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New analyst coverage unearths extensive data on stocks for investors. As analysts are privy to vital information, which is crucial for investment decisions, they are much relied on as lack of information creates chances of misinterpretation (over- or under-valued).
Analysts don’t add a stock to their coverage randomly. New coverage on a stock is usually the result of huge investor focus on it 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 the 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 paying more attention to it. 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 mind, it’s a good strategy to focus on the number of analyst recommendations that have increased over the last few weeks.
Below, we have selected five stocks that have seen increased analyst coverage over the last 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 five of 12 stocks that passed the screen:
Catalyst Biosciences, Inc. : Headquartered in South San Francisco, CA, this clinical-stage biopharmaceutical company currently carries a Zacks Rank #2 (Buy). The stock has gained 12.2% over the past three months against its industry’s 5.1% decline. Loss estimates have narrowed to $2.69 per share from $3.10 over the past seven days. The bottom line for the current year is expected to increase 41.5%.
UFP Industries, Inc. (UFPI - Free Report) : Based in Grand Rapids, MI, this company designs, manufactures, and markets wood and wood-alternative products. The stock currently carries a Zacks Rank #3 (Hold). It has outperformed its industry year to date. Its earnings estimates for 2020 have climbed 14.5% to $3.80 per share over the past 30 days. Earnings for the current year are expected to increase 30.6%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
VeriSign, Inc. (VRSN - Free Report) : Based in Reston, VA, this company provides domain name registry services and Internet infrastructure. This stock currently carries a Zacks Rank #3. Although the stock has underperformed its industry over the past three months, its earnings estimates for 2020 have climbed 4.2% over the past 30 days, depicting analyst optimism over the company’s earnings growth potential. Earnings for the current year are expected to increase 31.5%.
InMode Ltd. (INMD - Free Report) : Headquartered in Yokneam, Israel, this company is a provider of medical technologies. The stock currently carries a Zacks Rank #3. The company has gained 37.8% in the past three months versus its industry’s 8.5% rise. The company’s trailing 12-month return on equity (ROE) is currently pegged at 27.2% versus the industry average of a negative 6.7%.
Castle Biosciences, Inc. (CSTL - Free Report) : Headquartered in Friendswood, TX, this commercial-stage dermatological cancer company currently carries a Zacks Rank #3. The company has gained 19.4% in the past three months versus its industry’s 5.1% decline. The bottom line for the current year is expected to increase 47.6%.
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.
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.
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5 Stocks Set to Pop on New Analyst Coverage
New analyst coverage unearths extensive data on stocks for investors. As analysts are privy to vital information, which is crucial for investment decisions, they are much relied on as lack of information creates chances of misinterpretation (over- or under-valued).
Analysts don’t add a stock to their coverage randomly. New coverage on a stock is usually the result of huge investor focus on it 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 the 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 paying more attention to it. 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 mind, it’s a good strategy to focus on the number of analyst recommendations that have increased over the last few weeks.
Below, we have selected five stocks that have seen increased analyst coverage over the last 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 five of 12 stocks that passed the screen:
Catalyst Biosciences, Inc. : Headquartered in South San Francisco, CA, this clinical-stage biopharmaceutical company currently carries a Zacks Rank #2 (Buy). The stock has gained 12.2% over the past three months against its industry’s 5.1% decline. Loss estimates have narrowed to $2.69 per share from $3.10 over the past seven days. The bottom line for the current year is expected to increase 41.5%.
UFP Industries, Inc. (UFPI - Free Report) : Based in Grand Rapids, MI, this company designs, manufactures, and markets wood and wood-alternative products. The stock currently carries a Zacks Rank #3 (Hold). It has outperformed its industry year to date. Its earnings estimates for 2020 have climbed 14.5% to $3.80 per share over the past 30 days. Earnings for the current year are expected to increase 30.6%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
VeriSign, Inc. (VRSN - Free Report) : Based in Reston, VA, this company provides domain name registry services and Internet infrastructure. This stock currently carries a Zacks Rank #3. Although the stock has underperformed its industry over the past three months, its earnings estimates for 2020 have climbed 4.2% over the past 30 days, depicting analyst optimism over the company’s earnings growth potential. Earnings for the current year are expected to increase 31.5%.
InMode Ltd. (INMD - Free Report) : Headquartered in Yokneam, Israel, this company is a provider of medical technologies. The stock currently carries a Zacks Rank #3. The company has gained 37.8% in the past three months versus its industry’s 8.5% rise. The company’s trailing 12-month return on equity (ROE) is currently pegged at 27.2% versus the industry average of a negative 6.7%.
Castle Biosciences, Inc. (CSTL - Free Report) : Headquartered in Friendswood, TX, this commercial-stage dermatological cancer company currently carries a Zacks Rank #3. The company has gained 19.4% in the past three months versus its industry’s 5.1% decline. The bottom line for the current year is expected to increase 47.6%.
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