As 2023 started on a volatile note, investors are wary about entering the market. The inflation is turning out to be more “sticky” than expected. This has increased the chances that the Federal Reserve will continue raising the interest rates and then keep the rates high till inflation comes down reasonably.
Higher rates will likely lead to a recession/economic slowdown in the latter part of 2023. This has resulted in bearish investor sentiments. Under such a scenario, it is difficult for individual investors to pick stocks independently and generate solid returns. One way to choose the right stocks in the current situation is to follow rating upgrades by brokers. In this regard, stocks like State Street Corporation ( STT Quick Quote STT - Free Report) , Universal Insurance Holdings, Inc. ( UVE Quick Quote UVE - Free Report) and Ralph Lauren Corporation ( RL Quick Quote RL - Free Report) are worth a look. As brokers directly communicate with the top management, they have a deeper understanding of what is happening in a particular company. They precisely assess companies’ publicly available documents and even attend conference calls. Brokers have an extra understanding of the overall sector and industry. They place company fundamentals against the current economic backdrop to determine how a particular stock will fare as an investment. So, when brokers upgrade a stock, you can rely on their judgment. But solely depending on broker upgrades is not a good way to build your investment portfolio. Several other factors should be taken into consideration to ensure steady returns. Selecting the Winning Strategy
We have a screening strategy that will help you in your search for potential winners:
Broker Rating Upgrades (Four Weeks) of 1% or More: The screen selects stocks that have witnessed broker rating upgrades of 1% or more over the last four weeks. Current Price Greater Than $5: The stocks must trade above $5. Average 20-Day Volume Greater Than 100,000: A large trading volume guarantees that the stock is easily tradable. Zacks Rank Equal to #1 or 2: Despite good or bad market conditions, stocks with a Zacks Rank #1 (Strong Buy) or 2 (Buy) have a proven record of success. You can see . the complete list of today’s Zacks #1 Rank stocks here Our research shows that stocks with a VGM Score of A or B, when combined with a Zacks Rank #1 or 2, offer the best upside potential. of A or B: VGM Score Here are three of the five stocks that qualified for the screening: Boston, MA-based State Street is a financial holding company. STT provides a range of products and services for institutional investors worldwide through its subsidiaries. The company’s earnings for 2023 are expected to increase 16.2%. State Street, currently carrying a Zacks Rank #2, has witnessed a 7.7% upward revision in broker ratings over the past four weeks. Headquartered in Fort Lauderdale, FL, Universal Insurance operates as an integrated insurance holding company. UVE develops, markets and underwrites insurance products. Universal Insurance’s 2023 earnings are projected to jump 502.4%. The company, sporting a Zacks Rank #1 at present, has witnessed a 50% upward revision in broker ratings over the past four weeks. Ralph Lauren, based in New York, is a major designer, marketer and distributor of premium lifestyle products. RL offers products in apparel, footwear, accessories, home furnishings and other licensed product categories. Ralph Lauren’s fiscal 2024 earnings are projected to rise 14.3%. The company, sporting a Zacks Rank #1 at present, has witnessed a 9.1% upward revision in broker ratings over the past four weeks. 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