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5 Broker-Favorite Stocks to Withstand the Current Market Mayhem
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Fears of a forthcoming recession gripped the U.S. markets, causing extreme uncertainty and volatility. With inflation at sky-high levels, the Fed adopted a hawkish stance to bring down the prices. After hiking the benchmark interest rate by 25, 50 and 75 basis points in the last three FOMC meetings in March, May and June, respectively, the central bank indicated that another rate hike of 50 to 75 basis points is almost certain in July.
Headwinds like rising energy and food prices in addition to supply-chain disruptions are rendering volatility to the stock market. The S&P 500, the Tech-heavy Nasdaq and the Dow Jones Industrial Average have declined in double-digits on a year-to-date basis.
However, this sorry state of affairs in no way spooks investors to avert stocks. In fact, broker-friendly stocks like C.H. Robinson Worldwide (CHRW - Free Report) ,Bunge Limited (BG - Free Report) , Cross Country Healthcare (CCRN - Free Report) , Bread Financial (BFH - Free Report) and CommercialMetalsCompany (CMC - Free Report) should be on investors’ watchlist.
Why is Broker Advice Useful?
Brokers have a better understanding of stocks, deeper knowledge of the industry and a firm grasp over the broader economy. They scrutinize the company’s fundamentals and place them against the prevailing economic backdrop to determine the attractiveness or otherwise of a stock as an investment option.
Since brokers arrive at their recommendation (buy, sell or hold) on a stock after thoroughly analyzing the nitty-gritties associated with the company, it is advisable for investors to be guided by their direction of estimate revisions while deciding on a particular stock. The estimate revisions serve as an important pointer regarding the price of a stock. Estimates can move north for a number of reasons like favorable earnings performance, bullish guidance, product launch or any upbeat macro scenario.
One of the well-accepted investment strategies is maintaining a diversified portfolio to generate handsome returns irrespective of market conditions. For instance, in the face of extremely low oil prices, analysts adopt an optimistic stance on airline stocks and raise estimates. Naturally, adding such stocks to one’s portfolio in the given scenario might prove to be a bullish strategy.
Formulating a Winning Portfolio
We designed a screener to arrive at a basket of stocks based on improving analyst recommendations and upward earnings estimate revisions over the last four weeks. However, considering only these factors does not make our strategy foolproof as the top line also needs to be considered.
Actually, according to many market watchers, a top-line outperformance is more creditable for a company than a mere earnings outperformance. To address top-line concerns, we included the price/sales ratio in our screener, which serves as a strong complementary valuation metric.
Screening Criteria
# (Up- Down Rating)/ Total (4 weeks) =Top #75(This gives the list of top 75 companies that have witnessed net upgrades over the last 4 weeks).
% change in Q (1) est. (4 weeks) = Top #10(This gives the top 10 stocks that have witnessed earnings estimate revisions over the past 4 weeks for the upcoming quarter).
We have also added the following screening parameters to ensure that the strategy is a winning one:
Price-to-Sales = Bot%10(The lower the ratio the better, companies meeting this criteria are in bottom 10% of our universe of over 7,700 stocks with respect to this ratio).
Price greater than 5(as a stock trading below $5 will not likely create significant interest for most of the investors).
Average Daily Volume greater than 100,000 shares over the last 20 trading days(Volume has to be significant to ensure that these are easily traded).
Market value ($ mil) = Top #3000(This gives us stocks that are the top 3000 in terms of market capitalization).
Com/ADR/Canadian= Com(This takes out the ADR and Canadian stocks).
Here are five of the 10 stocks that made it through the screen:
C.H. Robinson Worldwide, currently carrying a Zacks Rank #2 (Buy), operates as an asset-light logistics player. The improving freight scenario in the United States is aiding this Minnesota-based freight broker. Efforts to control costs also bode well. Measures to reward CHRW's shareholders instill further confidence in the stock.
C.H. Robinson has an impressive earnings track record. The bottom line surpassed the Zacks Consensus Estimate in three of the trailing four quarters (missing the mark in the remaining one), the average surprise being 17.1%. CHRW has witnessed the Zacks Consensus Estimate for 2022 earnings being revised 0.7% upward over the past 60 days.
