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5 Promising Stocks That Brokers Certify Now

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Lack of proper guidance often causes one to falter in life. This is true for the investing world as well. With a plethora of stocks always flooding the market, risks abound for investors to make mistakes while designing their portfolio, especially in absence of expert advice.

Choice of improper stocks can adversely impact his/her returns, thereby ruining the very objective of investing the hard-earned money in the highly unpredictable stock market. Although this is a concern at all times, it is even more crucial in the present troubled scenario.
 

Broker Advice: An Invaluable Guide

The requisite assistance in building a winning portfolio comes from brokers who devote ample time to research stocks under their coverage. Such investment specialists attend conference calls and company presentations as well as interact with management.

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 a valuable pointer as far as fixing the target price of stock (s) is concerned. Given their thorough understanding of the stock market as highlighted in this write-up, it is only prudent for investors to pay heed to broker advice in planning a winning portfolio

Of the three types of brokers (sell-side, buy-side and independent), sell-side analysts are the most common. They are employed by various brokerage firms to provide an unbiased opinion on stocks. Meanwhile, buy-side analysts are employed by hedge funds, mutual funds and others while independent analysts directly sell their reports to investors.

Making the Most of Broker Opinions

The above write-up clearly suggests that by following broker actions, one can arrive at a promising portfolio of stocks. Keeping this in mind, we devised a screen to shortlist stocks based on improving analyst recommendation, upward revisions as well as earnings estimates over the last four weeks. Also, since the price/sales ratio is a strong complementary valuation metric in the presence of analyst information, it is also included as one of the determining factors. The price/sales ratio takes care of the company’s top line, making the strategy foolproof.

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).

We have also added the following screening parameters to ensure that the strategy is a winning one:

Price-to-Sales = Bot%10 (The lower the ratio the better. Companies meeting this criteria are in bottom 10% of our universe of more than 7,700 stocks with respect to this ratio).
 

Price greater than 5 (as a stock trading below $5 will not likely create a 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 in terms of 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:

Here are five of the 10 stocks that made it through the screen:

Founded in 2001, Brentwood, TN-based Delek US Holdings, Inc. (DK - Free Report) is an independent refiner, transporter and marketer of petroleum products. This Zacks Rank #3 (Hold) stock’s earnings outshined the Zacks Consensus Estimate in two of the last four quarters and missed the same in the other two. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Clearwater Paper Corporation (CLW - Free Report) : This Spokane, WA-based company carries a Zacks Rank #2 (Buy). The company produces pulp and paperboard at multiple facilities across the United States. The Zacks Consensus Estimate for 2020 earnings has been revised upward in excess of 100% on a year-over-year basis.

Arrow Electronics (ARW - Free Report) provides products, services and solutions to industrial and commercial users of electronic components and enterprise computing. The company, based in Centennial, CO, carries a Zacks Rank of 2. The company delivered a positive earnings surprise in three of the trailing four quarters, missing the mark in the remaining one.

Chicago-based Century Aluminum Company (CENX - Free Report) is engaged in the production of primary aluminum in the United Sates and Iceland. This Zacks #2 Ranked company delivered a positive earnings surprise in three of the trailing four quarters, lagging estimates on one occasion.

Headquartered in Duluth, GA, Asbury Automotive Group (ABG - Free Report) is among the leading automotive retailers in the domestic market. This Zacks Rank #3 stock’s earnings are expected to grow 49.2% for 2021.

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.