It is no secret that complexities associated with equity markets are not easy to master as a plethora of stocks floods the space at any point of time. An in-depth knowledge of the investment world is a prime requisite as one tries to build a winning portfolio of stocks, irrespective of the surrounding market conditions, to garner attractive returns from his portfolio.
This know-how is immensely tough for individual investors. At the same time, it is very much true that investors shell out their hard earned money in investing and would not want the same to go down the drain by choosing inappropriate stocks for their portfolios. To avoid such an unfortunate scenario, investors should pay heed to the advice of experts in this field, i.e. brokers.
Brokers irrespective of their types (sell-side, buy-side and independent), revise their earnings estimates after carefully examining the pros and cons of an event for the concerned stock. As part of their thorough research, these investment specialists attend conference calls, company presentations and also interact with the management. Since brokers meticulously follow the stocks in their coverage, their estimate revisions serve as an important yardstick for a stock price.
Keeping this in mind, we designed a screen to shortlist stocks based on improving broker recommendations and upward revisions of 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 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 passed the screen test:
ArcBest Corporation ( ARCB Quick Quote ARCB - Free Report) sports a Zacks Rank #1 (Strong Buy), currently. ARCB has a stellar surprise history, earnings of which outperformed the Zacks Consensus Estimate in each of the preceding four quarters, the average being 31.4%.
Shares of ArcBest have rallied 61.3% 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 growth at ARCB. You can see
the complete list of today’s Zacks #1 Rank stocks here. Atlas Air Worldwide Holdings ( AAWW Quick Quote AAWW - Free Report) 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. Strong demand for air freight amid the coronavirus pandemic supports AAWW. 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 AAWW stock has appreciated 35.8% in a year’s time.
Cross Country Healthcare ( CCRN Quick Quote 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 27.9% upward in the past 60 days. Shares of CCRN have increased more than 100% in a year’s time. CCRN currently sports a Zacks Rank of 1.
Asbury Automotive Group ( ABG Quick Quote 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 18% in a year’s time. Avnet ( AVT Quick Quote AVT - Free Report) is benefiting from robust demand for its products across Asia, Europe, the Middle East, and Africa (EMEA) regions. Improvement in Americas also served as a tailwind. Its continued focus on boosting the IoT capabilities is helping it expand in newer markets and gain customers. Moreover, cost-saving efforts are aiding profitability.
Avnet, currently sporting a Zacks Rank #1, has an impressive surprise history with its earnings having surpassed the Zacks Consensus Estimate in each of the last four quarters, the average being 18.7%. The AVT stock has appreciated 9.6% 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 backtest 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 .