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5 Broker-Loved Stocks to Monitor as Fed Cuts Rates by 25 bps
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Key Takeaways
The Fed cut rates by 25 bps and expects two more cuts this year to support growth.
Brokers highlight CVI, ABG, AXL, GM, and ADNT as stocks to watch for returns.
Stocks were screened using analyst upgrades, earnings revisions and low price/sales ratios.
The U.S. Federal Reserve cut interest rates for the first time in the current year. The 25-basis-point rate cut was widely expected and signals a shift toward monetary easing. The Fed expects two more rate cuts by year-end.
Although inflation remains above the Federal Reserve’s 2% target, the uptick in the unemployment rate has increased pressure on policymakers to shift focus from containing inflation toward supporting growth. The central bank raised its projections for economic growth this year, with higher growth anticipated next year. Investors would like to capitalize on this improving scenario by designing their portfolios accordingly.
One way to fulfill the objective would be to follow broker advice, as they are considered experts in the field of investing. Thus, keeping an eye on broker-adored stocks like CVR Energy (CVI - Free Report) , Asbury Automotive Group (ABG - Free Report) , American Axle & Manufacturing Holdings (AXL - Free Report) , General Motors Company (GM - Free Report) and Adient plc (ADNT - Free Report) for healthy returns seems to be prudent.
We have designed a screen to shortlist stocks based on improving analyst recommendations and upward estimate revisions over the last four weeks. Also, since the price/sales ratio is a strong complementary valuation metric in the presence of broker information, it has been included. The price/sales ratio takes care of the company’s top line, making the strategy a well-rounded one.
Screening Parameters
# (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 concerning this ratio).
Current Price greater than 5 (as a stock trading below $5 will not likely create significant interest for most of the investors).
Average Daily Volume greater than 100,000 shares over the last 20 trading days (Volume has to be significant to ensure that these are easily traded).
Market value ($ mil) = Top #3000 (This gives us stocks that are the top 3000 in terms of market capitalization).
Com/ADR/Canadian= Com (This eliminates the ADR and Canadian stocks).
Here are five of the 10 stocks that made it through the screen:
Established in 2006, CVR Energy is a holding company primarily involved in renewable energy, petroleum refining, marketing and nitrogen fertilizer manufacturing through its stake in CVR Partners. It is committed to developing renewable biofuels and actively participating in the energy transition to reduce carbon emissions.
CVI beat the Zacks Consensus Estimate for earnings in three of the trailing four quarters and missed once. The oil and gas refining and marketing company currently carries a Zacks Rank #3 (Hold).
Asbury’s diversified product mix and multiple streams of income improve its risk profile and position it for top-line growth. Its e-commerce platform— Clicklane— is driving growth. Strategic buyouts are helping the auto retailer increase its market share. Asbury’s rollout of Tekion’s Automotive Retail Cloud is emerging as a strategic tailwind.
Asbury currently carries a Zacks Rank #3. ABG beat the Zacks Consensus Estimate for earnings in two of the last four quarters and missed in the other two, the average beat being 5.9%.
American Axle is a leading supplier of driveline and drivetrain systems, modules and components for the light vehicle market. It is advancing in the electric drive space, with its Inovance collaboration boosting electrification revenues. AXL’s expanding electrification portfolio strengthens its market position.
AXL currently carries a Zacks Rank #3. The Zacks Consensus Estimate for 2025 EPS has improved by 3 cents in the past 90 days. American Axle surpassed estimates in each of the trailing four quarters, the average earnings surprise being 584.1%.
General Motors remains the top-selling U.S. automaker, supported by strong demand for its pickups, SUVs, and expanding EV lineup. Robust vehicle offerings, electrification strides, China restructuring efforts, and solid liquidity are expected to drive growth at General Motors.
GM currently carries a Zacks Rank #3. The Zacks Consensus Estimate for 2025 EPS has improved by 8 cents in the past 60 days. General Motors surpassed estimates in each of the trailing four quarters, the average earnings surprise being 8%.
Adient is one of the world’s largest automotive seating suppliers. Adient has been gaining customers with its broad range of products. A diverse customer base and international presence have helped ADNT create a strong market position.
