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5 Broker-Favorite Stocks to Note Post Recent Analyst Upgrades
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With the third-quarter earnings season being round the corner, investors would look to include stocks in their respective portfolios, which have the potential to surpass earnings expectations in the to-be-reported quarter. This is because an earnings beat generally leads to stock price appreciation.
Investors are after all shelling out their hard-earned savings in the stock market. Naturally, they would want to generate handsome returns from their portfolio. However, the task of designing one’s portfolio with prospective outperformers is anything but easy. In fact, equity market tricks are not easy to master with a plethora of stocks flooding the space at any point of time. The job becomes even more difficult when one tries to select a winning portfolio without proper guidance.
Choice of improper stocks can adversely impact his/her returns, thereby ruining the very objective of investing the hard-earned money in the highly unpredictable stock market.
Broker Advice: The Way Forward?
To avoid such an unfortunate scenario, investors, more often than not rely on the guidance provided by brokers who are deemed experts in the field, equipped with thorough knowledge and a clear insight into the nitty gritties of the investment world.
They have at their disposal a lot more substantial information on a company and its prospects than individual investors. Brokers directly communicate with the top management. They also thoroughly study the documents available in the public domain and attend conference calls. Since brokers meticulously follow the stocks under their coverage, they revise their earnings estimates after carefully examining the pros and cons of an event for the concerned company. Naturally, their estimate revisions serve as an important yardstick regarding the price of a stock.
To take care of the earnings performance, we designed a screen based on better broker recommendations and upward estimate revisions over the last four weeks.
Top-Line Growth: A Key Catalyst
However, designing a strategy, based solely on the bottom line is unlikely to lead to a positive approach. Actually, according to many market watchers, a revenue beat is more creditable for a company than a mere earnings outperformance, especially in an environment of revenue weakness due to macroeconomic headwinds. To address the top-line concerns, we included in our screen the price/sales ratio, which serves as a strong complementary valuation metric.
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.
To ensure that the strategy is a winning one, covering all bases, we have added the following screening parameters:
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: A stock trading below $5 will not likely create significant interest for most investors.
Average Daily Volume greater than 100,000 shares over the last 20 trading days: Volume has to be significant to ensure that these are easily traded.
Market value ($ mil) = Top #3000: This gives us stocks that are the top 3000 if one judges by market capitalization.
Com/ADR/Canadian= Com: This eliminates the ADR and Canadian stocks.
Here are five of the 10 stocks that made it through the screen:
ABM Industries (ABM - Free Report) : The New York-based company’s offerings include janitorial, energy, facilities engineering, electrical and lighting, landscape and turf, HVAC and mechanical, mission critical and parking solutions. The stock, carrying a Zacks Rank #3 (Hold) currently, has seen the Zacks Consensus Estimate for current-quarter earnings being revised 44% upward over the past 60 days.
AAR Corporation (AIR - Free Report) : The company, carrying a Zacks Rank #2 (Buy) presently, provides various products and services to the aviation and defense industries worldwide. The company’s earnings outperformed the Zacks Consensus Estimate in each of the last four quarters, the average being in excess of 100%.
Idaho-based Boise Cascade (BCC - Free Report) operates as a wood products manufacturer and building materials distributor. The stock, carrying a Zacks Rank #3 currently, has seen the Zacks Consensus Estimate for current-quarter earnings move 54.3% north over the past 60 days.
Owens & Minor (OMI - Free Report) functions as a healthcare solutions entity. This Richmond, VA-based company’s earnings for 2020 are projected to grow at more than 200% from its 2019-levels. The stock sports a Zacks Rank #1 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Covenant Logistics Group (CVLG - Free Report) offers a portfolio of transportation and logistics services to customers throughout the United States. The stock, flaunting a Zacks Rank of 1 currently, has seen the Zacks Consensus Estimate for current-quarter earnings being revised more than 100% upward over the past 60 days.
Get the rest of the stocks on the list and start putting this and other ideas to the test. It can all be done with the Research Wizard stock picking and backtesting software.
