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Buy These 5 Stocks on New Analyst Coverage Amid Coronavirus
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The hopes of reopening businesses and improving prospects of a vaccine amid the coronavirus-induced dismal economic scenario have been making markets volatile.
Now, as global stock markets are experiencing record levels of volatility, investors may look for stocks that recently received new analyst coverage. The logic behind this is that analysts don’t add a stock to their coverage randomly. New coverage on a stock is usually the result of huge investor focus on it or its promising prospects.
Interestingly, stocks typically see an incremental upward price movement with new analyst coverage compared to what they witness with continuation of existing analyst coverage. Of course, the price movement depends on the recommendations from the new analysts. Positive recommendations — Buy and Strong Buy — lead to a significant positive incremental price reaction than Strong Sell, Sell or Hold recommendations.
Moreover, if an analyst gives a new recommendation on a company that has limited or no analyst coverage, investors start paying more attention to it. As analysts almost always initiate coverage with a positive recommendation. Also, any new information attracts portfolio managers to build a position in the stock.
However, one should preferably look for the average change in broker recommendation rather than a single recommendation change. Then again, an upgrade, an initiation or even increased coverage is equally important.
Keeping this mind, it’s a good strategy to focus on the number of analyst recommendations that have increased over the last few weeks.
Screening Criteria
Number of Broker Ratings now greater than the Number of Broker Ratings four weeks ago (This will shortlist stocks that have recent new coverage).
Average Broker Rating less than Average Broker Rating four weeks ago ('Less than' means 'better than' four weeks ago).
Increased analyst coverage and improving average rating are the primary criteria of this strategy but one should consider other relevant parameters to make the strategy foolproof.
Here are the other screening parameters:
Price greater than or equal to $5 (as a stock below $5 will not likely create significant interest for most investors).
Average Daily Volume greater than or equal to 100,000 shares (if volume isn’t enough, it will not attract individual investors).
Here are five of the 10 stocks that passed the screen:
Gibraltar Industries, Inc. (ROCK - Free Report) : This Buffalo, NY-based company manufactures and distributes products to the industrial and buildings market. It currently sports a Zacks Rank #1 (Strong Buy) and has outperformed its industry year to date. The Zacks Consensus Estimate for its current-year earnings has risen 6% over the past 60 days, depicting analyst optimism over the stock’s potential. It has an expected earnings growth rate of 16.7% for the current year. You can see the complete list of today’s Zacks #1 Rank stocks here.
PJT Partners Inc. (PJT - Free Report) : Headquartered in New York, NY, this is an investment bank which currently sports a Zacks Rank #1. The company’s stock has outperformed its industry year to date. Earnings for the current year are expected to increase 21.6%.
ICU Medical, Inc. (ICUI - Free Report) , a medical device maker, currently carries a Zacks Rank #1. The company has gained 16% so far this year against the industry’s decline of 10.6%. The stock has an impressive earnings surprise history and has topped analysts’ expectations in three of the last four quarters, the average being 8.8%. The company’s trailing 12-month return on equity or ROE of 11.9% compares with the industry’s negative 12.8%.
eXp World Holdings Inc. (EXPI - Free Report) provides cloud-based real estate brokerage services in the United States and Canada. Although the company’s stock has underperformed its industry year to date, the Zacks Consensus Estimate for its current-year earnings has risen 112.5% over the past 60 days, depicting analyst optimism over the stock’s potential. This Zacks Rank #1 company has an expected earnings growth rate of 106.7% for the current year.
Innovative Industrial Properties, Inc. (IIPR - Free Report) : This is a real estate investment trust which currently sports a Zacks Rank #1. The company’s stock has outperformed its industry year to date. The Zacks Consensus Estimate for its current-year earnings has climbed 4.9% over the past 30 days. Earnings for the current year are expected to increase 63%.
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
Buy These 5 Stocks on New Analyst Coverage Amid Coronavirus
The hopes of reopening businesses and improving prospects of a vaccine amid the coronavirus-induced dismal economic scenario have been making markets volatile.
Now, as global stock markets are experiencing record levels of volatility, investors may look for stocks that recently received new analyst coverage. The logic behind this is that analysts don’t add a stock to their coverage randomly. New coverage on a stock is usually the result of huge investor focus on it or its promising prospects.
Interestingly, stocks typically see an incremental upward price movement with new analyst coverage compared to what they witness with continuation of existing analyst coverage. Of course, the price movement depends on the recommendations from the new analysts. Positive recommendations — Buy and Strong Buy — lead to a significant positive incremental price reaction than Strong Sell, Sell or Hold recommendations.
Moreover, if an analyst gives a new recommendation on a company that has limited or no analyst coverage, investors start paying more attention to it. As analysts almost always initiate coverage with a positive recommendation. Also, any new information attracts portfolio managers to build a position in the stock.
However, one should preferably look for the average change in broker recommendation rather than a single recommendation change. Then again, an upgrade, an initiation or even increased coverage is equally important.
Keeping this mind, it’s a good strategy to focus on the number of analyst recommendations that have increased over the last few weeks.
Screening Criteria
Number of Broker Ratings now greater than the Number of Broker Ratings four weeks ago (This will shortlist stocks that have recent new coverage).
Average Broker Rating less than Average Broker Rating four weeks ago ('Less than' means 'better than' four weeks ago).
Increased analyst coverage and improving average rating are the primary criteria of this strategy but one should consider other relevant parameters to make the strategy foolproof.
Here are the other screening parameters:
Price greater than or equal to $5 (as a stock below $5 will not likely create significant interest for most investors).
Average Daily Volume greater than or equal to 100,000 shares (if volume isn’t enough, it will not attract individual investors).
Here are five of the 10 stocks that passed the screen:
Gibraltar Industries, Inc. (ROCK - Free Report) : This Buffalo, NY-based company manufactures and distributes products to the industrial and buildings market. It currently sports a Zacks Rank #1 (Strong Buy) and has outperformed its industry year to date. The Zacks Consensus Estimate for its current-year earnings has risen 6% over the past 60 days, depicting analyst optimism over the stock’s potential. It has an expected earnings growth rate of 16.7% for the current year. You can see the complete list of today’s Zacks #1 Rank stocks here.
PJT Partners Inc. (PJT - Free Report) : Headquartered in New York, NY, this is an investment bank which currently sports a Zacks Rank #1. The company’s stock has outperformed its industry year to date. Earnings for the current year are expected to increase 21.6%.
ICU Medical, Inc. (ICUI - Free Report) , a medical device maker, currently carries a Zacks Rank #1. The company has gained 16% so far this year against the industry’s decline of 10.6%. The stock has an impressive earnings surprise history and has topped analysts’ expectations in three of the last four quarters, the average being 8.8%. The company’s trailing 12-month return on equity or ROE of 11.9% compares with the industry’s negative 12.8%.
eXp World Holdings Inc. (EXPI - Free Report) provides cloud-based real estate brokerage services in the United States and Canada. Although the company’s stock has underperformed its industry year to date, the Zacks Consensus Estimate for its current-year earnings has risen 112.5% over the past 60 days, depicting analyst optimism over the stock’s potential. This Zacks Rank #1 company has an expected earnings growth rate of 106.7% for the current year.
Innovative Industrial Properties, Inc. (IIPR - Free Report) : This is a real estate investment trust which currently sports a Zacks Rank #1. The company’s stock has outperformed its industry year to date. The Zacks Consensus Estimate for its current-year earnings has climbed 4.9% over the past 30 days. Earnings for the current year are expected to increase 63%.
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