During an earnings season, market sentiment is largely influenced by corporate results and guidance. Though earnings performance is a good indicator of a stock’s future performance, identifying future growth drivers is not always an easy task.
A company’s better-than-expected earnings may not always translate into a solid price appreciation for its stock due to reasons that are difficult to identify. Hence, it is wise to depend on expert advice. One way to do this is to follow broker recommendations.
Brokers have a better understanding of stocks, deeper industry knowledge and a grasp over the economy at large. They scrutinize the company’s fundamentals and place them against the current economic backdrop to find out how the stock will fare as an investment option.
Brokers go through the company’s publicly available documents, attend conference calls and are in direct communication with the top management. At times, to get more insight into the company’s products and services offered, they even communicate with customers.
After a thorough research, brokers decide to rate stocks. Therefore, by following broker rating upgrades, you can easily find promising investment picks.
Nonetheless, solely depending on broker recommendations is not the right way to build your investment portfolio. You should also take into consideration certain other factors to ensure strong returns.
Choosing the Winning Strategy
We have a screening strategy that will help 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 10 stocks that qualified the screening:
Delta Air Lines, Inc. DAL provides scheduled air transportation for passengers and cargo. This Atlanta, GA-based company’s 2020 earnings are expected to increase 8.2%. The stock, carrying a Zacks Rank #2, has witnessed 7.7% upward revision in broker ratings over the past four weeks.
Based in Issaquah, WA, Costco Wholesale Corporation COST sells high volumes of foods and general merchandise (including household products and appliances) at discounted prices through membership warehouses. Its earnings are expected to grow 4.9% in fiscal 2020. The stock, carrying a Zacks Rank #2, has witnessed 5% upward revision in broker ratings over the past four weeks.
Headquartered in Mechanicsville, VA, Owens & Minor, Inc. OMI operates as a healthcare solutions company. Its earnings are expected to grow 27.3% in 2020. The stock, carrying a Zacks Rank #2, has witnessed 33.3% upward revision in broker ratings over the past four weeks.
Based in Houston, TX, EOG Resources, Inc. EOG explores, develops, produces and markets crude oil and natural gas. Its 2020 earnings are expected to rise 7.1%. The stock, carrying a Zacks Rank #2, has witnessed 5% upward revision in broker ratings over the past four weeks.
JELD-WEN Holding, Inc. JELD manufactures and sells doors and windows. This Charlotte, NC-based company’s 2020 earnings are expected to increase 32.4%. The stock, carrying a Zacks Rank #2, has witnessed 14.3% 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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Delta Air Lines, Inc. (DAL) : Free Stock Analysis Report
JELD-WEN Holding, Inc. (JELD) : Free Stock Analysis Report
Owens & Minor, Inc. (OMI) : Free Stock Analysis Report
EOG Resources, Inc. (EOG) : Free Stock Analysis Report
Costco Wholesale Corporation (COST) : Free Stock Analysis Report
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