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5 Broker-Favorite Stocks to Keep an Eye on as 2024 Approaches
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Year 2023, which is in its last leg, has witnessed extreme volatility from high interest rates and geo-political woes. However, cooling down inflation following the Fed’s interest rate hike policy to combat elevated inflation markets is a positive.
The Fed’s December FOMC meeting dot-plot has shown that, on average, Fed officials are expecting at least three rate cuts of 25 basis points each in 2024, followed by four more rate cuts of one percentage point in 2025. Investors would like to take advantage of this optimistic forecast by designing a winning portfolio of stocks. However, doing this without proper guidance from investing experts is hazardous.
Experts in the field of investing are brokers, as they have at their disposal a lot more information on a company and its prospects than individual investors. Keeping tabs on broker-favored stocks like American Airlines (AAL - Free Report) , ABM Industries (ABM - Free Report) , Cardinal Health (CAH - Free Report) ,Cleveland-Cliffs (CLF - Free Report) and Cencora (COR - Free Report) in this scenario appears to be prudent.
Why Broker-Advice Works Wonders
Brokers have an in-depth understanding of stocks and great knowledge of the industry and the broader economy. They scrutinize the company’s fundamentals and place them against the prevalent economic scenario to find out how attractive a stock is as an investment option or otherwise.
Only after undertaking thorough research can brokers arrive at their recommendation (buy, sell or hold) on a stock. Such well-researched information is not available to individual investors. Therefore, they, in the absence of proper guidance, may end up selecting the wrong stocks in their portfolio. This might result in their hard-earned money, which they have invested in stock markets, going down the drain. To avoid such an unfortunate scenario from materializing, it is highly desirable for investors to be guided by broker advice, while deciding their course of action on a particular stock.
Formulating a Winning Portfolio
We have designed a screener to arrive at stocks based on improving analyst recommendations and upward earnings estimate revisions over the last four weeks. However, considering only these factors does not make our strategy foolproof, as the top line has not been considered.
Actually, according to many market watchers, a top-line outperformance is more credible for a company than a mere earnings outperformance. To address top-line concerns, we have included the price/sales ratio in our screener as it serves as a strong complementary valuation metric.
Screening Criteria
#(Up-Down Rating)/ Total (4 weeks) =Top #75: This gives the list of the top 75 companies that have witnessed net upgrades over the last four weeks.
Percentage change in Q (1) est. (4 weeks) = Top #10: This gives us the top 10 stocks that have witnessed earnings estimate revisions over the past four 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 more than 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 in the top 3000 if one judges by market capitalization.
Com/ADR/Canadian = Com: This takes out the ADR and Canadian stocks.
Here are five of the 10 stocks that made it through the screen:
American Airlines 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.
New York-based ABM Industries is a provider of integrated facility solutions in the United States and internationally. ABM currently carries a Zacks Rank #3. The company has an impressive surprise history, with its earnings surpassing the Zacks Consensus Estimate in three of the last four quarters (missing the mark on the other occasion), the average beat being 1.4%.
The company's comprehensive transformational initiative called 2020 Vision has helped it attain long-term profitable growth through an industry-based go-to-market approach. Multi-year comprehensive strategic plan, ELEVATE is expected to accelerate ABM’s organic growth, improve its strategic and comprehensive positioning, and reinforce profitability.
Headquartered in Dublin, OH, Cardinal Health is a nation-wide drug distributor and provider of services to pharmacies, healthcare providers and manufacturers. The company’s diversified portfolio represents significant long-term opportunities. Further, it follows an acquisition-driven strategy.
CAH, currently carrying a Zacks Rank of 3, has an impressive surprise history, with its earnings surpassing the Zacks Consensus Estimate in each of the last four quarters, the average being 15.7%.
Cleveland-Cliffs 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 2024 earnings has been revised 6.34% upward. Cleveland-Cliffs currently carries a Zacks Rank #3.
Chesterbrook, PA-based Cencora is one of the world’s largest pharmaceutical services companies. The company should benefit from the strength in the U.S. Healthcare Solutions business. Cencora currently carries a Zacks Rank #3.
The Zacks Consensus Estimate for the current year has inched up 0.5% over the past 60 days. COR has outpaced the Zacks Consensus Estimate for earnings in each of the last four quarters by an average of 3.88%.
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.
