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5 Broker-Favored Stocks to Keep an Eye on in the Current Year
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The U.S. stock markets, which ended 2023 on a healthy note, are likely to continue their impressive showing in 2024. With inflation cooling and consumer confidence gaining strength, the U.S. economy appears to be on a solid footing. Moreover, fears of the economy slipping into a recession eased to a great extent.
Notably, several Fed officials have indicated at least three rate cuts of 25 basis points in 2024. Rate cuts will lower borrowing costs, implying that consumers will be able to spend more freely.
Investors would like to take advantage of this optimistic scenario by keeping tabs on broker-favored stocks. This is because brokers are considered to be experts in the field of investing as they have at their disposal a lot more information on a company and its prospects than individual investors. Given this backdrop, keeping an eye on stocks like American Airlines (AAL - Free Report) , Alaska Air Group (ALK - Free Report) , Cencora (COR - Free Report) , Cleveland-Cliffs (CLF - Free Report) and Avnet (AVT - Free Report) appears to be prudent.
Why Broker-Advice is the Way Forward
Generally, three types of brokers (sell-side, buy-side and independent) are present in the investment world, with sell-side analysts being the most common. They are employed by various brokerage firms to provide unbiased opinions to investors on the stocks under their coverage after thorough research. Buy-side analysts are employed by hedge funds, mutual funds etc., while the independent ones sell their reports to investors.
All types of brokers indulge in thorough research of the stocks under their coverage. They have access to much detailed information on a company. Toward this end, they attend company conference calls/presentations and scrutinize every detail available publicly before advising investors. Naturally, broker advice acts as an invaluable guide for investors in their bid to garner the maximum from their portfolios.
To take care of the earnings performance, we have designed a screen based on improving analyst recommendations and upward estimate revisions over the last four weeks.
According to many market watchers, a revenue beat is more creditable for a company than a mere earnings outperformance, especially in an environment of revenue weakness due to macroeconomic headwinds like a strong dollar. To take care of the top line, we have considered the price/sales ratio for screening stocks.
Screening Criteria
# (Up- Down Rating)/ Total (4 weeks) = Top #75: This gives the list of the top 75 companies that have witnessed net upgrades over the last four 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 four weeks for the upcoming quarter.
To ensure that the strategy is a winning one, covering all bases, we have added the following screening parameters:
Price-to-Sales = Bot%10: The lower the ratio, the better. Companies meeting this criterion are in the bottom 10% of our universe of more than 7,700 stocks with respect to this ratio.
Price greater than 5: A stock trading below $5 will not likely create significant interest for most investors.
Average Daily Volume greater than 100,000 shares over the last 20 trading days: Volume has to be significant to ensure that these are easily traded.
Market value ($ mil) = Top #3000: This gives us stocks that are in the top 3000 if one judges by 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:
American Airlines is based in Fort Worth, TX. The gradual increase in air travel demand (particularly for leisure) is aiding AAL. However, high operating costs are hurting the company’s bottom line.
Over the past 60 days, the AAL stock has seen the Zacks Consensus Estimate for 2024 earnings being revised 1.67% upward. American Airlines currently carries a Zacks Rank #2 (Buy).
Alaska Air Group, based in Seattle, WA, is being aided by the uptick in air travel demand. The carrier’s shareholder-friendly attitude also bodes well.
Over the past 60 days, the ALK stock has seen the Zacks Consensus Estimate for 2024 earnings being revised 1.23% upward. Alaska Air Group currently carries a Zacks Rank #3 (Hold).
Chesterbrook, PA-based Cencora is one of the world’s largest pharmaceutical services companies. The company should benefit from the strength in the U.S. Healthcare Solutions business. Cencora currently carries a Zacks Rank #2.
The Zacks Consensus Estimate for the current year has inched up 0.5% over the past 60 days. COR has outpaced the Zacks Consensus Estimate for earnings in each of the last four quarters by an average of 3.88%.
Cleveland-Cliffs is a leading iron ore producer in the United States. It supplies differentiated iron ore pellets under long-term contracts to major blast furnace steel producers in North America. The Mining and Pelletizing operation gains from low-cost, high-quality iron ore pellet production with substantial logistics and transportation advantages to serve the Great Lakes steel market. The company should gain from its merger with AK Steel Holding Corporation.
Over the past 60 days, the Zacks Consensus Estimate for CLF’s 2024 earnings has been revised 1.46% upward. Cleveland-Cliffs currently carries a Zacks Rank #3.
Avnet is benefiting from robust demand for its products across the Asia, Europe, the Middle East and Africa regions. Improvement in the Americas also served as a tailwind. Its continued focus on boosting IoT capabilities is helping it expand in the newer markets and win customers. Moreover, cost-saving efforts are aiding profitability.
AVT, currently carrying a Zacks Rank of 3, has an impressive surprise history, with its earnings surpassing the Zacks Consensus Estimate in each of the last four quarters, the average being 13.8%.
