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5 Stocks to Watch Amid Crisis as Analysts Initiate Coverage
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Recession fears have been dominating the stock market headlines of late, resulting in accelerated selloffs. Market pundits and investors are of the opinion that the Federal Reserve’s increasingly hawkish stance can push the U.S. economy into deep recession. Now, as the stock markets are experiencing record levels of volatility, investors may look for stocks that recently received new analyst coverage. The logic behind this is that analysts don’t add a stock to their coverage randomly. New coverage on a stock is usually the result of huge investor focus on it or its promising prospects.
Clearfield, Inc. (CLFD - Free Report) , DHT Holdings, Inc. (DHT - Free Report) , AerSale Corporation (ASLE - Free Report) , Leonardo DRS, Inc. (DRS - Free Report) and NOW Inc. (DNOW - Free Report) are a few stocks that have witnessed new analyst coverage lately. These, therefore, are expected to attract investor attention.
Interestingly, stocks typically see an incremental upward price movement with new analyst coverage compared to what they witness with the 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. As analysts almost always initiate coverage with a positive recommendation. 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.
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 also consider other relevant parameters to make it 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 the volume isn’t enough, it will not attract individual investors).
Here are five among the 15 stocks that passed the screen:
Clearfield: Headquartered in Minneapolis, MN, Clearfield designs and manufactures the FieldSmart fiber management platform, which includes its latest generation Fiber Distribution System and Fiber Scalability Center.
CLFD currently carries a Zacks Rank #1. The stock has gained 25.2% year to date (YTD) against the industry’s 26.5% decline. Earnings estimates for fiscal 2023 have increased to $4.95 per share from $3.60 per share over the past 30 days. The estimated figure implies 39.4% growth from the year-ago period. You can see the complete list of today’s Zacks #1 Rank stocks here.
DHT Holdings: Based in Hamilton, Bermuda, DHT owns and operates crude oil tankers primarily in Monaco, Singapore and Norway.
DHT currently carries a Zacks Rank #2 (Buy). The stock has gained 81.9% YTD compared with the industry’s 18.5% rise. Earnings estimates for 2023 have increased to $1.17 per share from $1.06 per share over the past 30 days. The estimated figure indicates 431.8% growth from the year-ago period.
AerSale: This Coral Gables, FL-based company provides integrated, diversified aviation aftermarket products and services for aircraft owners and operators to realize savings in the operation, maintenance and monetization of their aircraft, engines and components.
ASLE currently carries a Zacks Rank #3 (Hold). The stock has declined 13.1% YTD against the industry’s 4.8% rise. Nonetheless, earnings estimates for 2023 have increased to $1.17 per share from $1.11 per share over the past 30 days. The estimated figure calls for 3.8% growth from the year-ago period.
Leonardo DRS: Based in Arlington, VA, DRS provides defense products and technologies in the land, air, sea, space, cyber and security, and commercial domains for military applications.
DRS currently carries a Zacks Rank #3. The stock has gained 25.8% YTD compared with the industry’s 4.8% rise. Earnings are expected to witness 2,100% growth from the year-ago period.
NOW Inc.: Headquartered in Houston, TX, DNOW distributes downstream energy and industrial products for petroleum refining, chemical processing, LNG terminals, power generation utilities, and industrial manufacturing operations in the United States, Canada and internationally.
DNOW currently carries a Zacks Rank #3. The stock has gained 47.2% YTD compared with the industry’s 11.9% rise. Earnings estimates for 2023 have increased to 94 cents per share from 87 cents per share over the past 60 days. The estimated figure calls for 5.1% growth from the year-ago period.
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.
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5 Stocks to Watch Amid Crisis as Analysts Initiate Coverage
Recession fears have been dominating the stock market headlines of late, resulting in accelerated selloffs. Market pundits and investors are of the opinion that the Federal Reserve’s increasingly hawkish stance can push the U.S. economy into deep recession. Now, as the stock markets are experiencing record levels of volatility, investors may look for stocks that recently received new analyst coverage. The logic behind this is that analysts don’t add a stock to their coverage randomly. New coverage on a stock is usually the result of huge investor focus on it or its promising prospects.
Clearfield, Inc. (CLFD - Free Report) , DHT Holdings, Inc. (DHT - Free Report) , AerSale Corporation (ASLE - Free Report) , Leonardo DRS, Inc. (DRS - Free Report) and NOW Inc. (DNOW - Free Report) are a few stocks that have witnessed new analyst coverage lately. These, therefore, are expected to attract investor attention.
Interestingly, stocks typically see an incremental upward price movement with new analyst coverage compared to what they witness with the 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. As analysts almost always initiate coverage with a positive recommendation. 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.
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 also consider other relevant parameters to make it 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 the volume isn’t enough, it will not attract individual investors).
Here are five among the 15 stocks that passed the screen:
Clearfield: Headquartered in Minneapolis, MN, Clearfield designs and manufactures the FieldSmart fiber management platform, which includes its latest generation Fiber Distribution System and Fiber Scalability Center.
CLFD currently carries a Zacks Rank #1. The stock has gained 25.2% year to date (YTD) against the industry’s 26.5% decline. Earnings estimates for fiscal 2023 have increased to $4.95 per share from $3.60 per share over the past 30 days. The estimated figure implies 39.4% growth from the year-ago period. You can see the complete list of today’s Zacks #1 Rank stocks here.
DHT Holdings: Based in Hamilton, Bermuda, DHT owns and operates crude oil tankers primarily in Monaco, Singapore and Norway.
DHT currently carries a Zacks Rank #2 (Buy). The stock has gained 81.9% YTD compared with the industry’s 18.5% rise. Earnings estimates for 2023 have increased to $1.17 per share from $1.06 per share over the past 30 days. The estimated figure indicates 431.8% growth from the year-ago period.
AerSale: This Coral Gables, FL-based company provides integrated, diversified aviation aftermarket products and services for aircraft owners and operators to realize savings in the operation, maintenance and monetization of their aircraft, engines and components.
ASLE currently carries a Zacks Rank #3 (Hold). The stock has declined 13.1% YTD against the industry’s 4.8% rise. Nonetheless, earnings estimates for 2023 have increased to $1.17 per share from $1.11 per share over the past 30 days. The estimated figure calls for 3.8% growth from the year-ago period.
Leonardo DRS: Based in Arlington, VA, DRS provides defense products and technologies in the land, air, sea, space, cyber and security, and commercial domains for military applications.
DRS currently carries a Zacks Rank #3. The stock has gained 25.8% YTD compared with the industry’s 4.8% rise. Earnings are expected to witness 2,100% growth from the year-ago period.
NOW Inc.: Headquartered in Houston, TX, DNOW distributes downstream energy and industrial products for petroleum refining, chemical processing, LNG terminals, power generation utilities, and industrial manufacturing operations in the United States, Canada and internationally.
DNOW currently carries a Zacks Rank #3. The stock has gained 47.2% YTD compared with the industry’s 11.9% rise. Earnings estimates for 2023 have increased to 94 cents per share from 87 cents per share over the past 60 days. The estimated figure calls for 5.1% growth from the year-ago period.
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