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5 Stocks to Buy Following Recent Upgrade by Brokers
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It is not rare to see someone falter in life due to lack of proper guidance. The same is true for the investing world. The world of investment is full of uncertainties and unless one is well-prepared before entering the space, more often than not the person will have to suffer huge losses.
Choice of unsuitable stocks can adversely impact his/her returns, thereby ruining the very objective of investing the hard-earned money in the highly unpredictable stock market. Moreover, with time at a premium these days, it is next to impossible for investors to keep track of the market movements to identify opportune moment(s) for buying or offloading a particular stock to maximize returns. Therefore, guidance from precise channels is a must.
Time for Some Broker Advice
The experts in the investing world are brokers. Generally, three types of brokers (sell-side, buy-side and independent) are present in the investment world, with sell-side analysts being the most common. Various brokerage firms employ them to provide an unbiased opinion to investors on the stocks under their coverage after a thorough research. Buy-side analysts are employed by hedge funds, mutual funds etc. while the independent ones simply sell their reports to investors.
All types of brokers indulge in in-depth research of the stocks under their coverage. They have access to much detailed information on a company. To this end, they attend company conference calls/presentations and scrutinize every detail available publicly before advising investors. Naturally, broker advice acts as an invaluable guide for investors in their bid to garner the maximum from their portfolios.
Direction of Earnings Estimates: An Invaluable Guide
Since brokers meticulously follow the stocks in their coverage, they revise their earnings estimates after carefully examining the pros and cons of an event for the concerned company. The estimate revisions serve as an important pointer regarding the price of a stock.
For example, an earnings outperformance by a company generally leads to upward estimate revisions with prices moving north. Similarly, lackluster earnings often lead to a stock price depreciation. Investors tend to be guided by the direction of estimate revisions and stock price while formulating their investment strategy.
Making the Most of Broker Guidance
The above write-up clearly suggests that by following broker actions, one can arrive at a winning portfolio of stocks. Keeping this in mind, we designed a screen to shortlist stocks based on improving analyst recommendation and upward revisions in 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 is also included. The price/sales ratio takes care of the company’s top line, making the strategy effective.
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.
Price-to-Sales = Bot%10:The lower the ratio, the better. Companies meeting this criterion are in the bottom 10% of our universe of over 7,700 stocks.
Price greater than 5:A stock trading below $5 will not likely be of significant interest to most investors.
Average Daily Volume greater than 100,000 shares over the last 20 trading days:Volume has to be significant to ensure that these are easily traded.
Market value ($ mil) = Top #3000:This gives us stocks that are the top 3000 in terms of market capitalization.
Here are five of the 10 stocks that passed the screen:
Atlas Air Worldwide Holdings is the parent company of Atlas Air and Polar Air Cargo, which together operate a fleet of freighter aircraft. AAWW is primarily involved in the airport-to-airport air transportation of heavy freight. AAWW is being supported by strong demand for air freight amid the coronavirus pandemic. The boom in e-commerce trends amid the current scenario is a catalyst.
Over the past 60 days, this presently Zacks #1 Ranked player has seen the Zacks Consensus Estimate for 2022 earnings being revised 8.1% upward. The stock has appreciated 52.2% in a year’s time. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
ArcBest Corporation (ARCB - Free Report) currently carries a Zacks Rank #2 (Buy). ARCB’s earnings trumped the Zacks Consensus Estimate in each of the trailing four quarters, the average being 31.4%. The Zacks Consensus Estimate for ARCB’s 2022 earnings has been revised 2% upward in the past 60 days.
Shares of ArcBest have skyrocketed 88.2% in a year’s time. Improving freight conditions in the United States bode well for ARCB. Solid customer demand and higher market rates are supporting ARCB.
Archer Daniels (ADM - Free Report) : This Chicago, IL-based leading agricultural products company’s leadership in key global trends like flexitarian diets, nutrition and sustainable materials has been a steady contributor to its momentum for a while. ADM’s focus on making investments in assets and technological capabilities to serve customers efficiently is likely to be a key driver.
Archer Daniels’ Readiness program, positive cash flow and a solid performance at the Nutrition unit are constantly aiding results. ADM, currently sporting a Zacks Rank #1, continues to progress well on its three strategic pillars: optimize, drive and grow. The Zacks Consensus Estimate for 2022 earnings has been revised 12% upward over the past 60 days. Shares of ADM have soared 46% over the past year.
Cross Country Healthcare (CCRN - Free Report) is currently benefiting from the pandemic-induced increase in demand for healthcare staffing, investments in headcount and technology, and higher operational effectiveness. Digital transformation and operational efficiency are enabling CCRN to cater to the continuously increasing demand in specialties, such as emergency room, operating room, labor, pediatrics, and delivery and medical-surgical services.
The Zacks Consensus Estimate for Cross Country Healthcare’s 2022 earnings has been revised 27.94% upward in the past 60 days. Shares of CCRN have skyrocketed more than 100% in a year’s time. CCRN currently sports a Zacks Rank of 1.
Asbury Automotive Group (ABG - Free Report) is one of the largest automotive retailers in the United States. The auto dealer is currently a #1 Ranked player. With the sustained recovery of the economy from the pandemic blues, auto sales are rebounding, underlined by strong new vehicle sales. Evidently, demand for automotive products and services is solid, aiding Asbury in turn.
Asbury Automotive has an impressive surprise history with its earnings having surpassed the Zacks Consensus Estimate in each of the last four quarters, the average being 24.3%. Shares of ABG have increased 12.6% in a year’s time.