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
5 Broker-Favored Stocks to Keep an Eye on in the Current Year
The U.S. stock markets, which ended 2023 on a healthy note, are likely to continue their impressive showing in 2024. With inflation cooling and consumer confidence gaining strength, the U.S. economy appears to be on a solid footing. Moreover, fears of the economy slipping into a recession eased to a great extent.
Notably, several Fed officials have indicated at least three rate cuts of 25 basis points in 2024. Rate cuts will lower borrowing costs, implying that consumers will be able to spend more freely.
Investors would like to take advantage of this optimistic scenario by keeping tabs on broker-favored stocks. This is because brokers are considered to be experts in the field of investing as they have at their disposal a lot more information on a company and its prospects than individual investors. Given this backdrop, keeping an eye on stocks like American Airlines (AAL - Free Report) , Alaska Air Group (ALK - Free Report) , Cencora (COR - Free Report) , Cleveland-Cliffs (CLF - Free Report) and Avnet (AVT - Free Report) appears to be prudent.
Why Broker-Advice is the Way Forward
Generally, three types of brokers (sell-side, buy-side and independent) are present in the investment world, with sell-side analysts being the most common. They are employed by various brokerage firms to provide unbiased opinions to investors on the stocks under their coverage after thorough research. Buy-side analysts are employed by hedge funds, mutual funds etc., while the independent ones sell their reports to investors.
All types of brokers indulge in thorough research of the stocks under their coverage. They have access to much detailed information on a company. Toward this end, they attend company conference calls/presentations and scrutinize every detail available publicly before advising investors. Naturally, broker advice acts as an invaluable guide for investors in their bid to garner the maximum from their portfolios.
To take care of the earnings performance, we have designed a screen based on improving analyst recommendations and upward estimate revisions over the last four weeks.
According to many market watchers, a revenue beat is more creditable for a company than a mere earnings outperformance, especially in an environment of revenue weakness due to macroeconomic headwinds like a strong dollar. To take care of the top line, we have considered the price/sales ratio for screening stocks.
Screening Criteria
# (Up- Down Rating)/ Total (4 weeks) = Top #75: This gives the list of the top 75 companies that have witnessed net upgrades over the last four 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 four weeks for the upcoming quarter.
To ensure that the strategy is a winning one, covering all bases, we have added the following screening parameters:
Price-to-Sales = Bot%10: The lower the ratio, the better. Companies meeting this criterion are in the bottom 10% of our universe of more than 7,700 stocks with respect to this ratio.
Price greater than 5: A stock trading below $5 will not likely create significant interest for most investors.
Average Daily Volume greater than 100,000 shares over the last 20 trading days: Volume has to be significant to ensure that these are easily traded.
Market value ($ mil) = Top #3000: This gives us stocks that are in the top 3000 if one judges by 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:
American Airlines is based in Fort Worth, TX. The gradual increase in air travel demand (particularly for leisure) is aiding AAL. However, high operating costs are hurting the company’s bottom line.
Over the past 60 days, the AAL stock has seen the Zacks Consensus Estimate for 2024 earnings being revised 1.67% upward. American Airlines currently carries a Zacks Rank #2 (Buy).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Alaska Air Group, based in Seattle, WA, is being aided by the uptick in air travel demand. The carrier’s shareholder-friendly attitude also bodes well.
Over the past 60 days, the ALK stock has seen the Zacks Consensus Estimate for 2024 earnings being revised 1.23% upward. Alaska Air Group currently carries a Zacks Rank #3 (Hold).
Chesterbrook, PA-based Cencora is one of the world’s largest pharmaceutical services companies. The company should benefit from the strength in the U.S. Healthcare Solutions business. Cencora currently carries a Zacks Rank #2.
The Zacks Consensus Estimate for the current year has inched up 0.5% over the past 60 days. COR has outpaced the Zacks Consensus Estimate for earnings in each of the last four quarters by an average of 3.88%.
Cleveland-Cliffs is a leading iron ore producer in the United States. It supplies differentiated iron ore pellets under long-term contracts to major blast furnace steel producers in North America. The Mining and Pelletizing operation gains from low-cost, high-quality iron ore pellet production with substantial logistics and transportation advantages to serve the Great Lakes steel market. The company should gain from its merger with AK Steel Holding Corporation.
Over the past 60 days, the Zacks Consensus Estimate for CLF’s 2024 earnings has been revised 1.46% upward. Cleveland-Cliffs currently carries a Zacks Rank #3.
Avnet is benefiting from robust demand for its products across the Asia, Europe, the Middle East and Africa regions. Improvement in the Americas also served as a tailwind. Its continued focus on boosting IoT capabilities is helping it expand in the newer markets and win customers. Moreover, cost-saving efforts are aiding profitability.
AVT, currently carrying a Zacks Rank of 3, has an impressive surprise history, with its earnings surpassing the Zacks Consensus Estimate in each of the last four quarters, the average being 13.8%.
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.