For Immediate Release
Chicago, IL – March 29, 2019 – Stocks in this week’s article include Methode Electronics, Inc. MEI, Walker & Dunlop, Inc. WD, Marker Therapeutics, Inc. MRKR, Chemed Corporation CHE and Olympic Steel, Inc. ZEUS. Kevin Matras screens for companies showing their 'first' profit and explains why they are ones to watch.
Screen of the Week written by Kevin Matras of Zacks Investment Research:
These Stocks Make Great Buys on New Analyst Coverage
Most investors have immense confidence in the research work of analysts as they fear that misinterpretations while exploring on their own might trigger inefficiencies. Here, analysts play a vital intermediary role with their extensive access to relevant data.
Coverage initiation on a stock by analyst(s) usually portrays higher investor inclination. Investors, on their part, often assume that there is something special in a stock to attract analysts to cover it. In other words, they believe that the company coming under the microscope definitely holds some value.
Obviously, stocks are not randomly chosen to cover. New coverage on a stock usually reflects a reassuring future envisioned by the analyst(s). At times, increased investor focus on a stock motivates analysts to take a closer look at it. After all, who doesn’t like to produce something that is already in demand? Hence, we often find that analysts’ ratings on newly added stocks are more favorable than their ratings on continuously covered stocks.
Needless to say, the average change in broker recommendation is preferred over a single recommendation change.
Impact of Analyst Coverage on Stock Price
The price movement of a stock is generally a function of the recommendations on it from new analysts. Stocks typically see an upward price movement with a new analyst coverage compared to what they witness with a rating upgrade under an existing coverage. Positive recommendations — Buy and Strong Buy — generally lead to a significantly more positive price reaction than Hold recommendations. On the contrary, analysts hardly initiate coverage with a Strong Sell or Sell recommendation.
Now, if an analyst gives a new recommendation on a company that has very few or no existing coverage, investors start paying more attention to it. Also, any new information attracts portfolio managers to build a position in the stock.
So, it’s a good strategy to bet on stocks that have seen increased analyst coverage over the last few weeks.
For the rest of this Screen of the Week article please visit Zacks.com at: https://www.zacks.com/stock/news/365909/these-5-stocks-make-great-buys-on-new-analyst-coverage
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Methode Electronics, Inc. (MEI) : Free Stock Analysis Report
Walker & Dunlop, Inc. (WD) : Free Stock Analysis Report
Chemed Corporation (CHE) : Free Stock Analysis Report
Olympic Steel, Inc. (ZEUS) : Free Stock Analysis Report
MARKER THERAPEUTICS, INC. (MRKR) : Free Stock Analysis Report
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