With a plethora of earnings reports flooding the market during the reporting cycle, pinpointing outperformers or well-performing stocks is by no means an easy task for individual investors. In the absence of proper guidance, identifying a winning stock is akin to searching for ‘a needle in a haystack’, for an investor. The proper guidance, in this respect, comes from brokers, who are deemed experts, equipped with vast knowledge and know how as far the field of investing is concerned.
Of the three types of brokers/analysts (sell-side, buy-side and independent) present in the investment world, sell-side analysts are most common. Various brokerage firms employ them to provide unbiased opinion to investors after thorough research. Buy-side analysts are employed by hedge funds, mutual funds etc. while the independent ones simply sell their reports to investors.
Brokers, not only scrutinize the publicly available financial documents, but also attend company conference calls and other presentations. Naturally, it is in the best interest of investors to pay heed to such well-researched information as they aim to generate maximum returns from their portfolio. Estimate revisions serve as an important pointer regarding the price of a stock.
We have designed a screen to shortlist stocks based on improving analyst recommendation and upward revisions to 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 has also been included. The price/sales ratio takes care of the company’s top line thereby making the strategy foolproof.
# (Up- Down Rating)/ Total (4 weeks) =Top #75: This gives the list of the top 75 companies that have witnessed net upgrades over the last four 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 four weeks for the upcoming quarter.
To ensure that the strategy is a winning one, covering all bases, we have added the following screening parameters:
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: A stock trading below $5 will not likely create significant interest for most investors.
Average Daily Volume greater than 100,000 shares over the last 20 trading days: Volume has to be significant to ensure that these are easily traded.
Market value ($ mil) = Top #3000: This gives us stocks that are the top 3000 if one judges by 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:
Mammoth Energy Services TUSK is an oilfield services provider with a variety of equipment, maintenance, and engineering and construction offerings to the energy sector. The stock carries a Zacks Rank #3 (Hold). The company has outshined the Zacks Consensus Estimate for earnings in two of the trailing four quarters. The average beat is 31.1%.
Ashford Hospitality Trust AHT is based in Dallas, TX. The company is an externally-advised REIT focused on investing in the hospitality industry. Ashford sports a Zacks Rank #1 (Strong Buy). The Zacks Consensus Estimate for the current year has improved 13.9% over the past 60 days. You can see the complete list of today’s Zacks #1 Rank stocks here.
Diebold Nixdorf, Incorporated DBD is a provider of connected commerce solutions to financial institutions. This Zacks Rank #2 (Buy) Ohio-based company provides automatic teller machines, financial and point-of-sale services. The Zacks Consensus Estimate for the current year has increased 30.4% over the past 60 days.
Brookdale Senior Living BKD is a leading owner and operator of senior living facilities throughout the United States. The stock carries a Zacks Rank #3. The company’s earnings per share are expected to grow at 13% (next three to five years), which compares favorably with its industry’s growth rate of 12.2%.
Leawood, KS-based AMC Entertainment Holdings AMC operates as a theatrical exhibition company primarily in the United States. The stock currently has a Zacks Rank #3. The company has outshined the Zacks Consensus Estimate for earnings in two of the trailing four quarters. The average beat is 42.1%.
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.
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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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Diebold Nixdorf, Incorporated (DBD) : Free Stock Analysis Report
AMC Entertainment Holdings, Inc. (AMC) : Free Stock Analysis Report
Brookdale Senior Living Inc. (BKD) : Free Stock Analysis Report
Ashford Hospitality Trust Inc (AHT) : Free Stock Analysis Report
Mammoth Energy Services, Inc. (TUSK) : Free Stock Analysis Report
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