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5 Broker-Loved Stocks to Watch Amid Current Market Swings
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In its January FOMC meeting, the Federal Reserve kept rates unchanged but what disappointed investors was Fed Chair Jerome Powell's indications that rate cuts are unlikely in the near future, particularly in March. The Fed is looking for more data pertaining to declining inflation before considering rate cuts.
Powell’s statement triggered a massive sell-off, with Wall Street falling sharply on Jan 31. In fact, U.S. equity markets have witnessed a roller-coaster ride since then, with volatility looming large. This uncertainty is unlikely to go away any time soon, with the possibility of near-term rate cuts dwindling.
Given this turbulent backdrop, we believe that investors should be guided by broker advice. This is because brokers are believed to be experts in the field of investing. Therefore, keeping an eye on broker-loved stocks like American Airlines (AAL - Free Report) , Delta Air Lines (DAL - Free Report) ,Cleveland-Cliffs (CLF - Free Report) , Best Buy (BBY - Free Report) and Cardinal Health (CAH - Free Report) is prudent.
Why Following Broker Advice Works Wonders?
Brokers have an in-depth understanding of stocks, great knowledge of the industry and grasp over the broader economy. They scrutinize the company’s fundamentals and place them against the prevalent economic scenario to find out how the attractiveness or otherwise of a stock as an investment option.
Only after undertaking thorough research, 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 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, which serves as a strong complementary valuation metric.
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 added the following screening parameters:
Price-to-Sales = Bot%10: The lower the ratio the better, companies meeting this criteria 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 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 stock has seen the Zacks Consensus Estimate for 2024 earnings being revised 28.3% upward. AAL currently carries a Zacks Rank #2 (Buy).
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 #3 (Hold), 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 6.1% upward. Cleveland-Cliffs currently carries a Zacks Rank #2.
Best Buy is constantly conducting various tests and pilots to become a more customer-centric, digitally focused and efficient company. BBY is continuously focusing on improving its digital capabilities, including boosting its omni-channel services, such as buy online, pick up in store services.
Over the past 60 days, the Zacks Consensus Estimate for BBY’s current-year earnings has been revised 0.2% upward. BBY’s earnings surpassed the Zacks Consensus Estimate in each of the last four quarters. The average beat is 12.8%. Best Buy currently carries a Zacks Rank #2.
Cardinal Health is a nationwide drug distributor and provider of services to pharmacies, healthcare providers and manufacturers. Cardinal Health’s diversified product portfolio and long-term supply agreements augur well.
Over the past 60 days, the Zacks Consensus Estimate for CAH’s current-year earnings has been revised 1.7% upward. CAH’s earnings surpassed the Zacks Consensus Estimate in each of the last four quarters. The average beat is 15.6%. Cardinal Health currently carries a Zacks Rank #2.
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-Loved Stocks to Watch Amid Current Market Swings
In its January FOMC meeting, the Federal Reserve kept rates unchanged but what disappointed investors was Fed Chair Jerome Powell's indications that rate cuts are unlikely in the near future, particularly in March. The Fed is looking for more data pertaining to declining inflation before considering rate cuts.
Powell’s statement triggered a massive sell-off, with Wall Street falling sharply on Jan 31. In fact, U.S. equity markets have witnessed a roller-coaster ride since then, with volatility looming large. This uncertainty is unlikely to go away any time soon, with the possibility of near-term rate cuts dwindling.
Given this turbulent backdrop, we believe that investors should be guided by broker advice. This is because brokers are believed to be experts in the field of investing. Therefore, keeping an eye on broker-loved stocks like American Airlines (AAL - Free Report) , Delta Air Lines (DAL - Free Report) ,Cleveland-Cliffs (CLF - Free Report) , Best Buy (BBY - Free Report) and Cardinal Health (CAH - Free Report) is prudent.
Why Following Broker Advice Works Wonders?
Brokers have an in-depth understanding of stocks, great knowledge of the industry and grasp over the broader economy. They scrutinize the company’s fundamentals and place them against the prevalent economic scenario to find out how the attractiveness or otherwise of a stock as an investment option.
Only after undertaking thorough research, 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 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, which serves as a strong complementary valuation metric.
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 added the following screening parameters:
Price-to-Sales = Bot%10: The lower the ratio the better, companies meeting this criteria 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 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 stock has seen the Zacks Consensus Estimate for 2024 earnings being revised 28.3% 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.
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 #3 (Hold), 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 6.1% upward. Cleveland-Cliffs currently carries a Zacks Rank #2.
Best Buy is constantly conducting various tests and pilots to become a more customer-centric, digitally focused and efficient company. BBY is continuously focusing on improving its digital capabilities, including boosting its omni-channel services, such as buy online, pick up in store services.
Over the past 60 days, the Zacks Consensus Estimate for BBY’s current-year earnings has been revised 0.2% upward. BBY’s earnings surpassed the Zacks Consensus Estimate in each of the last four quarters. The average beat is 12.8%. Best Buy currently carries a Zacks Rank #2.
Cardinal Health is a nationwide drug distributor and provider of services to pharmacies, healthcare providers and manufacturers. Cardinal Health’s diversified product portfolio and long-term supply agreements augur well.
Over the past 60 days, the Zacks Consensus Estimate for CAH’s current-year earnings has been revised 1.7% upward. CAH’s earnings surpassed the Zacks Consensus Estimate in each of the last four quarters. The average beat is 15.6%. Cardinal Health currently carries a Zacks Rank #2.
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.