Investors strive to design a portfolio of stocks that will fetch them handsome returns. However, the task is easier said than done. This is because the investing world is fraught with uncertainties and stock prices are sensitive to recent developments. Moreover, a plethora of stocks flood the market at any given point of time which makes the task of choosing the right stock more daunting.

Additionally, the same group of stocks may not work under all circumstances. For example, airline stocks may benefit from declining oil prices but may fall out of favor in the event of oil prices moving up. One of the well-accepted strategies to brave market uncertainties is to maintain a well-diversified (i.e. include stocks from different industries) portfolio.

This clearly suggests that one needs to have in-depth knowledge of the minute details of the investing space. This is quite impossible for individual investors, particularly because of the time constraint that we all face these days. Consequently, advice of “experts” in this field is much sought after by investors.

Expert Advice from Brokers

The experts in the investing world are brokers. Generally, three types of brokers (sell-side, buy-side and independent) are present in the investment world, with sell-side analysts being the most common. They are employed by various brokerage firms to provide unbiased opinion to investors on the stocks under their coverage after thorough research. Buy-side analysts are employed by hedge funds, mutual funds etc. while the independent ones simply sell their reports to investors.

All types of brokers indulge in thorough research of the stocks under their coverage. They have access to much detailed information on a company. Toward this end, they attend company conference calls/presentations and scrutinize every detail available publicly before advising investors. Naturally, broker advice acts as an invaluable guide for investors in their bid to garner the maximum from their portfolios.

Earnings Estimate Revisions – An Invaluable Pointer

Since brokers follow stocks in their coverage minutely, they revise their earnings estimates on a stock after carefully examining the pros and cons of an event for the concerned company. All the decisions by brokers are backed by solid logic or justification and thus estimate revisions serve as an important pointer regarding the price of a stock.

For instance, an earnings beat by a company generally leads to upward estimate revisions with prices moving north. Similarly, lackluster earnings results often lead to stock price depreciation. Investors tend to be guided by the direction of estimate revisions and stock price while formulating their investment strategy. To take care of the earnings performance, we have designed a screen based on improving analyst recommendation and upward estimate revisions over the last four weeks.

Revenues Performance not to be Ignored

According to many market watchers, a revenue beat is more creditable for a company than a mere earnings outperformance, especially in an environment of revenue weakness due to macroeconomic headwinds like a strong dollar or lackluster demand for travel (which will hurt travel-focused companies). Therefore, one must take the top-line performance into consideration as well while formulating a winning strategy. We have included in our screen the price/sales ratio 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.

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.

Price greater than 5:A stock trading below $5 will not likely be of significant interest to 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 in terms of market capitalization.

Here are 5 of the ten stocks that passed the screen:

Based in Indianapolis, IN, and formed through the merger of Anthem and WellPoint Health Networks in Nov 2004, Anthem Inc. is one of the largest publicly traded managed care organizations in terms of membership. The Zacks Consensus Estimate for current quarter earnings has increased by 12 cents to $1.54 per share over the last three months. Moreover, the stock price for this Zacks Rank #3 (Hold) stock appreciated 10.2% in the last six months.

Headquartered in Houston, TX, Bristow Group, Inc. is a leading provider of helicopter services for major transportation operations in the U.S., Gulf of Mexico and the North Sea, and other major offshore oil and gas producing regions of the world, including Alaska, Australia, Brazil, Mexico, Nigeria, Russia and Trinidad.  The company, which delivered an impressive earnings surprise of 32.7% in the most recent quarter, has seen its stock price rally over 81% in the last six months. The stock carries a Zacks Rank #3.

Based in Franklin, TN, Community Health Systems, Inc. (CYH Quick QuoteCYH - Free Report) operates 194 hospitals across 28 states, with an aggregate of 39,853 licensed beds. As of Dec 31, 2015, 190 of the company’s hospitals are general acute care hospitals while four being stand-alone rehabilitation or psychiatric hospitals. The company’s earnings per share for the current quarter are projected to grow over 100% on a year-over-year basis. The stock carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

American Axle & Manufacturing Holdings Inc. (AXL Quick QuoteAXL - Free Report) is a leading supplier of driveline and drivetrain systems, modules and components for the light vehicle market.The company has an impressive track record with respect to earnings, having surpassed the Zacks Consensus Estimate in each of the last four quarters by an average of 10.7%. The automobile stock carries a Zacks Rank #3.

AECOM Technology Corp. (ACM Quick QuoteACM - Free Report) is a leading solutions provider for supporting professional, technical and management solutions for diverse industries across end-markets like transportation, facilities, government as well as those in environmental, energy and water businesses.The company has an impressive track record with respect to earnings, having surpassed the Zacks Consensus Estimate in three of the last four quarters by an average of 8.6%.

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.

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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.

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