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Analysts don’t add a stock randomly to their coverage. New coverage on a stock is usually the result of huge investor focus on its promising prospects.
Interestingly, stocks typically see an incremental upward price movement with new analyst coverage compared to what they witness with continuation of existing analyst coverage. Of course, the price movement depends on the recommendations from the new analysts. Positive recommendations — Buy and Strong Buy — lead to a significant positive incremental price reaction than Strong Sell, Sell or Hold recommendations.
Moreover, if an analyst gives a new recommendation on a company that has limited or no analyst coverage, investors start paying more attention to it. Also, any new information attracts portfolio managers to build a position in the stock.
However, one should preferably look for the average change in broker recommendation rather than a single recommendation change. Then again, an upgrade, an initiation or even increased coverage is equally important.
Keeping this mind, it’s a good strategy to focus on the number of analyst recommendations that have increased over the last few weeks.
Below, we have selected five stocks that have seen increased analyst coverage over the last few weeks.
Screening Criteria
Number of Broker Ratings now greater than the Number of Broker Ratings four weeks ago (This will shortlist stocks that have recent new coverage).
Average Broker Rating less than Average Broker Rating four weeks ago ('Less than' means 'better than' four weeks ago).
Increased analyst coverage and improving average rating are the primary criteria of this strategy but one should consider other relevant parameters to make the strategy foolproof.
Here are the other screening parameters:
Price greater thanor equal to $5 (as a stock below $5 will not likely create significant interest for most investors).
Average Daily Volume greater than or equal to 100,000 shares (if volume isn’t enough, it will not attract individual investors).
Here are five of the 12 stocks that passed the screen:
Fulgent Genetics, Inc. (FLGT - Free Report) : Headquartered in Temple City, CA, this company provides genetic testing services to physicians with clinically actionable diagnostic information. The company currently sports a Zacks Rank #1 (Strong Buy). The stock has gained 123.5% year to date, compared with its industry’s 25.3% rise. Its earnings estimates for 2020 have climbed to $1.25 per share from 10 cents over the past 30 days, depicting analysts’ optimism over the company’s earnings growth potential. The company’s earnings are expected to grow 557.9% this year. You can see the complete list of today’s Zacks #1 Rank stocks here.
Primoris Services Corporation (PRIM - Free Report) : This Dallas, TX-based specialty contractor and infrastructure company also sports a Zacks Rank #1. This stock has outperformed its industry year to date. Its earnings estimates for 2020 have climbed 39.3% over the past 30 days.
Niu Technologies (NIU - Free Report) : Headquartered in Beijing, China, this company designs, manufactures, and sells smart electric-scooters. This Zacks Rank #2 (Buy) stock has outperformed its industry year to date and its earnings estimates for 2020 have moved up 17.2% over the past 30 days. The company’s earnings are expected to grow 55.9% in 2021.
Surface Oncology, Inc. : Headquartered in Cambridge, MA, this clinical-stage immuno-oncology company has gained 271.3% year to date against the industry’s 1.1% decline. Loss estimates for 2020 have narrowed down to 76 cents per share from 97 cents over the past 30 days. The company carries a Zacks Rank #2 and its bottom line is expected to grow 61.4% this year.
Aldeyra Therapeutics, Inc. (ALDX - Free Report) : Headquartered in Lexington, MA, this biotechnology company carries a Zacks Rank #2. The stock has gained 7.8% year to date against the industry’s 6% decline. Loss estimates for 2020 have narrowed down to $1.27 per share from $1.52 over the past 30 days.
You can get the rest of the stocks on this list by signing up now for your 2-week free trial to the Research Wizard and start using this screen in your own trading. Further, you can also create your own strategies and test them first before taking the investment plunge.
The Research Wizard is a great place to begin. It's easy to use. Everything is in plain language. And it's very intuitive. Start your Research Wizard trial today. And the next time you read an economic report, open up the Research Wizard, plug your finds in, and see what gems come out.
