FY24.
Vista Oil & Gas stock has soared over 1,000% in the last three years to blow away the broader Zacks Oil and Energy Sector’s 46% climb. The stock is up 90% during the trailing 12 months and it trades below fresh highs at around $32 per share.
Despite the massive run, VIST stock still trades 32% below its average Zacks price target. Plus, all three of the brokerage recommendations that Zacks has are “Strong Buys.”
Image Source: Zacks Investment Research
A recent dip has VIST stock back around neutral RSI levels. Better yet, Vista Oil & Gas trades at a 40% discount to the Zacks Oil and Energy Sector and not too far above its three-year median despite its massive outperformance at 5.4X forward 12-month earnings.
Vista Oil & Gas currently lands a Zacks Rank #3 (Hold) and is expected to release its fourth quarter financial results on February 20.
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: www.zacks.com/performance_disclosure