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5 Broker-Favored Stocks to Watch as Inflation Rises Again
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The increase in inflation for the month of December has sounded alarm bells. The unfavorable reading has once again dampened investors’ spirits. Rising inflation can make markets more volatile in the coming days.
The Consumer Price Index (CPI) jumped 0.3% month over month in December compared with November’s increase of 0.1%. Year over year, CPI jumped 3.4% in December compared with 3.1% in November.
The increase in inflation and the resultant uncertainty, however, do not mean that investors should turn their backs on stocks now. We believe that keeping an eye on broker-loved stocks like American Airlines (AAL - Free Report) , Alaska Air Group (ALK - Free Report) , Delta Air Lines (DAL - Free Report) , Cleveland-Cliffs (CLF - Free Report) and Bread Financial (BFH - Free Report) will prove to be rewarding.
Following Broker Advice is Prudent: Here’s Why
Brokers have an in-depth understanding of stocks, great knowledge of the industry and a grasp of the broader economy. They scrutinize the company’s fundamentals and place them against the prevalent economic scenario to find out how attractive or otherwise a stock is as an investment option.
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. So, they, in the absence of proper guidance, may end up selecting the wrong stocks for their portfolio. This might result in their hard-earned money, going down the drain. To avoid such an unfortunate scenario, 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
# (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 the top 3000 stocks 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 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 60 days, the Zacks Consensus Estimate for 2024 earnings has been revised 11% upward. AAL currently carries a Zacks Rank #2 (Buy).
Alaska Air Group, based in Seattle, WA, is being aided by the uptick in air travel demand. The carrier’s shareholder-friendly attitude also bodes well.
Over the past 60 days, the Zacks Consensus Estimate for 2024 earnings has been revised 3.9% upward. ALK currently carries a Zacks Rank #3 (Hold).
Delta Air Lines is headquartered in Atlanta, GA. Upbeat air travel demand in the post-COVID era, particularly on the domestic front, is aiding Delta. Management’s decision to resume paying dividends bodes well.
Delta, currently carrying a Zacks Rank of 3, has an impressive surprise history, with its earnings surpassing the Zacks Consensus Estimate in three of the last four quarters (missing the mark once). The average beat is 3%.
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 6.7% upward. Cleveland-Cliffs currently carries a Zacks Rank #2.
Bread Financial, based in Columbus, OH, 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.
Bread Financial, currently carrying a Zacks Rank of 3, has a stellar surprise history, with its earnings surpassing the Zacks Consensus Estimate in each of the last four quarters. The average beat is 139.9%.
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-Favored Stocks to Watch as Inflation Rises Again
The increase in inflation for the month of December has sounded alarm bells. The unfavorable reading has once again dampened investors’ spirits. Rising inflation can make markets more volatile in the coming days.
The Consumer Price Index (CPI) jumped 0.3% month over month in December compared with November’s increase of 0.1%. Year over year, CPI jumped 3.4% in December compared with 3.1% in November.
The increase in inflation and the resultant uncertainty, however, do not mean that investors should turn their backs on stocks now. We believe that keeping an eye on broker-loved stocks like American Airlines (AAL - Free Report) , Alaska Air Group (ALK - Free Report) , Delta Air Lines (DAL - Free Report) , Cleveland-Cliffs (CLF - Free Report) and Bread Financial (BFH - Free Report) will prove to be rewarding.
Following Broker Advice is Prudent: Here’s Why
Brokers have an in-depth understanding of stocks, great knowledge of the industry and a grasp of the broader economy. They scrutinize the company’s fundamentals and place them against the prevalent economic scenario to find out how attractive or otherwise a stock is as an investment option.
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. So, they, in the absence of proper guidance, may end up selecting the wrong stocks for their portfolio. This might result in their hard-earned money, going down the drain. To avoid such an unfortunate scenario, 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
# (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 the top 3000 stocks 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 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 60 days, the Zacks Consensus Estimate for 2024 earnings has been revised 11% upward. AAL currently carries a Zacks Rank #2 (Buy).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Alaska Air Group, based in Seattle, WA, is being aided by the uptick in air travel demand. The carrier’s shareholder-friendly attitude also bodes well.
Over the past 60 days, the Zacks Consensus Estimate for 2024 earnings has been revised 3.9% upward. ALK currently carries a Zacks Rank #3 (Hold).
Delta Air Lines is headquartered in Atlanta, GA. Upbeat air travel demand in the post-COVID era, particularly on the domestic front, is aiding Delta. Management’s decision to resume paying dividends bodes well.
Delta, currently carrying a Zacks Rank of 3, has an impressive surprise history, with its earnings surpassing the Zacks Consensus Estimate in three of the last four quarters (missing the mark once). The average beat is 3%.
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 6.7% upward. Cleveland-Cliffs currently carries a Zacks Rank #2.
Bread Financial, based in Columbus, OH, 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.
Bread Financial, currently carrying a Zacks Rank of 3, has a stellar surprise history, with its earnings surpassing the Zacks Consensus Estimate in each of the last four quarters. The average beat is 139.9%.
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.