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.
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5 Broker-Favorite Stocks to Note Post Recent Analyst Upgrades
With the third-quarter earnings season being round the corner, investors would look to include stocks in their respective portfolios, which have the potential to surpass earnings expectations in the to-be-reported quarter. This is because an earnings beat generally leads to stock price appreciation.
Investors are after all shelling out their hard-earned savings in the stock market. Naturally, they would want to generate handsome returns from their portfolio. However, the task of designing one’s portfolio with prospective outperformers is anything but easy. In fact, equity market tricks are not easy to master with a plethora of stocks flooding the space at any point of time. The job becomes even more difficult when one tries to select a winning portfolio without proper guidance.
Choice of improper stocks can adversely impact his/her returns, thereby ruining the very objective of investing the hard-earned money in the highly unpredictable stock market.
Broker Advice: The Way Forward?
To avoid such an unfortunate scenario, investors, more often than not rely on the guidance provided by brokers who are deemed experts in the field, equipped with thorough knowledge and a clear insight into the nitty gritties of the investment world.
They have at their disposal a lot more substantial information on a company and its prospects than individual investors. Brokers directly communicate with the top management. They also thoroughly study the documents available in the public domain and attend conference calls. Since brokers meticulously follow the stocks under their coverage, they revise their earnings estimates after carefully examining the pros and cons of an event for the concerned company. Naturally, their estimate revisions serve as an important yardstick regarding the price of a stock.
To take care of the earnings performance, we designed a screen based on better broker recommendations and upward estimate revisions over the last four weeks.
Top-Line Growth: A Key Catalyst
However, designing a strategy, based solely on the bottom line is unlikely to lead to a positive approach. Actually, according to many market watchers, a revenue beat is more creditable for a company than a mere earnings outperformance, especially in an environment of revenue weakness due to macroeconomic headwinds. To address the top-line concerns, we included in our screen the price/sales ratio, which serves as a strong complementary valuation metric.
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.
To ensure that the strategy is a winning one, covering all bases, we have added the following screening parameters:
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: A stock trading below $5 will not likely create significant interest for most investors.
Average Daily Volume greater than 100,000 shares over the last 20 trading days: Volume has to be significant to ensure that these are easily traded.
Market value ($ mil) = Top #3000: This gives us stocks that are the top 3000 if one judges by market capitalization.
Com/ADR/Canadian= Com: This eliminates the ADR and Canadian stocks.
Here are five of the 10 stocks that made it through the screen:
ABM Industries (ABM - Free Report) : The New York-based company’s offerings include janitorial, energy, facilities engineering, electrical and lighting, landscape and turf, HVAC and mechanical, mission critical and parking solutions. The stock, carrying a Zacks Rank #3 (Hold) currently, has seen the Zacks Consensus Estimate for current-quarter earnings being revised 44% upward over the past 60 days.
AAR Corporation (AIR - Free Report) : The company, carrying a Zacks Rank #2 (Buy) presently, provides various products and services to the aviation and defense industries worldwide. The company’s earnings outperformed the Zacks Consensus Estimate in each of the last four quarters, the average being in excess of 100%.
Idaho-based Boise Cascade (BCC - Free Report) operates as a wood products manufacturer and building materials distributor. The stock, carrying a Zacks Rank #3 currently, has seen the Zacks Consensus Estimate for current-quarter earnings move 54.3% north over the past 60 days.
Owens & Minor (OMI - Free Report) functions as a healthcare solutions entity. This Richmond, VA-based company’s earnings for 2020 are projected to grow at more than 200% from its 2019-levels. The stock sports a Zacks Rank #1 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Covenant Logistics Group (CVLG - Free Report) offers a portfolio of transportation and logistics services to customers throughout the United States. The stock, flaunting a Zacks Rank of 1 currently, has seen the Zacks Consensus Estimate for current-quarter earnings being revised more than 100% upward over the past 60 days.
Get the rest of the stocks on the list and start putting this and other ideas to the test. It can all be done with the Research Wizard stock picking and backtesting software.
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