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5 Broker-Friendly Stocks to Monitor in the Current Scenario
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That inflation is showing signs of easing is definitely a welcome sign as far as the U.S. economy is concerned. Per the Bureau of Labor Statistics, the Consumer Price Index increased 4% year over year in May. The increase was not only lower than expected but also below April’s reading. Further good news came in when the Producer Price Index reading revealed that the decline in producer prices for the month of May was more than expected. With inflation woes subsiding, consumer sentiment in the United States is on the mend. The stunning job growth witnessed in May is a further positive as far as economic health is concerned.
Investors will no doubt want to take advantage of this brightening scenario. One way to do so would be to follow broker advice and keep broker-favorite stocks like American Airlines (AAL - Free Report) , Bread Financial (BFH - Free Report) , ABM Industries (ABM - Free Report) , Cleveland-Cliffs (CLF - Free Report) and Archer Daniels Midland Company (ADM - Free Report) in one’s watchlist.
Why Should You Pay Heed to Broker Advice?
As brokers indulge in extensive research on stocks under their coverage, they have access to detailed information on a company. Also, they attend company conference calls/presentations and scrutinize every piece of document available in the public domain before instructing investors.
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. Naturally, their estimate revisions serve as an important pointer regarding the price of a stock.
Given this extensive know-how, brokers are deemed to be experts in the field of investing. They are believed to be equipped with thorough knowledge and a clear insight into the complexities associated with the investment world. Paying heed to such well-researched information is, therefore, desirable for investors to avoid an unfortunate scenario where one’s hard-earned money invested in stock markets goes down the drain.
Winning Strategy
The above write-up therefore suggests that by following broker actions, one can arrive at a winning portfolio of stocks. Keeping this in mind, we have designed a screen to shortlist stocks based on improving analyst 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 included. The price/sales ratio takes care of a 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.
To ensure that the strategy is a winning one, covering all bases, we have added the following screening parameters:
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 with respect to this ratio.
Price greater than 5: A stock trading below $5 will not likely create significant interest for most investors.
Average Daily Volume greater than 100,000 shares over the last 20 trading days: Volume has to be significant to ensure that these are easily traded.
Market value ($ mil) = Top #3000: This gives us stocks that are the top 3000 if one judges by market capitalization.
Com/ADR/Canadian= Com: This eliminates the ADR and Canadian stocks.
Here are five of the 10 stocks that passed the screen test:
American Airlines: It is based in Fort Worth, TX. The gradual increase in air travel demand (particularly for leisure) is aiding AAL. However, high operating costs are hurting the bottom line.
Over the past 60 days, the Zacks Consensus Estimate for 2023 earnings has been revised 12.9% upward. AAL currently carries a Zacks Rank #3 (Hold).
Bread Financial: Based in Columbus, OH, the company continues to benefit from data-driven marketing strategies. Solid receivables growth in Card Services should drive its top line. Acquisitions and divestitures will aid the company in growing inorganically and expanding its international footprint.
Over the past 60 days, the Zacks Consensus Estimate for BFH’s 2023 earnings has been revised 24.4% upward. Bread Financial currently carries a Zacks Rank #3.
ABM Industries: This integrated facility solutions provider's multi-year comprehensive strategic plan, ELEVATE, focuses on providing clients with offerings that enhance transparency and efficiency, developing its own talent management system capabilities, expanding data usage and modernizing the digital ecosystem.
ABM has outpaced the Zacks Consensus Estimate for earnings in three of the past four quarters (reporting in-line earnings in the remaining quarter). ABM currently carries a Zacks Rank #3.
Cleveland-Cliffs: It is a leading iron ore producer in the United States. It supplies differentiated iron ore pellets under long-term contracts to major blast furnace steel producers in North America. The Mining and Pelletizing operation gains from low-cost, high-quality iron ore pellet production with substantial logistics and transportation advantages to serve the Great Lakes steel market. The company should gain from its merger with AK Steel Holding Corporation.
Over the past 60 days, the Zacks Consensus Estimate for CLF’s 2023 earnings has been revised 4.3% upward. Cleveland-Cliffs currently carries a Zacks Rank #3.
Archer Daniels: This Chicago, IL-based agricultural product company’s leadership in key global trends like flexitarian diets, nutrition and sustainable materials has been a key contributor to its momentum. Its focus on making investments in assets and technological capabilities to serve customers efficiently is likely to be a significant growth driver. Solid demand, improved productivity and product innovations have been driving growth.
ADM outpaced the Zacks Consensus Estimate for earnings in each of the past four quarters by an average of 23.44%. The stock currently carries a Zacks Rank #3.
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.
