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During an earnings season, market sentiments get easily influenced by corporate results and guidance. Though earnings performance is a good indicator of a stock’s future performance, identifying growth drivers is not always an easy task.
Hence, it is wise to seek help from the experts. One effective and easy way to pick profitable stocks is to follow rating upgrades by brokers as they have a deeper insight into stocks and the overall sectors.
Brokers thoroughly analyze a company’s publicly available documents, attend conference calls and are in direct communication with the top management. Further, at times, they talk to customers to understand what they like or dislike about the products and services offered by the company.
Thus, there’s an all-inclusive research behind the rating of a broker on a company’s stock. Following what the majority of brokers are saying about a stock can help you measure its potential. So, when a broker upgrades a stock, one can rely on their judgment.
Arguably, it’s not advisable to depend solely on brokers’ upgrades to build your portfolio. You must take other factors into consideration as well to ensure strong returns.
Choosing the Winning Strategy
We have a screening strategy that will help you 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 the five of the seven stocks that qualified the screening:
Sally Beauty Holdings, Inc. SBH is an international specialty retailer and distributor of professional beauty supplies. This Denton, TX-based company’s earnings for fiscal 2021 are projected to increase 52.5%. The stock, currently carrying a Zacks Rank #2, has witnessed 11.1% upward revision in broker ratings over the past four weeks.
Polaris Inc. PII designs, engineers, manufactures and markets power sports vehicles worldwide. This Medina, MN-based company’s earnings for 2021 are projected to grow at the rate of 6.3%. The stock, carrying a Zacks Rank #2 at present, has witnessed 9.1% upward revision in broker ratings over the past four weeks.
Headquartered in Fort Mill, SC, Domtar Corporation UFS manufactures and distributes a wide array of fiber-based products including communication papers, specialty and packaging papers and adult incontinence products. Its earnings for 2021 are projected to grow at the rate of 76.7%. The stock, currently sporting a Zacks Rank #1, has witnessed 10% upward revision in broker ratings over the past four weeks.
NuStar Energy L.P. NS is a master limited partnership that engages in the transportation and storage of crude oil as well as refined products. This San Antonio, TX-based company’s earnings are projected to increase 184.1% for 2021. The stock, carrying a Zacks Rank #2 at present, has witnessed 11.1% upward revision in broker ratings over the past four weeks.
Based in Miami, FL, World Fuel Services Corporation INT engages in the distribution of fuel, and related products and services. Its earnings for 2021 are projected to grow at the rate of 59.1%. The stock, currently carrying a Zacks Rank #2, has witnessed 50% 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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NuStar Energy L.P. (NS) : Free Stock Analysis Report
Sally Beauty Holdings, Inc. (SBH) : Free Stock Analysis Report
Polaris Inc. (PII) : Free Stock Analysis Report
World Fuel Services Corporation (INT) : Free Stock Analysis Report
Domtar Corporation (UFS) : Free Stock Analysis Report
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