The earnings season has already begun and investors are concerned about the financial performance of the companies. But taking investment decisions based on quarterly performance is not wise. Though earnings performance is a good enough indicator of a stock’s prospects, identifying future growth drivers is not always an easy task.
Therefore, it is advisable 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 also 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 an in-depth research, brokers decide to rate the company’s stock. So, when a broker upgrades a stock, you can easily rely on it.
Still, solely depending on analyst recommendations is not the right way to build your investment portfolio. You should also take into consideration certain other factors to ensure solid 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.
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 five stocks that qualified the screening:
Integer Holdings (NYSE:ITGR), based in Frisco, TX, is a medical device outsource manufacturer. Its 2018 earnings are expected to rise 19.9%. The stock, sporting a Zacks Rank #1, has witnessed 33.3% upward revision in broker ratings over the past four weeks.
Louisiana-Pacific Corporation (NYSE:LPX), headquartered in Nashville, TN, manufactures building products as well as light industrial and commercial construction applications. Its earnings are expected to increase 26.2% in 2018. The stock, carrying a Zacks Rank #2, has witnessed 14.3% upward revision in broker ratings over the past four weeks.
Knight-Swift Transportation (NYSE:KNX) provides truckload transportation and logistics services. Current-year earnings for this Phoenix, AZ-based company are projected to jump 66.7%. The stock, carrying a Zacks Rank #2, has witnessed 7.1% upward revision in broker ratings over the past four weeks.
Bonita Springs, FL-based Herc Holdings (NYSE:HRI) operates as an equipment rental supplier. The company’s earnings are expected to surge 512.5% in 2018. The stock, sporting a Zacks Rank #1, has witnessed 25% upward revision in broker ratings over the past four weeks.
Eaton (NYSE:ETN), headquartered in Dublin, Ireland, operates as a power management company. Its 2018 earnings are expected to increase 12.5%. The stock, with a Zacks Rank #2, has witnessed 7.1% upward estimate revision in the broker ratings over the past four weeks.
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.
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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