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: Bigstock
5 Broker-Friendly Stocks to Monitor in the Current Scenario
That inflation is showing signs of easing is definitely a welcome sign as far as the U.S. economy is concerned. Per the Bureau of Labor Statistics, the Consumer Price Index increased 4% year over year in May. The increase was not only lower than expected but also below April’s reading. Further good news came in when the Producer Price Index reading revealed that the decline in producer prices for the month of May was more than expected. With inflation woes subsiding, consumer sentiment in the United States is on the mend. The stunning job growth witnessed in May is a further positive as far as economic health is concerned.
Investors will no doubt want to take advantage of this brightening scenario. One way to do so would be to follow broker advice and keep broker-favorite stocks like American Airlines (AAL - Free Report) , Bread Financial (BFH - Free Report) , ABM Industries (ABM - Free Report) , Cleveland-Cliffs (CLF - Free Report) and Archer Daniels Midland Company (ADM - Free Report) in one’s watchlist.
Why Should You Pay Heed to Broker Advice?
As brokers indulge in extensive research on stocks under their coverage, they have access to detailed information on a company. Also, they attend company conference calls/presentations and scrutinize every piece of document available in the public domain before instructing investors.
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. Naturally, their estimate revisions serve as an important pointer regarding the price of a stock.
Given this extensive know-how, brokers are deemed to be experts in the field of investing. They are believed to be equipped with thorough knowledge and a clear insight into the complexities associated with the investment world. Paying heed to such well-researched information is, therefore, desirable for investors to avoid an unfortunate scenario where one’s hard-earned money invested in stock markets goes down the drain.
Winning Strategy
The above write-up therefore suggests that by following broker actions, one can arrive at a winning portfolio of stocks. Keeping this in mind, we have designed a screen to shortlist stocks based on improving analyst 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 included. The price/sales ratio takes care of a 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.
To ensure that the strategy is a winning one, covering all bases, we have added the following screening parameters:
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 with respect to this ratio.
Price greater than 5: A stock trading below $5 will not likely create significant interest for most investors.
Average Daily Volume greater than 100,000 shares over the last 20 trading days: Volume has to be significant to ensure that these are easily traded.
Market value ($ mil) = Top #3000: This gives us stocks that are the top 3000 if one judges by market capitalization.
Com/ADR/Canadian= Com: This eliminates the ADR and Canadian stocks.
Here are five of the 10 stocks that passed the screen test:
American Airlines: It is based in Fort Worth, TX. The gradual increase in air travel demand (particularly for leisure) is aiding AAL. However, high operating costs are hurting the bottom line.
Over the past 60 days, the Zacks Consensus Estimate for 2023 earnings has been revised 12.9% upward. AAL currently carries a Zacks Rank #3 (Hold).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Bread Financial: Based in Columbus, OH, the company continues to benefit from data-driven marketing strategies. Solid receivables growth in Card Services should drive its top line. Acquisitions and divestitures will aid the company in growing inorganically and expanding its international footprint.
Over the past 60 days, the Zacks Consensus Estimate for BFH’s 2023 earnings has been revised 24.4% upward. Bread Financial currently carries a Zacks Rank #3.
ABM Industries: This integrated facility solutions provider's multi-year comprehensive strategic plan, ELEVATE, focuses on providing clients with offerings that enhance transparency and efficiency, developing its own talent management system capabilities, expanding data usage and modernizing the digital ecosystem.
ABM has outpaced the Zacks Consensus Estimate for earnings in three of the past four quarters (reporting in-line earnings in the remaining quarter). ABM currently carries a Zacks Rank #3.
Cleveland-Cliffs: It is a leading iron ore producer in the United States. It supplies differentiated iron ore pellets under long-term contracts to major blast furnace steel producers in North America. The Mining and Pelletizing operation gains from low-cost, high-quality iron ore pellet production with substantial logistics and transportation advantages to serve the Great Lakes steel market. The company should gain from its merger with AK Steel Holding Corporation.
Over the past 60 days, the Zacks Consensus Estimate for CLF’s 2023 earnings has been revised 4.3% upward. Cleveland-Cliffs currently carries a Zacks Rank #3.
Archer Daniels: This Chicago, IL-based agricultural product company’s leadership in key global trends like flexitarian diets, nutrition and sustainable materials has been a key contributor to its momentum. Its focus on making investments in assets and technological capabilities to serve customers efficiently is likely to be a significant growth driver. Solid demand, improved productivity and product innovations have been driving growth.
ADM outpaced the Zacks Consensus Estimate for earnings in each of the past four quarters by an average of 23.44%. The stock currently carries a Zacks Rank #3.
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.