For Immediate Release
Chicago, IL – February 20, 2018 - Stocks in this week’s article LCI Industries (LCII - Free Report) , The Simply Good Foods Company (SMPL - Free Report) , Heritage Insurance Holdings, Inc. (HRTG - Free Report) , Enterprise Financial Services Corp (EFSC - Free Report) andLakeland Bancorp, Inc. (LBAI - Free Report) .
5 Stocks to Add to Your Portfolio on New Analyst Coverage
New analyst coverage unearths extensive data on stocks for investors. Analysts are privy to vital information which is crucial for investment decisions. Lack of information creates chances of misinterpretation of stocks (over- or under-valued).
Coverage initiation on a stock by analyst(s) usually portrays higher investor inclination. Investors, on their part, often assume that there is something special in a stock to attract analysts to cover it. In other words, they believe that the company coming under the microscope definitely holds some value.
Obviously, stocks are not randomly chosen to cover. New coverage on a stock usually reflects a reassuring future envisioned by the analyst(s). At times, increased investor focus on a stock motivates analysts to take a closer look at it. After all, who doesn’t like to produce something that is already in demand? Hence, we often find that analysts’ ratings on newly added stocks are more favorable than their ratings on continuously covered stocks.
Needless to say, the average change in broker recommendation is preferred over a single recommendation change.
Impact on Stock Price
The price movement of a stock is generally a function of the recommendations on it from new analysts. Stocks typically see an upward price movement with a new analyst coverage compared to what they witness with a rating upgrade under an existing coverage. Positive recommendations — Buy and Strong Buy — generally lead to a significantly more positive price reaction than Hold recommendations. On the contrary, analysts hardly initiate coverage with a Strong Sell or Sell recommendation.
Now, if an analyst gives a new recommendation on a company that has very few or no existing coverage, investors start paying more attention to it. Also, any new information attracts portfolio managers to build a position in the stock.
For the rest of this Screen of the Week article please visit Zacks.com at: https://www.zacks.com/stock/news/292733/5-stocks-to-add-to-your-portfolio-on-new-analyst-coverage
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