ADNT currently carries a Zacks Rank #3. The Zacks Consensus Estimate for current-quarter EPS has improved by 7 cents in the past 60 days. Adient surpassed estimates in three of the trailing four quarters (missing the mark once). The average earnings surprise is 30.3%.
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 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 Monitor as Fed Cuts Rates by 25 bps
Key Takeaways
The U.S. Federal Reserve cut interest rates for the first time in the current year. The 25-basis-point rate cut was widely expected and signals a shift toward monetary easing. The Fed expects two more rate cuts by year-end.
Although inflation remains above the Federal Reserve’s 2% target, the uptick in the unemployment rate has increased pressure on policymakers to shift focus from containing inflation toward supporting growth. The central bank raised its projections for economic growth this year, with higher growth anticipated next year. Investors would like to capitalize on this improving scenario by designing their portfolios accordingly.
One way to fulfill the objective would be to follow broker advice, as they are considered experts in the field of investing. Thus, keeping an eye on broker-adored stocks like CVR Energy (CVI - Free Report) , Asbury Automotive Group (ABG - Free Report) , American Axle & Manufacturing Holdings (AXL - Free Report) , General Motors Company (GM - Free Report) and Adient plc (ADNT - Free Report) for healthy returns seems to be prudent.
We have designed a screen to shortlist stocks based on improving analyst recommendations and upward estimate revisions over the last four weeks. Also, since the price/sales ratio is a strong complementary valuation metric in the presence of broker information, it has been included. The price/sales ratio takes care of the company’s top line, making the strategy a well-rounded one.
Screening Parameters
# (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 concerning this ratio).
Current Price greater than 5 (as a stock trading below $5 will not likely create significant interest for most of the investors).
Average Daily Volume greater than 100,000 shares over the last 20 trading days (Volume has to be significant to ensure that these are easily traded).
Market value ($ mil) = Top #3000 (This gives us stocks that are the top 3000 in terms of market capitalization).
Com/ADR/Canadian= Com (This eliminates the ADR and Canadian stocks).
Here are five of the 10 stocks that made it through the screen:
Established in 2006, CVR Energy is a holding company primarily involved in renewable energy, petroleum refining, marketing and nitrogen fertilizer manufacturing through its stake in CVR Partners. It is committed to developing renewable biofuels and actively participating in the energy transition to reduce carbon emissions.
CVI beat the Zacks Consensus Estimate for earnings in three of the trailing four quarters and missed once. The oil and gas refining and marketing company currently carries a Zacks Rank #3 (Hold).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Asbury’s diversified product mix and multiple streams of income improve its risk profile and position it for top-line growth. Its e-commerce platform— Clicklane— is driving growth. Strategic buyouts are helping the auto retailer increase its market share. Asbury’s rollout of Tekion’s Automotive Retail Cloud is emerging as a strategic tailwind.
Asbury currently carries a Zacks Rank #3. ABG beat the Zacks Consensus Estimate for earnings in two of the last four quarters and missed in the other two, the average beat being 5.9%.
American Axle is a leading supplier of driveline and drivetrain systems, modules and components for the light vehicle market. It is advancing in the electric drive space, with its Inovance collaboration boosting electrification revenues. AXL’s expanding electrification portfolio strengthens its market position.
AXL currently carries a Zacks Rank #3. The Zacks Consensus Estimate for 2025 EPS has improved by 3 cents in the past 90 days. American Axle surpassed estimates in each of the trailing four quarters, the average earnings surprise being 584.1%.
General Motors remains the top-selling U.S. automaker, supported by strong demand for its pickups, SUVs, and expanding EV lineup. Robust vehicle offerings, electrification strides, China restructuring efforts, and solid liquidity are expected to drive growth at General Motors.
GM currently carries a Zacks Rank #3. The Zacks Consensus Estimate for 2025 EPS has improved by 8 cents in the past 60 days. General Motors surpassed estimates in each of the trailing four quarters, the average earnings surprise being 8%.
Adient is one of the world’s largest automotive seating suppliers. Adient has been gaining customers with its broad range of products. A diverse customer base and international presence have helped ADNT create a strong market position.
ADNT currently carries a Zacks Rank #3. The Zacks Consensus Estimate for current-quarter EPS has improved by 7 cents in the past 60 days. Adient surpassed estimates in three of the trailing four quarters (missing the mark once). The average earnings surprise is 30.3%.
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 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.