Back to top

Image: Shutterstock

Swear on 5 Broker-Friendly Stocks to Weather Market Storms

Read MoreHide Full Article

The U.S. equity markets have been extremely unpredictable of late, thanks to a wide range of concerns that kept investors on tenterhooks. Apart from global issues like the prolonged Russia-Ukraine war, steep oil price, spread of the coronavirus, especially in China, the sky-high domestic inflation and the resultant Fed Rate hike (with the possibility of more) rendered volatility to the stock market, causing a high degree of uncertainty eventually.

However, this ongoing unpredictability should not force investors to turn their backs on equities. He/she will always look for handsome returns, irrespective of the market upheavals. But then the question arises as to who should guide investors in designing a winning basket of stocks given that a universe of stocks from various industries glut the market at any point of time.

Adhering to broker advice is surely one of the most trusted ways to select a lucrative suite of stocks as brokers have in-depth knowledge of the surrounding markets. Investors are advised to keep broker-friendly stocks, such as Atlas Air Worldwide Holdings (AAWW - Free Report) , American Airlines (AAL - Free Report) , Cross Country Healthcare (CCRN - Free Report) , Avnet ((AVT - Free Report) ) and Clearwater Paper (CLW - Free Report) on their watchlist for healthy returns.

Why Broker Advice is Indispensable

Brokers go through minute details of the financial documents available in the public domain apart from attending company conference calls and other presentations. Since brokers study the stocks’ movements under their coverage in great detail, they revise their earnings estimates after carefully weighing the pros and cons of an event for the concerned company. Estimate revisions are an important determinant of the stock price.

To take care of the earnings performance, we designed a screen based on improving analyst recommendations and northward estimate revisions over the last four weeks.

Do Not Ignore the Top Line

However, designing a strategy solely on the bottom-line basis is unlikely to result in a winning approach. Actually, according to many market watchers, a revenue beat is more creditable for a company than a mere earnings outperformance. 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).

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

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. 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, the AAWW stock has seen the Zacks Consensus Estimate for 2022 earnings being revised 6.8% upward. Atlas Air currently carries a Zacks Rank #3 (Hold).

American Airlines is based in Fort Worth, TX. The gradual increase in air-travel demand (particularly for leisure) is aiding AAL. However, high fuel costs are hurting the bottom line.

Over the past 60 days, the AAL stock has seen the Zacks Consensus Estimate for 2022 earnings being revised 44.7% upward. AAL currently carries a Zacks Rank of 3.

Cross Country Healthcare is currently benefiting from the pandemic-induced rise 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 continuous buoyancy in 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 66.3% upward in the past 60 days. Shares of CCRN have inched up 1.6% in a year’s time.  CCRN currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Avnet is benefiting from robust demand for its products across Asia, Europe, the Middle East, and Africa (EMEA) regions. Improvement in the Americas also served as a tailwind. Its continued focus on boosting the IoT capabilities is helping it expand in the newer markets and gain customers. Moreover, cost-saving efforts are aiding profitability.

Avnet, currently sporting a Zacks Rank of 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 21.2%. The AVT stock has appreciated 9.5% in a year’s time.

Clearwater Paper is being aided by robust packaging demand. CLW’s commitment to reducing debt levels and deploying a prudent capital structure provides ample liquidity. Continued focus on operational execution will drive margins. 

The Zacks Consensus Estimate for Clearwater Paper’s 2022 earnings has been revised 18.4% upward in the past 60 days. CLW, currently carrying a Zacks Rank #2 (Buy), has an impressive surprise history with its earnings having surpassed the Zacks Consensus Estimate in each of the last four quarters, the average being 37.8%.

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: