For Immediate Release
Chicago, IL – June 16, 2022 – Stocks in this week’s article are Standard Motor Products, Inc. SMP, GATX Corp. GATX, Nova Ltd. NVMI, AAR Corp. AIR and Arconic Corp. ARNC.
5 Stocks to Make the Most of New Analyst Coverage
As analysts are crucial information intermediaries in capital markets, initiation of coverage by them creates value for companies.
It is to be borne in mind that the lack of consistency in information creates inefficiencies that might result in misinterpretation of stocks (over- or under-valued). Thus, coverage initiation by analysts offers critical information on a stock, which is of great value to investors.
Standard Motor Products, Inc., GATX Corp., Nova Ltd., AAR Corp., and Arconic Corp. are some stocks that have seen new analyst coverage lately and are therefore expected to attract investors' attention.
Coverage initiation on a stock by analyst(s) usually depicts increased investor inclination. Investors, on their part, often assume that there is something in the stock that has attracted analyst attention. In other words, they believe that the company coming under the radar definitely has some value that can be tapped into.
Obviously, stocks are not arbitrarily chosen to cover. New coverage on a stock usually reflects an encouraging future envisioned by the analyst(s). At times, increased investor focus on a stock motivates analysts to take a closer look at it.
However, we have noticed that the average change in broker recommendation is preferred over a single recommendation change.
Analyst Coverage & Price Movement
Interestingly, the price movement is generally a function of the recommendations 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 positive price reaction than Hold recommendations. On the contrary, analysts hardly initiate coverage with a Strong Sell or Sell recommendation.
Now, if an analyst issues a new recommendation on a company that has limited 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.
Here are five out of the 18 stocks that passed the screen:
Standard Motor Products: Based in Long Island City, NY, this company manufactures and distributes replacement parts in the automotive aftermarket industry.
SMP currently carries a Zacks Rank #2 (Buy). The stock has declined 35.7% year to date (YTD) compared with the industry's 30.7% decline. That said, earnings estimates for fiscal 2022 have increased 3.1% over the past 30 days to $4.68 per share. The estimated figure calls for a 5.2% increase from the year-ago period. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
GATX Corp.: Based in Chicago, IL, GATX operates as a railcar leasing company in the United States and internationally.
GATX currently carries a Zacks Rank #2. The stock has lost 7.1% YTD compared with the industry's 18.4% drop. However, earnings estimates for 2022 have increased 2.3% over the past 30 days to $5.83 per share. The estimated figure calls for a 15.2% increase from the year-ago period.
Nova: Based in Rehovot, Israel, Nova is a provider of metrology solutions for advanced process control used in semiconductor manufacturing in Israel, Taiwan, the United States, China, Korea and internationally.
NVMI currently carries a Zacks Rank #2. The stock has lost 35.5% YTD compared with the industry's 27.9% drop. Yet, earnings estimates for 2022 have increased 21.8% over the past 30 days to $4.69 per share. The estimated figure calls for a 21.8% increase from the year-ago period.
AAR: Wood Dale, IL-based AAR provides various products and services to the aviation and defense industries worldwide.
AIR currently carries a Zacks Rank #3 (Hold). The stock has lost 10.4% YTD against the industry's 2.9% drop. Earnings estimates for 2022 calls for a 29.3% increase from the year-ago period.
Arconic: Based in Pittsburgh, PA, manufactures and sells aluminum sheets, plates, extrusions, and architectural products in the United States and internationally.
ARNC currently carries a Zacks Rank #3. The stock has lost 18.2% YTD against the industry's 6.2% drop. Nonetheless, earnings estimates for 2022 calls for a 183.2% increase from the year-ago period. Earnings estimates for 2022 have increased 0.8% over the past 30 days to $2.53 per share.
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For the rest of this Screen of the Week article please visit Zacks.com at: https://www.zacks.com/stock/news/1939168/5-stocks-to-make-the-most-of-new-analyst-coverage
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