Bunge Limited: Headquartered in St. Louis, MO, Bunge operates as an agribusiness firm, delivering essential food, feed and fuel across the globe. BG is reportedly the world’s leader in oilseed processing and a leading producer and supplier of specialty plant-based oils and fats.
Bunge delivered a trailing four-quarter earnings surprise of 69.7%, on average. BG has a long-term earnings growth expectation of 6.7%. BG currently carries a Zacks Rank #3 (Hold).
Cross Country Healthcare is a leading provider of innovative healthcare workforce solutions and staffing services in the United Sates. CCRN’s diverse client base includes both clinical and non-clinical settings, physician practice groups, outpatient and ambulatory-care centers, nursing facilities, public schools and charter schools, rehabilitation and sports medicine clinics, plus government facilities and homecare.
Cross Country Healthcare currently has a Zacks Rank of 3 and an expected earnings growth rate of 55.9% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 4.4% over the past 60 days.
Bread Financial iscurrently Zacks #3 Ranked. Organic growth, higher average loan balances, improved loan yields and a solid cash position are key positives for BFH. BFH also has a strong balance sheet by virtue of its solid liquidity.
Bread Financial has an impressive earnings track record. The bottom line surpassed the Zacks Consensus Estimate in three of the trailing four quarters (missing the mark in the remaining one), the average surprise being 58.7%. BFH has witnessed the Zacks Consensus Estimate for 2022 earnings being revised 1.6% upward over the past 60 days.
Commercial Metals presently has a Zacks Rank of 1 and an expected earnings growth rate of 152.9% for the current fiscal year. The consensus estimate for CMC's current-quarter earnings has been revised 54.9% upward over the past 60 days.
Commercial Metals’ earnings beat the Zacks Consensus Estimate in three of the last four quarters and missed the mark once. CMC has a trailing four-quarter earnings surprise of 15.1%, on average. Shares of CMC have gained 10.4% in a year’s time.
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 Broker-Favorite Stocks to Withstand the Current Market Mayhem
Fears of a forthcoming recession gripped the U.S. markets, causing extreme uncertainty and volatility. With inflation at sky-high levels, the Fed adopted a hawkish stance to bring down the prices. After hiking the benchmark interest rate by 25, 50 and 75 basis points in the last three FOMC meetings in March, May and June, respectively, the central bank indicated that another rate hike of 50 to 75 basis points is almost certain in July.
Headwinds like rising energy and food prices in addition to supply-chain disruptions are rendering volatility to the stock market. The S&P 500, the Tech-heavy Nasdaq and the Dow Jones Industrial Average have declined in double-digits on a year-to-date basis.
However, this sorry state of affairs in no way spooks investors to avert stocks. In fact, broker-friendly stocks like C.H. Robinson Worldwide (CHRW - Free Report) ,Bunge Limited (BG - Free Report) , Cross Country Healthcare (CCRN - Free Report) , Bread Financial (BFH - Free Report) and Commercial Metals Company (CMC - Free Report) should be on investors’ watchlist.
Why is Broker Advice Useful?
Brokers have a better understanding of stocks, deeper knowledge of the industry and a firm grasp over the broader economy. They scrutinize the company’s fundamentals and place them against the prevailing economic backdrop to determine the attractiveness or otherwise of a stock as an investment option.
Since brokers arrive at their recommendation (buy, sell or hold) on a stock after thoroughly analyzing the nitty-gritties associated with the company, it is advisable for investors to be guided by their direction of estimate revisions while deciding on a particular stock. The estimate revisions serve as an important pointer regarding the price of a stock. Estimates can move north for a number of reasons like favorable earnings performance, bullish guidance, product launch or any upbeat macro scenario.
One of the well-accepted investment strategies is maintaining a diversified portfolio to generate handsome returns irrespective of market conditions. For instance, in the face of extremely low oil prices, analysts adopt an optimistic stance on airline stocks and raise estimates. Naturally, adding such stocks to one’s portfolio in the given scenario might prove to be a bullish strategy.
