With the second-quarter earnings season in full swing, investors are closely evaluating companies’ quarterly performances. But investment decisions should not be driven solely by near-term results. It is equally important to consider the broader macroeconomic backdrop and assess how prevailing trends could influence a company’s fundamentals and long-term growth prospects.

Geopolitical tensions in the Middle East have pushed global oil prices higher, raising concerns that inflationary pressures could persist in the coming months. This, in turn, reinforces the Federal Reserve’s cautious approach to monetary policy. Investors should also remain mindful of stretched valuations in several artificial intelligence (AI)-related stocks, along with continued uncertainty surrounding tariffs and global trade policies. Against this backdrop, a careful assessment of company-specific strengths, valuation and earnings potential is essential before making investment decisions.

One way to cut short this task is to follow brokers’ recommendations. Stocks like PENN Entertainment, Inc. (PENN Quick QuotePENN - Free Report) , The Chemours Company (CC Quick QuoteCC - Free Report) and Lumentum Holdings Inc. (LITE Quick QuoteLITE - Free Report) are worth betting on.

Broker recommendations are typically based on a comprehensive research process involving direct discussions with company management, detailed reviews of regulatory filings, earnings-call assessments, channel checks and wider industry analysis. This enables analysts to judge a company’s fundamentals against macroeconomic developments, sector dynamics, competitive positioning and peer performance rather than evaluating the business in isolation.

A broker upgrade generally reflects a meaningful improvement in an analyst’s outlook for a company. The revision may be driven by several developments that are not yet fully incorporated into consensus estimates or the stock’s prevailing valuation. Therefore, an upgrade may signal a potential inflection point in earnings expectations and overall investor sentiment.

However, broker upgrades should not be viewed as stand-alone investment indicators. They are more effective when considered alongside other fundamental, earnings and valuation factors. Hence, broker recommendations are best used as one component of a broader and well-balanced investment decision-making process.

Selecting the Winning Strategy

We have a screening strategy that may help you identify potential winners.

Broker Rating Upgrades (Four Weeks) of 1% or More: The screen selects stocks that have witnessed broker rating upgrades of 1% or more over the past four weeks.

Current Price Greater Than $5: The stocks must trade above $5.

Average 20-Day Volume Greater Than 100,000: A large trading volume guarantees that the stock is easily tradable.

Zacks Rank Equal to #1 (Strong Buy) or 2 (Buy): Despite good or bad market conditions, stocks with a Zacks Rank #1 or 2 have a proven record of success. You can see the complete list of today’s Zacks #1 Rank stocks here.

VGM Score of A or B: Our research shows that stocks with a VGM Score of A or B, when combined with a Zacks Rank #1 or 2, offer the best upside potential.

3 Stocks With Upgraded Broker Ratings

Wyomissing, PA-based PENN Entertainment is a multi-jurisdictional owner and operator of gaming and racing facilities with video gaming terminal operations and a focus on slot-machine entertainment. PENN’s portfolio is geographically diverse and includes a broad set of regional properties.

PENN’s 2026 earnings are expected to soar 122.8% year over year. PENN Entertainment, which currently sports a Zacks Rank #1, has witnessed a 10% upward revision in broker ratings over the past four weeks.

Chemours, based in Wilmington, DE, is a leading provider of performance chemicals that are key ingredients in end-products and processes across a host of industries. CC offers its customers solutions across a vast spectrum of industries, including plastics and coatings, refrigeration and air conditioning, mining and general industrial manufacturing and electronics.

Chemours’ 2026 earnings are projected to jump 24.2% on a year-over-year basis. CC, sporting a Zacks Rank #1 at present, has seen a 10% increase in broker ratings over the past four weeks.

Headquartered in San Jose, CA, Lumentum is a provider of optical and photonic products serving cloud, AI/machine learning, telecommunications, consumer and industrial end markets. LITE’s technologies enable high-capacity optical links for intra-data center, data center interconnect, long-haul and submarine networks, and support enterprise networking across SANs, LANs and WANs.

Lumentum’s fiscal 2027 earnings are expected to jump 121.8% year over year. LITE, which currently carries a Zacks Rank #2, has witnessed a 4.6% upward revision in broker ratings over the past four weeks.