Lack of proper guidance often pushes one to falter in life. This is true for the investing world as well. In the current coronavirus-led turbulent scenario, an apt direction for individual investors is all the more required as they aim to garner profits irrespective of the surroundings. After all, no one wishes to see his/her hard-earned money go down the drain in want of judicious decisions. Such a faux pas could happen if inappropriate stocks enter a stakeholder’s basket of choice.
Although this is a concern at all times, it is even more crucial in the current troubled environment. To avoid such indiscretions, it is in the best interest of investors to be guided by the experts in the arena of investing.
These exponents are brokers as they are equipped with well-researched information on the stocks they cover. Such investment specialists take conference calls and attend company presentations as well as interact with the management.
Brokers revise their earnings estimates after carefully examining the merits and demerits of an event for the concerned stock. Naturally, their stock-related actions (upgrade or downgrade) serve as a valuable pointer as far as fixing the target price of a stock (s) is concerned. Given their thorough understanding of the stock market as highlighted in this write-up, it is only prudent for investors to pay heed to brokers’ advice in planning a winning portfolio.
We designed a screen to shortlist stocks based on the 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).
We have also added the following screening parameters to ensure that the strategy is a winning one:
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 (as a stock trading below $5 will not likely create significant interest for most of the investors). Average Daily Volume greater than 100,000 shares over the last 20 trading days (Volume has to be significant to ensure that these are easily traded). Market value ($ mil) = Top #3000 (This gives us stocks that are the top 3000 in terms of market capitalization). Com/ADR/Canadian= Com (This takes out the ADR and Canadian stocks).
Here are five of the 10 stocks that made it through the screen:
Big Lots ( BIG Quick Quote BIG - Free Report) along with its fully-owned subsidiaries is a broad-line closeout retailer in the United States. The stock carries a Zacks Rank #3 (Hold), currently. The company’s bottom line surpassed the Zacks Consensus Estimate in three of the last four quarters, missing estimates in the remaining one. The average beat is 62.2%.
You can see
the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. ArcBest Corporation ( ARCB Quick Quote ARCB - Free Report) provides freight transportation services and solutions. This currently Zacks #3 Ranked stock has seen the Zacks Consensus Estimate for 2020 earnings being revised 88.3% upward over the past 30 days. Diebold Nixdorf ( DBD Quick Quote DBD - Free Report) is a provider of connected commerce solutions to financial institutions. This currently #3 Ranked company provides automatic teller machines plus financial and point-of-sale services. The Zacks Consensus Estimate for 2021 earnings has been revised 64.6% upward over the past 60 days. BlueLinx Holdings ( BXC Quick Quote BXC - Free Report) is the largest distributor of building products in the United States. The stock carries a Zacks Rank #2 (Buy), currently. Earnings of the company surpassed the Zacks Consensus Estimate in two of the last four quarters, missing the mark in the other two. The average beat is 15.9%. CNH Industrial ( CNHI Quick Quote CNHI - Free Report) offers vehicles for agricultural and industrial purposes. Its product line ranges from tractors to trucks and buses along with off and on-road powertrain solutions as well as marine vehicles. The stock carries a Zacks Rank of 3, currently. The Zacks Consensus Estimate for 2021 earnings has moved 12.6% north over the past 60 days.
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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