Formulating a Winning Portfolio
We designed a screener to arrive at a basket of stocks based on improving analyst recommendations and upward earnings estimate revisions over the last four weeks. However, considering only these factors does not make our strategy foolproof as the top line also needs to be considered.
Actually, according to many market watchers, a top-line outperformance is more creditable for a company than a mere earnings outperformance. To address top-line concerns, we included the price/sales ratio in our screener, which serves as a strong complementary valuation metric.
Screening Criteria
# (Up- Down Rating)/ Total (4 weeks) =Top #75(This gives the list of top 75 companies that have witnessed net upgrades over the last 4 weeks).
% change in Q (1) est. (4 weeks) = Top #10(This gives the top 10 stocks that have witnessed earnings estimate revisions over the past 4 weeks for the upcoming quarter).
We have also added the following screening parameters to ensure that the strategy is a winning one:
Price-to-Sales = Bot%10(The lower the ratio the better, companies meeting this criteria are in bottom 10% of our universe of over 7,700 stocks with respect to this ratio).
Price greater than 5(as a stock trading below $5 will not likely create significant interest for most of the investors).
Average Daily Volume greater than 100,000 shares over the last 20 trading days(Volume has to be significant to ensure that these are easily traded).
Market value ($ mil) = Top #3000(This gives us stocks that are the top 3000 in terms of market capitalization).
Com/ADR/Canadian= Com(This takes out the ADR and Canadian stocks).
Here are five of the 10 stocks that made it through the screen:
C.H. Robinson Worldwide, currently carrying a Zacks Rank #2 (Buy), operates as an asset-light logistics player. The improving freight scenario in the United States is aiding this Minnesota-based freight broker. Efforts to control costs also bode well. Measures to reward CHRW's shareholders instill further confidence in the stock.
C.H. Robinson has an impressive earnings track record. The bottom line surpassed the Zacks Consensus Estimate in three of the trailing four quarters (missing the mark in the remaining one), the average surprise being 17.1%. CHRW has witnessed the Zacks Consensus Estimate for 2022 earnings being revised 0.7% upward over the past 60 days.
You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks
Bunge Limited: Headquartered in St. Louis, MO, Bunge operates as an agribusiness firm, delivering essential food, feed and fuel across the globe. BG is reportedly the world’s leader in oilseed processing and a leading producer and supplier of specialty plant-based oils and fats.
Bunge delivered a trailing four-quarter earnings surprise of 69.7%, on average. BG has a long-term earnings growth expectation of 6.7%. BG currently carries a Zacks Rank #3 (Hold).
Cross Country Healthcare is a leading provider of innovative healthcare workforce solutions and staffing services in the United Sates. CCRN’s diverse client base includes both clinical and non-clinical settings, physician practice groups, outpatient and ambulatory-care centers, nursing facilities, public schools and charter schools, rehabilitation and sports medicine clinics, plus government facilities and homecare.
Cross Country Healthcare currently has a Zacks Rank of 3 and an expected earnings growth rate of 55.9% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 4.4% over the past 60 days.
Bread Financial iscurrently Zacks #3 Ranked. Organic growth, higher average loan balances, improved loan yields and a solid cash position are key positives for BFH. BFH also has a strong balance sheet by virtue of its solid liquidity.
Bread Financial has an impressive earnings track record. The bottom line surpassed the Zacks Consensus Estimate in three of the trailing four quarters (missing the mark in the remaining one), the average surprise being 58.7%. BFH has witnessed the Zacks Consensus Estimate for 2022 earnings being revised 1.6% upward over the past 60 days.
Commercial Metals presently has a Zacks Rank of 1 and an expected earnings growth rate of 152.9% for the current fiscal year. The consensus estimate for CMC's current-quarter earnings has been revised 54.9% upward over the past 60 days.
Commercial Metals’ earnings beat the Zacks Consensus Estimate in three of the last four quarters and missed the mark once. CMC has a trailing four-quarter earnings surprise of 15.1%, on average. Shares of CMC have gained 10.4% in a year’s time.
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