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5 Broker-Loved Stocks That Hold Promise Despite Volatility
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The unfavorable inflation reading for the month of February has dashed all hopes of the Federal Reserve implementing the first rate cut in March. Per data from the Labor Department, the consumer price index rose 0.4% sequentially in February, following a 0.3% increase in January. Moreover, the February reading was up 3.2% year over year.
The prevalent high interest rates and uncertainty pertaining to rate cuts imply that the present volatility is unlikely to fade away soon. Higher interest rates raise borrowing costs, escalating the chances of an economic slowdown.
However, this volatile scenario does not mean that investors should shy away from stocks. Broker-favored stocks like General Motors (GM - Free Report) , Cardinal Health (CAH - Free Report) , Cencora (COR - Free Report) , Alta Equipment Group (ALTG - Free Report) and Asbury Automotive (ABG - Free Report) are worth keeping on one’s radar for healthy returns despite this uncertainty.
Here’s Why Following Broker Advice Works Wonders
Brokers have an in-depth understanding of stocks and great knowledge of the industry and the broader economy. They scrutinize the company’s fundamentals and place them against the prevalent economic scenario to find out how attractive a stock is as an investment option or otherwise.
Only after undertaking thorough research, brokers arrive at their recommendation (buy, sell or hold) on a stock. Such well-researched information is not available to individual investors. So, they, in the absence of proper guidance, may end up selecting the wrong stocks in their portfolio. This might result in their hard-earned money, which they have invested in stock markets, going down the drain. To avoid such an unfortunate scenario from materializing, it is highly desirable for investors to be guided by broker advice while deciding their course of action on a particular stock.
Formulating a Winning Portfolio
We have designed a screener to arrive at 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 has not been considered.
Actually, according to many market watchers, a top-line outperformance is more credible for a company than a mere earnings outperformance. To address top-line concerns, we have included the price/sales ratio in our screener as it serves as a strong complementary valuation metric.
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 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 criterion are in the 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:
Based in Detroit, MI, General Motors is one of the world’s largest automakers. The company’s massive electric vehicle (EV) push is commendable. The automaker plans to roll out 30 fresh EV models by 2025-end. Over the past 60 days, the Zacks Consensus Estimate for 2024 earnings has moved up 16.4%.
The Zacks Consensus Estimate for General Motors’s 2024 earnings indicates 17.2% growth from the 2023 actual. GM, currently sporting a Zacks Rank #1 (Strong Buy), has a trailing four-quarter earnings surprise of roughly 20%, on average. GM shares have gained 28.6% in a year. You can see the complete list of today’s Zacks #1 Rank stocks here.
Ohio-based Cardinal Health is a nationwide drug distributor and provider of services to pharmacies, healthcare providers and manufacturers. CAH’s diversified product portfolio bodes well and should drive growth.
Cardinal Health, currently carrying a Zacks Rank of 2 (Buy), has an impressive surprise history, with its earnings surpassing the Zacks Consensus Estimate in each of the last four quarters, the average being 15.6%.
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 earnings has been revised 4.3% upward over the past 90 days. COR has outpaced the Zacks Consensus Estimate for earnings in each of the last four quarters by an average of 6.69%.
Alta Equipment is an industrial and construction equipment company. ALTG, currently carrying a Zacks Rank #3, offers new and used industrial products and construction products.
Alta Equipment Group has an expected revenue and earnings growth rates of 5.1% and more than 100%, respectively, for the current year. ALTG has outpaced the Zacks Consensus Estimate for earnings in three of the last four quarters (missing the mark on the other occasion) by an average of 130.27%.
Asbury Automotive, which operates as an automotive retailer in the United States, carries a Zacks Rank #3, presently. Asbury’s diversified product mix and multiple streams of income bode well.
Asbury Automotive outpaced the Zacks Consensus Estimate for earnings in two of the last four quarters, missing the mark in the other two quarters. The average beat is 0.86%. Shares of ABG have gained 13.1% in a year’s time.
You can get the rest of the stocks on this list by signing up now for a 2-week free trial to the Research Wizard stock picking and backtesting software. You can also create your own strategies and test them first before making investments.
