5 Broker-Loved Stocks to Watch in an Uncertain Scenario
After performing well in the first half of the year, driven by the AI boom, Wall Street has been faltering in the second half. Factors like the Israel-Hamas conflict, rising oil prices, still high inflation and an average third-quarter 2023 earnings performance so far have contributed to the southward movement witnessed by U.S. equity markets.
Despite this uncertain scenario, investors should not turn their backs on stocks. In fact, broker-loved stocks like The Greenbrier Companies GBX, AMC Entertainment AMC, The Gap GPS, Asbury Automotive Group ABG and Cencora COR should be on an investor’s radar for healthy returns amid this turbulence.
Here’s Why Following Broker Advice Works Wonders
Brokers have an in-depth understanding of stocks and great knowledge of the industry and the broader economy. They scrutinize the company’s fundamentals and place them against the prevalent economic scenario to find out how attractive a stock is as an investment option or otherwise.
Only after undertaking thorough research, brokers arrive at their recommendation (buy, sell or hold) on a stock. Such well-researched information is not available to individual investors. So, they, in the absence of proper guidance, may end up selecting the wrong stocks in their portfolio. This might result in their hard-earned money, which they have invested in stock markets, going down the drain. To avoid such an unfortunate scenario from materializing, it is highly desirable for investors to be guided by broker advice while deciding their course of action on a particular stock.
Formulating a Winning Portfolio
We have designed a screener to arrive at stocks based on improving analyst recommendations and upward earnings estimate revisions over the last four weeks. However, considering only these factors does not make our strategy foolproof, as the top line has not been considered.
Actually, according to many market watchers, a top-line outperformance is more credible for a company than a mere earnings outperformance. To address top-line concerns, we have included the price/sales ratio in our screener as it 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).
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 criterion are in the bottom 10% of our universe of over 7,700 stocks with respect to this ratio).
Price greater than 5 (as a stock trading below $5 will not likely create significant interest for most of the investors).
Average Daily Volume greater than 100,000 shares over the last 20 trading days (Volume has to be significant to ensure that these are easily traded).
Market value ($ 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:
The Greenbrier Companies is a leading supplier of transportation equipment and services to the railroad and related industries. GBX’s manufacturing segment produces double-stack intermodal railcars, conventional railcars and marine vessels and performs repair and refurbishment activities for both intermodal and conventional railcars.
GBX is also engaged in complementary leasing and services activities. Greenbrier Europe is an end-to-end freight railcar manufacturing, engineering and repair business with operations in Poland & Romania and serves customers across Europe and the Middle East. We are impressed by the company’s efforts to pay dividends even in the current uncertain scenario. GBX currently carries a Zacks Rank #3 (Hold).
AMC Entertainment operates as a theatrical exhibition company. It owns interests in theaters and screens. The Zacks Consensus Estimate for the current year has increased 17.6% over the past 60 days. AMC currently carries a Zacks Rank #2 (Buy).
The Gap is a premier international specialty retailer offering a diverse range of clothing, accessories and personal care products. GPS offers products for men, women and children under the Old Navy, Gap, Banana Republic, Athleta, Intermix and Hill City brands.
The Gap’s expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for current-year earnings has improved 4.4% over the past 60 days. GPS currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Asbury Automotive Group, which operates as an automotive retailer in the United States, carries a Zacks Rank #2 presently. Asbury’s diversified product mix and multiple streams of income bode well.
Asbury Automotive Group has a trailing four-quarter earnings surprise of 5.6%, on average. Shares of ABG have gained 18.3% in a year’s time.
Chesterbrook, PA-based Cencora is one of the world’s largest pharmaceutical services companies. The company should benefit from the strength in the U.S. Healthcare Solutions business. Cencora currently carries a Zacks Rank #2.
The Zacks Consensus Estimate for the current year has inched up 0.8% over the past 90 days. COR has outpaced the Zacks Consensus Estimate for earnings in each of the last four quarters by an average of 3.45%.
You can get the rest of the stocks on this list by signing up now for a 2-week free trial to the Research Wizard stock picking and backtesting software. You can also create your own strategies and test them first before making investments.
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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The Gap, Inc. (GPS) : Free Stock Analysis Report
Cencora, Inc. (COR) : Free Stock Analysis Report
Asbury Automotive Group, Inc. (ABG) : Free Stock Analysis Report
Greenbrier Companies, Inc. (The) (GBX) : Free Stock Analysis Report
AMC Entertainment Holdings, Inc. (AMC) : Free Stock Analysis Report