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
5 Stocks to Buy as Analysts Initiate Coverage
Analysts don’t add a stock randomly to their coverage. New coverage on a stock is usually the result of huge investor focus on its promising prospects.
Interestingly, stocks typically see an incremental upward price movement with new analyst coverage compared to what they witness with continuation of existing analyst coverage. Of course, the price movement depends on the recommendations from the new analysts. Positive recommendations — Buy and Strong Buy — lead to a significant positive incremental price reaction than Strong Sell, Sell or Hold recommendations.
Moreover, if an analyst gives a new recommendation on a company that has limited or no analyst coverage, investors start paying more attention to it. Also, any new information attracts portfolio managers to build a position in the stock.
However, one should preferably look for the average change in broker recommendation rather than a single recommendation change. Then again, an upgrade, an initiation or even increased coverage is equally important.
Keeping this mind, it’s a good strategy to focus on the number of analyst recommendations that have increased over the last few weeks.
Below, we have selected five stocks that have seen increased analyst coverage over the last few weeks.
Screening Criteria
Number of Broker Ratings now greater than the Number of Broker Ratings four weeks ago (This will shortlist stocks that have recent new coverage).
Average Broker Rating less than Average Broker Rating four weeks ago ('Less than' means 'better than' four weeks ago).
Increased analyst coverage and improving average rating are the primary criteria of this strategy but one should consider other relevant parameters to make the strategy foolproof.
Here are the other screening parameters:
Price greater than or equal to $5 (as a stock below $5 will not likely create significant interest for most investors).
Average Daily Volume greater than or equal to 100,000 shares (if volume isn’t enough, it will not attract individual investors).
Here are five of the 12 stocks that passed the screen:
Fulgent Genetics, Inc. (FLGT - Free Report) : Headquartered in Temple City, CA, this company provides genetic testing services to physicians with clinically actionable diagnostic information. The company currently sports a Zacks Rank #1 (Strong Buy). The stock has gained 123.5% year to date, compared with its industry’s 25.3% rise. Its earnings estimates for 2020 have climbed to $1.25 per share from 10 cents over the past 30 days, depicting analysts’ optimism over the company’s earnings growth potential. The company’s earnings are expected to grow 557.9% this year. You can see the complete list of today’s Zacks #1 Rank stocks here.
Primoris Services Corporation (PRIM - Free Report) : This Dallas, TX-based specialty contractor and infrastructure company also sports a Zacks Rank #1. This stock has outperformed its industry year to date. Its earnings estimates for 2020 have climbed 39.3% over the past 30 days.
Niu Technologies (NIU - Free Report) : Headquartered in Beijing, China, this company designs, manufactures, and sells smart electric-scooters. This Zacks Rank #2 (Buy) stock has outperformed its industry year to date and its earnings estimates for 2020 have moved up 17.2% over the past 30 days. The company’s earnings are expected to grow 55.9% in 2021.
Surface Oncology, Inc. : Headquartered in Cambridge, MA, this clinical-stage immuno-oncology company has gained 271.3% year to date against the industry’s 1.1% decline. Loss estimates for 2020 have narrowed down to 76 cents per share from 97 cents over the past 30 days. The company carries a Zacks Rank #2 and its bottom line is expected to grow 61.4% this year.
Aldeyra Therapeutics, Inc. (ALDX - Free Report) : Headquartered in Lexington, MA, this biotechnology company carries a Zacks Rank #2. The stock has gained 7.8% year to date against the industry’s 6% decline. Loss estimates for 2020 have narrowed down to $1.27 per share from $1.52 over the past 30 days.
You can get the rest of the stocks on this list by signing up now for your 2-week free trial to the Research Wizard and start using this screen in your own trading. Further, you can also create your own strategies and test them first before taking the investment plunge.
The Research Wizard is a great place to begin. It's easy to use. Everything is in plain language. And it's very intuitive. Start your Research Wizard trial today. And the next time you read an economic report, open up the Research Wizard, plug your finds in, and see what gems come out.
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