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-Loved Stocks That Hold Promise Despite Volatility
The unfavorable inflation reading for the month of February has dashed all hopes of the Federal Reserve implementing the first rate cut in March. Per data from the Labor Department, the consumer price index rose 0.4% sequentially in February, following a 0.3% increase in January. Moreover, the February reading was up 3.2% year over year.
The prevalent high interest rates and uncertainty pertaining to rate cuts imply that the present volatility is unlikely to fade away soon. Higher interest rates raise borrowing costs, escalating the chances of an economic slowdown.
However, this volatile scenario does not mean that investors should shy away from stocks. Broker-favored stocks like General Motors (GM - Free Report) , Cardinal Health (CAH - Free Report) , Cencora (COR - Free Report) , Alta Equipment Group (ALTG - Free Report) and Asbury Automotive (ABG - Free Report) are worth keeping on one’s radar for healthy returns despite this uncertainty.
Here’s Why Following Broker Advice Works Wonders
Brokers have an in-depth understanding of stocks and great knowledge of the industry and the broader economy. They scrutinize the company’s fundamentals and place them against the prevalent economic scenario to find out how attractive a stock is as an investment option or otherwise.
Only after undertaking thorough research, brokers arrive at their recommendation (buy, sell or hold) on a stock. Such well-researched information is not available to individual investors. So, they, in the absence of proper guidance, may end up selecting the wrong stocks in their portfolio. This might result in their hard-earned money, which they have invested in stock markets, going down the drain. To avoid such an unfortunate scenario from materializing, it is highly desirable for investors to be guided by broker advice while deciding their course of action on a particular stock.
Formulating a Winning Portfolio
We have designed a screener to arrive at 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 has not been considered.
Actually, according to many market watchers, a top-line outperformance is more credible for a company than a mere earnings outperformance. To address top-line concerns, we have included the price/sales ratio in our screener as it serves as a strong complementary valuation metric.
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 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 criterion are in the 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:
Based in Detroit, MI, General Motors is one of the world’s largest automakers. The company’s massive electric vehicle (EV) push is commendable. The automaker plans to roll out 30 fresh EV models by 2025-end. Over the past 60 days, the Zacks Consensus Estimate for 2024 earnings has moved up 16.4%.
The Zacks Consensus Estimate for General Motors’s 2024 earnings indicates 17.2% growth from the 2023 actual. GM, currently sporting a Zacks Rank #1 (Strong Buy), has a trailing four-quarter earnings surprise of roughly 20%, on average. GM shares have gained 28.6% in a year. You can see the complete list of today’s Zacks #1 Rank stocks here.
Ohio-based Cardinal Health is a nationwide drug distributor and provider of services to pharmacies, healthcare providers and manufacturers. CAH’s diversified product portfolio bodes well and should drive growth.
Cardinal Health, currently carrying a Zacks Rank of 2 (Buy), has an impressive surprise history, with its earnings surpassing the Zacks Consensus Estimate in each of the last four quarters, the average being 15.6%.
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 earnings has been revised 4.3% upward over the past 90 days. COR has outpaced the Zacks Consensus Estimate for earnings in each of the last four quarters by an average of 6.69%.
Alta Equipment is an industrial and construction equipment company. ALTG, currently carrying a Zacks Rank #3, offers new and used industrial products and construction products.
Alta Equipment Group has an expected revenue and earnings growth rates of 5.1% and more than 100%, respectively, for the current year. ALTG has outpaced the Zacks Consensus Estimate for earnings in three of the last four quarters (missing the mark on the other occasion) by an average of 130.27%.
Asbury Automotive, which operates as an automotive retailer in the United States, carries a Zacks Rank #3, presently. Asbury’s diversified product mix and multiple streams of income bode well.
Asbury Automotive outpaced the Zacks Consensus Estimate for earnings in two of the last four quarters, missing the mark in the other two quarters. The average beat is 0.86%. Shares of ABG have gained 13.1% in a year’s time.
You can get the rest of the stocks on this list by signing up now for a 2-week free trial to the Research Wizard stock picking and backtesting software. You can also create your own strategies and test them first before making investments.
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