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Screen of the Week of Zacks Investment Research by Kevin Matras:
The Power of New Analyst Coverage
Broker recommendations -– love them or hate them, they do have their place. And we all look at them eventually.
Whether you're a small individual investor or a large institutional portfolio manager (or somewhere in between), who doesn't like it when a stock gets an upgraded rating or sees a new analyst jumping in with coverage? We all do. (Although I should note that, in general, the change in the average broker recommendation is a better indicator than the actual recommendation itself.)
Anyway, today I want to talk about companies that receive new analyst coverage.
One of the things that generates analyst coverage is investor interest. How else can you explain the increased analyst coverage for Facebook (a company that's only been public for 2 1/2 yrs.) in comparison to a company like GE (public for more than 40 yrs.)?
And as new coverage is initiated, it becomes more visible, which in turn means potentially more demand (read higher prices).
This is often the case because analysts almost always initiate coverage with a positive recommendation. (Why write a research report on a company not widely followed only to say it stinks?)
And when it comes to companies with little to no analyst coverage, that one new recommendation can sometimes give portfolio managers the validation they need to build a position. (And the more money they can invest, the more they can potentially influence prices.)
The best way to use this information is to look for companies with analyst coverage that has increased over the last 4 weeks.
Simply look at the number of analyst recommendations now in comparison to the number of analyst recommendations 4 weeks ago. An increase in coverage is bullish whereas a decrease in coverage is bearish.
It's typically more bullish if the increase went from none to one or if the coverage was minimal to begin with. (Going from 25 to 26 isn't going to have the same impact because that 26th analyst isn't discovering something 'new'.) But increased coverage is better than decreased coverage –- assuming the coverage is positive of course.
Here's a screen to try:
• Number of Broker Ratings now greater than the Number of Broker Ratings four weeks ago (This shows stocks where new coverage has recently been added.)
• Average Broker Rating less than Average Broker Rating four weeks ago (By 'less than', I mean 'better than' four weeks ago.)
• And I'm applying all of the above parameters to stocks with Prices greater than or equal to 5 (most money managers won't even look at a stock under $5) and Average Daily Volume greater than or equal to 100,000 shares (if there's not enough volume, even individual investors won't want it).
Here are 5 stocks from this week's screen:
(Nasdaq: LIVN – Free Report) LivaNova (from 2 analysts four weeks ago to 5)
(NYSE: CLDT – Free Report) Chatham Lodging Trust (from 3 analysts four weeks ago to 5)
(Nasdaq: ASML – Free Report) ASML Holding (from 6 analysts four weeks ago to 8)
(NYSE: HEI – Free Report) Heico, Corp. (from 7 analysts four weeks ago to 9)
(Nasdaq: ETSY – Free Report) Etsy, Inc. (from 8 analysts four weeks ago to 10)
Many screeners won't let you search for the number of analysts covering a stock, let alone comparing the amount of coverage they had weeks or even months ago. But you can with the Research Wizard. And you can backtest it all. Find out how to pick the right stocks right now by taking a free trial to the Research Wizard stock picking and backtesting program.
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.
Zacks Restaurant Recommendations: In addition to dining at these special places, you can feast on their stock shares. A Zacks Special Report spotlights 5 recent IPOs to watch plus 2 stocks that offer immediate promise in a booming sector. Download it free »
Sign up now for your free trial today and start picking better stocks immediately. And with the backtesting feature, you can test your ideas to see how you can improve your trading in both up markets and down markets. Don’t wait for the market to get better before you decide to do better. Start learning how to be a better trader today: https://at.zacks.com/?id=111
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.
About Screen of the Week
Zacks.com created the first and best screening system on the web earning the distinction as the "#1 site for screening stocks" by Money Magazine. But powerful screening tools is just the start. That is why Zacks created the Screen of the Week to highlight profitable stock picking strategies that investors can actively use. Each week, