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Buy These 4 Stocks on New Analyst Coverage

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·5 min read
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Coverage initiation on a stock by an analyst is not a random act. It takes thorough evaluation and substantial investor focus on the stock or its promising prospects.

Interestingly, stocks typically see an incremental upward price movement with new analyst coverage compared to what they witness with continuation of existing analyst coverage. Of course, the price movement depends on the recommendations from new analysts. Positive recommendations — Buy and Strong Buy — lead to a significant positive incremental price reaction than Strong Sell, Sell or Hold recommendations.

Moreover, if an analyst gives a new recommendation on a company that has limited or no analyst coverage, investors start taking notice. Also, any new information attracts portfolio managers to build a position in the stock.

However, one should preferably look for the average change in broker recommendation rather than a single recommendation change. Then again, an upgrade, an initiation or even increased coverage is equally important.

Keeping this in mind, it’s a good strategy to focus on the number of analyst recommendations that have increased over the past few weeks.

Below, we have selected four stocks that have seen increased analyst coverage over the past few weeks.

Screening Criteria

Number of Broker Ratings now greater than the Number of Broker Ratings four weeks ago (this will shortlist stocks that have recent new coverage).

Average Broker Rating less than Average Broker Rating four weeks ago ('less than' means 'better than' four weeks ago).

Increased analyst coverage and improving average rating are the primary criteria of this strategy but one should consider other relevant parameters to make the strategy foolproof.

Here are the other screening parameters:

Price greater than or equal to $5 (as a stock below $5 will not likely create significant interest for most investors).

Average Daily Volume greater than or equal to 100,000 shares (if volume isn’t enough, it will not attract individual investors).

Here are four of the 16 stocks that passed the screen:

Popular, Inc. BPOP: Headquartered in Hato Rey, Puerto Rico, this company provides various retail, mortgage, and commercial banking products as well as services in Puerto Rico and the United States. The stock currently carries a Zacks Rank #1 (Strong Buy) and has gained 40.3% year to date compared with the industry’s 35.5% rally. Earnings estimates for 2021 have moved up 19.2% over the past 30 days. The bottom line is expected to grow 57.8% for 2021. You can see the complete list of today’s Zacks #1 Rank stocks here.

Daqo New Energy Corp. DQ: Daqo — based in Shanghai, the People's Republic of China —manufactures and sells polysilicon to photovoltaic product manufactures in the country. This Zacks Rank #1 stock has gained 28.3% year to date compared with the industry’s 9.3% rise. Earnings estimates have moved up 16.8% over the past 30 days for 2021. Its earnings are expected to grow 255.2% for 2021.

Flushing Financial Corporation FFIC: Based in Uniondale, NY, this company operates as the bank holding company for Flushing Bank. This Zacks Rank #2 (Buy) stock has surged 45.1% year to date, outperforming the industry’s 29.4% gain. Earnings estimates have moved up 15.8% over the past 30 days for 2021. The company’s earnings are expected to grow 41.8% for 2021.

Titan Machinery Inc. TITN: Based in West Fargo, ND, this company is a dealer of diversified mix of agricultural, construction and consumer products in the upper Midwest. It presently carries a Zacks Rank #2 and has gained 30.7% year to date, underperforming the industry’s 37.5% rise. That said, earnings estimates have moved up 1.4% over the past 60 days for 2021, depicting analysts’ optimism over the stock’s growth potential. Earnings for the company are expected to grow 14.3% for the current fiscal year.

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.

Click here to sign up for a free trial to the Research Wizard today.

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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Popular, Inc. (BPOP) : Free Stock Analysis Report
 
Titan Machinery Inc. (TITN) : Free Stock Analysis Report
 
DAQO New Energy Corp. (DQ) : Free Stock Analysis Report
 
Flushing Financial Corporation (FFIC) : Free Stock Analysis Report
 
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