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: Shutterstock
5 Stocks to Buy Following Recent Upgrade by Brokers
It is not rare to see someone falter in life due to lack of proper guidance. The same is true for the investing world. The world of investment is full of uncertainties and unless one is well-prepared before entering the space, more often than not the person will have to suffer huge losses.
Choice of unsuitable stocks can adversely impact his/her returns, thereby ruining the very objective of investing the hard-earned money in the highly unpredictable stock market. Moreover, with time at a premium these days, it is next to impossible for investors to keep track of the market movements to identify opportune moment(s) for buying or offloading a particular stock to maximize returns. Therefore, guidance from precise channels is a must.
Time for Some Broker Advice
The experts in the investing world are brokers. Generally, three types of brokers (sell-side, buy-side and independent) are present in the investment world, with sell-side analysts being the most common. Various brokerage firms employ them to provide an unbiased opinion to investors on the stocks under their coverage after a thorough research. Buy-side analysts are employed by hedge funds, mutual funds etc. while the independent ones simply sell their reports to investors.
All types of brokers indulge in in-depth research of the stocks under their coverage. They have access to much detailed information on a company. To this end, they attend company conference calls/presentations and scrutinize every detail available publicly before advising investors. Naturally, broker advice acts as an invaluable guide for investors in their bid to garner the maximum from their portfolios.
Direction of Earnings Estimates: An Invaluable Guide
Since brokers meticulously follow the stocks in their coverage, they revise their earnings estimates after carefully examining the pros and cons of an event for the concerned company. The estimate revisions serve as an important pointer regarding the price of a stock.
For example, an earnings outperformance by a company generally leads to upward estimate revisions with prices moving north. Similarly, lackluster earnings often lead to a stock price depreciation. Investors tend to be guided by the direction of estimate revisions and stock price while formulating their investment strategy.
Making the Most of Broker Guidance
The above write-up clearly suggests that by following broker actions, one can arrive at a winning portfolio of stocks. Keeping this in mind, we designed a screen to shortlist stocks based on improving analyst recommendation and upward revisions in 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 is also included. The price/sales ratio takes care of the company’s top line, making the strategy effective.
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.
Price-to-Sales = Bot%10:The lower the ratio, the better. Companies meeting this criterion are in the bottom 10% of our universe of over 7,700 stocks.
Price greater than 5:A stock trading below $5 will not likely be of significant interest to most investors.
Average Daily Volume greater than 100,000 shares over the last 20 trading days:Volume has to be significant to ensure that these are easily traded.
Market value ($ mil) = Top #3000:This gives us stocks that are the top 3000 in terms of market capitalization.
Here are five of the 10 stocks that passed the screen:
Atlas Air Worldwide Holdings is the parent company of Atlas Air and Polar Air Cargo, which together operate a fleet of freighter aircraft. AAWW is primarily involved in the airport-to-airport air transportation of heavy freight. AAWW is being supported by strong demand for air freight amid the coronavirus pandemic. The boom in e-commerce trends amid the current scenario is a catalyst.
Over the past 60 days, this presently Zacks #1 Ranked player has seen the Zacks Consensus Estimate for 2022 earnings being revised 8.1% upward. The stock has appreciated 52.2% in a year’s time. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
ArcBest Corporation (ARCB - Free Report) currently carries a Zacks Rank #2 (Buy). ARCB’s earnings trumped the Zacks Consensus Estimate in each of the trailing four quarters, the average being 31.4%. The Zacks Consensus Estimate for ARCB’s 2022 earnings has been revised 2% upward in the past 60 days.
Shares of ArcBest have skyrocketed 88.2% in a year’s time. Improving freight conditions in the United States bode well for ARCB. Solid customer demand and higher market rates are supporting ARCB.
Archer Daniels (ADM - Free Report) : This Chicago, IL-based leading agricultural products company’s leadership in key global trends like flexitarian diets, nutrition and sustainable materials has been a steady contributor to its momentum for a while. ADM’s focus on making investments in assets and technological capabilities to serve customers efficiently is likely to be a key driver.
Archer Daniels’ Readiness program, positive cash flow and a solid performance at the Nutrition unit are constantly aiding results. ADM, currently sporting a Zacks Rank #1, continues to progress well on its three strategic pillars: optimize, drive and grow. The Zacks Consensus Estimate for 2022 earnings has been revised 12% upward over the past 60 days. Shares of ADM have soared 46% over the past year.
Cross Country Healthcare (CCRN - Free Report) is currently benefiting from the pandemic-induced increase in demand for healthcare staffing, investments in headcount and technology, and higher operational effectiveness. Digital transformation and operational efficiency are enabling CCRN to cater to the continuously increasing demand in specialties, such as emergency room, operating room, labor, pediatrics, and delivery and medical-surgical services.
The Zacks Consensus Estimate for Cross Country Healthcare’s 2022 earnings has been revised 27.94% upward in the past 60 days. Shares of CCRN have skyrocketed more than 100% in a year’s time. CCRN currently sports a Zacks Rank of 1.
Asbury Automotive Group (ABG - Free Report) is one of the largest automotive retailers in the United States. The auto dealer is currently a #1 Ranked player. With the sustained recovery of the economy from the pandemic blues, auto sales are rebounding, underlined by strong new vehicle sales. Evidently, demand for automotive products and services is solid, aiding Asbury in turn.
Asbury Automotive has an impressive surprise history with its earnings having surpassed the Zacks Consensus Estimate in each of the last four quarters, the average being 24.3%. Shares of ABG have increased 12.6% in a year’s time.
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.