During an earnings season, market sentiments are largely influenced by corporate results and guidance. Though earnings are a good enough indicator of a stock’s future performance, identifying growth drivers is not an easy task.
A company’s better-than-expected earnings may not always translate into a solid price appreciation due to some reasons that are not easy to identify. So, it is wise to depend on expert advice. One way to do this is to follow broker recommendations.
Brokers have a better understanding of stocks, deeper industry knowledge and a grasp over the economy at large. They scrutinize the company’s fundamentals and place them against the current economic backdrop to find out how the stock will fare as an investment option.
Brokers go through the company’s publicly available documents, attend conference calls and are in direct communication with top management. At times, to get more insight into the company’s products and services offered, they even communicate with customers.
After an in-depth research, brokers decide to rate the company’s stock. So, when an analyst upgrades a stock, you can easily rely on it.
Still solely depending on analyst recommendations is not the right way to build your investment portfolio. You should also take into consideration certain other factors to ensure solid returns.
Selecting the Winning Strategy
We have a screening strategy that will help in your search for 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 last four weeks.
Current Price greater than 5: The stocks must be trading 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 or 2: No matter whether market conditions are good or bad, stocks with a Zacks Rank #1 (Strong Buy) or 2 (Buy) 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.
Here are three of the five stocks that qualified the screening:
United Airlines Holdings, Inc. UAL, based in Chicago, IL provides air transportation services. Its earnings are expected to grow 24% in 2019. The stock, carrying a Zacks Rank #2, has witnessed 7.1% upward revision in broker ratings over the past four weeks.
Based in New York, American International Group, Inc. AIG provides insurance products for commercial, institutional, and individual customers. Its earnings are expected to surge 326.5% in 2019. The stock, carrying a Zacks Rank #2, has witnessed 8.3% upward revision in broker ratings over the past four weeks.
KBR, Inc. KBR, headquartered in Houston, TX, offers professional services and technologies across the asset and program life-cycle within the government services and hydrocarbons industries. Its earnings are expected to increase 9.2% in 2019. The stock, carrying a Zacks Rank #2, has witnessed 14.3% upward revision in broker ratings over the past four weeks.
Get the rest of the stocks on the list and start putting this and other ideas to the test. It can all be done with the Research Wizard stock picking and backtesting software.
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.
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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
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