At present, the macroeconomic backdrop continues to be volatile. Hence, it is difficult for individual investors to pick stocks independently and generate solid returns.
One way to choose the right stocks in the current situation is to follow rating upgrades by brokers. In this regard, stocks like Abercrombie & Fitch Co. ANF, Owens Corning OC, Belden Inc. BDC, Hexcel Corporation HXL and Consolidated Water Co. Ltd. CWCO are worth a look.
As brokers directly communicate with the top management, they have a better insight into what is happening in a particular company. They accurately evaluate companies’ publicly available documents and even attend conference calls.
Brokers have more understanding of the overall sector and industry. They place company fundamentals against the current economic backdrop to determine how a particular stock will fare as an investment.
Hence, when brokers upgrade a stock, you can rely on their judgment. But solely depending on broker upgrades is not a good way to build your investment portfolio. Several other factors should be taken into consideration to ensure steady returns.
Selecting 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 trade 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: Despite good or bad market conditions, 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 five of the 11 stocks that qualified for the screening:
New Albany, OH-based Abercrombie & Fitch is a specialty retailer of premium, high-quality casual apparel for men, women and kids. ANF sells its products through a network of more than 750 stores across North America, Europe, Asia and the Middle East, as well as e-commerce sites.
ANF’s earnings for fiscal 2024 are expected to surge 1600%. Abercrombie & Fitch, currently sporting a Zacks Rank #1, has witnessed a 12.5% upward revision in broker ratings over the past four weeks.
Headquartered in Toledo, OH, Owens Corning is a world leader in building materials systems and composite solutions. OC’s products include glass fiber that is used to support composite materials for transportation, electronics, marine, infrastructure, wind energy and other high-performance markets for insulation as well as roofing for residential, commercial and industrial applications.
Owens Corning’s 2023 earnings are projected to increase 5.5%. OC, sporting a Zacks Rank #1 at present, has witnessed an 8.3% upward revision in broker ratings over the past four weeks.
Belden, based in Saint Louis, MO, offers a portfolio of signal transmission solutions in the Americas, Europe, the Middle East, Africa and the Asia-Pacific. BDC operates through two segments -- Enterprise Solutions and Industrial Automation Solutions.
Belden’s 2023 earnings are projected to rise 13.4%. BDC, carrying a Zacks Rank #2 at present, has witnessed a 25% upward revision in broker ratings over the past four weeks.
Stamford, CT-based Hexcel develops, manufactures and distributes lightweight, high-performance structural materials for use in the Commercial Aerospace, Space & Defense and Industrial markets. HXL serves international markets through manufacturing facilities located in the United States, Asia Pacific, Europe, Russia and Africa.
HXL’s earnings for 2023 are expected to jump 50%. Hexcel, currently carrying a Zacks Rank #2, has witnessed a 7.9% upward revision in broker ratings over the past four weeks.
Headquartered in the Cayman Islands, Consolidated Water is involved in the development and operation of seawater desalination plants and water distribution systems in areas where naturally occurring supplies of potable water are scarce or nonexistent. CWCO also focuses on expanding operations in areas with a large proportion of tourist properties and a growing population.
Consolidated Water’s 2023 earnings are projected to surge 164.8%. CWCO, carrying a Zacks Rank #2 at present, has witnessed a 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.
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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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