Image: Bigstock
5 Broker-Favorite Stocks to Keep an Eye on as 2024 Approaches
Year 2023, which is in its last leg, has witnessed extreme volatility from high interest rates and geo-political woes. However, cooling down inflation following the Fed’s interest rate hike policy to combat elevated inflation markets is a positive.
The Fed’s December FOMC meeting dot-plot has shown that, on average, Fed officials are expecting at least three rate cuts of 25 basis points each in 2024, followed by four more rate cuts of one percentage point in 2025. Investors would like to take advantage of this optimistic forecast by designing a winning portfolio of stocks. However, doing this without proper guidance from investing experts is hazardous.
Experts in the field of investing are brokers, as they have at their disposal a lot more information on a company and its prospects than individual investors. Keeping tabs on broker-favored stocks like American Airlines (AAL - Free Report) , ABM Industries (ABM - Free Report) , Cardinal Health (CAH - Free Report) ,Cleveland-Cliffs (CLF - Free Report) and Cencora (COR - Free Report) in this scenario appears to be prudent.
Why Broker-Advice Works Wonders
Brokers have an in-depth understanding of stocks and great knowledge of the industry and the broader economy. They scrutinize the company’s fundamentals and place them against the prevalent economic scenario to find out how attractive a stock is as an investment option or otherwise.
Only after undertaking thorough research can brokers arrive at their recommendation (buy, sell or hold) on a stock. Such well-researched information is not available to individual investors. Therefore, they, in the absence of proper guidance, may end up selecting the wrong stocks in their portfolio. This might result in their hard-earned money, which they have invested in stock markets, going down the drain. To avoid such an unfortunate scenario from materializing, it is highly desirable for investors to be guided by broker advice, while deciding their course of action on a particular stock.
Formulating a Winning Portfolio
We have designed a screener to arrive at stocks based on improving analyst recommendations and upward earnings estimate revisions over the last four weeks. However, considering only these factors does not make our strategy foolproof, as the top line has not been considered.
Actually, according to many market watchers, a top-line outperformance is more credible for a company than a mere earnings outperformance. To address top-line concerns, we have included the price/sales ratio in our screener as it serves as a strong complementary valuation metric.
Screening Criteria
#(Up-Down Rating)/ Total (4 weeks) =Top #75: This gives the list of the top 75 companies that have witnessed net upgrades over the last four weeks.
Percentage change in Q (1) est. (4 weeks) = Top #10: This gives us the top 10 stocks that have witnessed earnings estimate revisions over the past four 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 more than 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 in the top 3000 if one judges by market capitalization.
Com/ADR/Canadian = Com: This takes out the ADR and Canadian stocks.
Here are five of the 10 stocks that made it through the screen:
American Airlines 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 30 days, the stock has seen the Zacks Consensus Estimate for 2024 earnings being revised 1% 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.
New York-based ABM Industries is a provider of integrated facility solutions in the United States and internationally. ABM currently carries a Zacks Rank #3. The company has an impressive surprise history, with its earnings surpassing the Zacks Consensus Estimate in three of the last four quarters (missing the mark on the other occasion), the average beat being 1.4%.
The company's comprehensive transformational initiative called 2020 Vision has helped it attain long-term profitable growth through an industry-based go-to-market approach. Multi-year comprehensive strategic plan, ELEVATE is expected to accelerate ABM’s organic growth, improve its strategic and comprehensive positioning, and reinforce profitability.
Headquartered in Dublin, OH, Cardinal Health is a nation-wide drug distributor and provider of services to pharmacies, healthcare providers and manufacturers. The company’s diversified portfolio represents significant long-term opportunities. Further, it follows an acquisition-driven strategy.
CAH, currently carrying a Zacks Rank of 3, has an impressive surprise history, with its earnings surpassing the Zacks Consensus Estimate in each of the last four quarters, the average being 15.7%.
Cleveland-Cliffs 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 2024 earnings has been revised 6.34% upward. Cleveland-Cliffs currently carries a Zacks Rank #3.
Chesterbrook, PA-based Cencora is one of the world’s largest pharmaceutical services companies. The company should benefit from the strength in the U.S. Healthcare Solutions business. Cencora currently carries a Zacks Rank #3.
The Zacks Consensus Estimate for the current year has inched up 0.5% over the past 60 days. COR has outpaced the Zacks Consensus Estimate for earnings in each of the last four quarters by an average of 3.88%.
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.