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2 Stock to Watch as New Analysts Initiate Coverage
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New analyst coverage can indeed be highly beneficial for investors and plays a significant role in the financial markets. Analysts often have extensive knowledge and expertise in specific industries or sectors. Their research and analysis can provide investors with valuable insights into a company's financial health, growth prospects, competitive position and industry trends. This information can be difficult for individual investors to obtain on their own.
Recently, few stocks, including Lancaster Colony Corporation (LANC - Free Report) and SharkNinja, Inc. (SN - Free Report) have attracted the attention of analysts, signaling value and growth opportunities for investors.
Analysts don't randomly choose which stocks to cover. Their decision is typically driven by significant investor interest or promising prospects associated with a particular stock.
An interesting observation is that when stocks receive new analyst coverage, they often experience gradual upward price movements compared to those already covered by analysts. The magnitude of this price movement is influenced by the recommendations made by the new analysts. Positive recommendations like "Buy" and "Strong Buy" tend to result in more substantial positive price reactions than "Strong Sell," "Sell," or "Hold" recommendations.
When an analyst provides a new recommendation for a company with limited or no prior analyst coverage, investors pay increased attention to the stock. Additionally, portfolio managers may become interested in building positions in such stocks due to the fresh information.
Rather than focusing solely on a single recommendation change, it is advisable to consider the average change in broker recommendations. Upgrades, initiations, and increased coverage by multiple analysts carry equal significance in assessing a stock's potential.
To create a prudent investment strategy, it's worthwhile to concentrate on the number of analyst recommendations that have increased in recent weeks. This approach can offer valuable insights into the overall sentiment and potential trajectory of a stock, helping investors make well-informed decisions.
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 also consider other relevant parameters to make it 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 the volume isn’t enough, it will not attract individual investors).
Here are two out of five stocks that passed the screen:
Lancaster: This Westerville, OH-based company is a manufacturer and marketer of specialty food products for the retail and foodservice markets. The company’s shares have lost 13.3% in the year-to-date (YTD) period versus the industry’s 15% decrease.
LANC — a Zacks Rank #3 (Hold) company — currently flaunts a VGM Score of B. This helps to identify stocks with the most attractive value, growth and momentum. The earnings per share (EPS) estimate for 2023 depicts 31.9% year-over-year growth.
SharkNinja: This product design and technology company is based in Needham, MA. In July 2023, the company announced that it completed its separation from JS Global Lifestyle Company Limited to become an independent public company, with its ordinary shares trading on the New York Stock Exchange under the ticker symbol “SN.” Since its inception, SN has gained 8.2%, outperforming the industry’s 4.1% decline over the time span.
SN currently carries a Zacks Rank #3. The EPS estimate for 2023 has remained stable at $2.99 over the past 30 days. The revenue estimate indicates 8.1% year-over-year growth.
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.
Image: Bigstock
2 Stock to Watch as New Analysts Initiate Coverage
New analyst coverage can indeed be highly beneficial for investors and plays a significant role in the financial markets. Analysts often have extensive knowledge and expertise in specific industries or sectors. Their research and analysis can provide investors with valuable insights into a company's financial health, growth prospects, competitive position and industry trends. This information can be difficult for individual investors to obtain on their own.
Recently, few stocks, including Lancaster Colony Corporation (LANC - Free Report) and SharkNinja, Inc. (SN - Free Report) have attracted the attention of analysts, signaling value and growth opportunities for investors.
Analysts don't randomly choose which stocks to cover. Their decision is typically driven by significant investor interest or promising prospects associated with a particular stock.
An interesting observation is that when stocks receive new analyst coverage, they often experience gradual upward price movements compared to those already covered by analysts. The magnitude of this price movement is influenced by the recommendations made by the new analysts. Positive recommendations like "Buy" and "Strong Buy" tend to result in more substantial positive price reactions than "Strong Sell," "Sell," or "Hold" recommendations.
When an analyst provides a new recommendation for a company with limited or no prior analyst coverage, investors pay increased attention to the stock. Additionally, portfolio managers may become interested in building positions in such stocks due to the fresh information.
Rather than focusing solely on a single recommendation change, it is advisable to consider the average change in broker recommendations. Upgrades, initiations, and increased coverage by multiple analysts carry equal significance in assessing a stock's potential.
To create a prudent investment strategy, it's worthwhile to concentrate on the number of analyst recommendations that have increased in recent weeks. This approach can offer valuable insights into the overall sentiment and potential trajectory of a stock, helping investors make well-informed decisions.
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 also consider other relevant parameters to make it 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 the volume isn’t enough, it will not attract individual investors).
Here are two out of five stocks that passed the screen:
Lancaster: This Westerville, OH-based company is a manufacturer and marketer of specialty food products for the retail and foodservice markets. The company’s shares have lost 13.3% in the year-to-date (YTD) period versus the industry’s 15% decrease.
LANC — a Zacks Rank #3 (Hold) company — currently flaunts a VGM Score of B. This helps to identify stocks with the most attractive value, growth and momentum. The earnings per share (EPS) estimate for 2023 depicts 31.9% year-over-year growth.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
SharkNinja: This product design and technology company is based in Needham, MA. In July 2023, the company announced that it completed its separation from JS Global Lifestyle Company Limited to become an independent public company, with its ordinary shares trading on the New York Stock Exchange under the ticker symbol “SN.” Since its inception, SN has gained 8.2%, outperforming the industry’s 4.1% decline over the time span.
SN currently carries a Zacks Rank #3. The EPS estimate for 2023 has remained stable at $2.99 over the past 30 days. The revenue estimate indicates 8.1% year-over-year growth.
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