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5 Stocks in Focus Following Recent Broker Rating Upgrades
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The Q3 earnings season is in full swing. The picture to have emanated so far is an extremely healthy one and the current reporting cycle remains on track to end on a strong note, displaying substantial growth. A high proportion of companies have reported better-than-expected earnings per share in Q3 so far.
Generally, an earnings beat by a company generally leads to an appreciation in its stock price. Given this highly bullish backdrop, investors would like to add outperformers to their respective portfolios for healthy returns.
However, the task is far from easy with a plethora of companies present in the market. Moreover, the complexities associated with the stock market makes it even more difficult for individual investors to select outperformers in their portfolios in the absence of proper guidance.
Be Guided by Broker Advice
The requisite guidance to design a winning portfolio comes from brokers. The opinion of brokers is highly valued by investors as they have a clear insight into the nitty gritty of the investment world. Consequently, it makes sense for individual investors to be guided by broker advice in order to design a winning portfolio, as investors generally do not have access to such detailed and well-researched information.
Brokers revise their earnings estimates after carefully examining the pros and cons of an event for the concerned stock. Naturally, their stock related actions (upgrade or downgrade) serve as an invaluable guide as far as fixing target price of stock (s) is concerned.
Estimates can move north for a number of reasons – favorable earnings performance, a bullish guidance, product launch or any favorable macro scenario. Similarly, lackluster earnings 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.
What About Revenues?
While we have talked about the bottom line in detail, the top line (revenue portion) cannot be ignored. Actually, according to many market watchers a revenue beat is more creditable for a company than a mere earnings outperformance. Therefore, we have included in our screen the price/sales ratio that 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 have added the following screening parameters:
Price-to-Sales = Bot%10: The lower the ratio the better, companies meeting this criteria are in 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 takes out the ADR and Canadian stocks.
Here are five of the 10 stocks that made it through the screen:
Based in Columbus, OH, Big Lots (BIG - Free Report) is a broad-line closeout retailer in the United States. The company offers products under various merchandising categories, which include Food, Consumables, Furniture, Seasonal, Soft Home, Hard Home, and Electronics & Accessories. The stock currently has a Zacks Rank #3 (Hold). Also, the three-five year EPS growth rate for the stock is an impressive 12%.
Express, Inc. (EXPR - Free Report) , carrying a Zacks Rank #2 (Buy), is a specialty retailer of women's and men's apparel in the United States. The company, based in Columbus, has an impressive track record with respect to earnings per share, having outshined the Zacks Consensus Estimate in three of the last four quarters. The average beat exceeds 100%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Comstock Resources, Inc. (CRK - Free Report) , is headquartered in Frisco, TX. It is an independent oil and gas exploration and production company engaged in the acquisition, exploration, and development of oil and gas properties. This Zacks Rank #3 company has an excellent earnings surprise history. It has a 100% track of outperforming estimates over the last four quarters at an average rate of 39.7%.
Bunge Limited (BG - Free Report) is an integrated global agribusiness and food company spanning the farm-to-consumer food chain. This Zacks Rank #2 company is based in White Plains, NY. The Zacks Consensus Estimate for current-quarter earnings improved 2.2% over the last 60 days.
EnLink Midstream LLC (ENLC - Free Report) is headquartered in Dallas, TX. This Zacks Rank #2 company is involved in natural gas gathering, treating, processing, transmission, distribution, supply and marketing, and crude oil marketing. The Zacks Consensus Estimate for current-quarter earnings is projected to improve 300% year over year.
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.
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5 Stocks in Focus Following Recent Broker Rating Upgrades
The Q3 earnings season is in full swing. The picture to have emanated so far is an extremely healthy one and the current reporting cycle remains on track to end on a strong note, displaying substantial growth. A high proportion of companies have reported better-than-expected earnings per share in Q3 so far.
Generally, an earnings beat by a company generally leads to an appreciation in its stock price. Given this highly bullish backdrop, investors would like to add outperformers to their respective portfolios for healthy returns.
However, the task is far from easy with a plethora of companies present in the market. Moreover, the complexities associated with the stock market makes it even more difficult for individual investors to select outperformers in their portfolios in the absence of proper guidance.
Be Guided by Broker Advice
The requisite guidance to design a winning portfolio comes from brokers. The opinion of brokers is highly valued by investors as they have a clear insight into the nitty gritty of the investment world. Consequently, it makes sense for individual investors to be guided by broker advice in order to design a winning portfolio, as investors generally do not have access to such detailed and well-researched information.
Brokers revise their earnings estimates after carefully examining the pros and cons of an event for the concerned stock. Naturally, their stock related actions (upgrade or downgrade) serve as an invaluable guide as far as fixing target price of stock (s) is concerned.
Estimates can move north for a number of reasons – favorable earnings performance, a bullish guidance, product launch or any favorable macro scenario. Similarly, lackluster earnings 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.
What About Revenues?
While we have talked about the bottom line in detail, the top line (revenue portion) cannot be ignored. Actually, according to many market watchers a revenue beat is more creditable for a company than a mere earnings outperformance. Therefore, we have included in our screen the price/sales ratio that 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 have added the following screening parameters:
Price-to-Sales = Bot%10: The lower the ratio the better, companies meeting this criteria are in 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 takes out the ADR and Canadian stocks.
Here are five of the 10 stocks that made it through the screen:
Based in Columbus, OH, Big Lots (BIG - Free Report) is a broad-line closeout retailer in the United States. The company offers products under various merchandising categories, which include Food, Consumables, Furniture, Seasonal, Soft Home, Hard Home, and Electronics & Accessories. The stock currently has a Zacks Rank #3 (Hold). Also, the three-five year EPS growth rate for the stock is an impressive 12%.
Express, Inc. (EXPR - Free Report) , carrying a Zacks Rank #2 (Buy), is a specialty retailer of women's and men's apparel in the United States. The company, based in Columbus, has an impressive track record with respect to earnings per share, having outshined the Zacks Consensus Estimate in three of the last four quarters. The average beat exceeds 100%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Comstock Resources, Inc. (CRK - Free Report) , is headquartered in Frisco, TX. It is an independent oil and gas exploration and production company engaged in the acquisition, exploration, and development of oil and gas properties. This Zacks Rank #3 company has an excellent earnings surprise history. It has a 100% track of outperforming estimates over the last four quarters at an average rate of 39.7%.
Bunge Limited (BG - Free Report) is an integrated global agribusiness and food company spanning the farm-to-consumer food chain. This Zacks Rank #2 company is based in White Plains, NY. The Zacks Consensus Estimate for current-quarter earnings improved 2.2% over the last 60 days.
EnLink Midstream LLC (ENLC - Free Report) is headquartered in Dallas, TX. This Zacks Rank #2 company is involved in natural gas gathering, treating, processing, transmission, distribution, supply and marketing, and crude oil marketing. The Zacks Consensus Estimate for current-quarter earnings is projected to improve 300% year over year.
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.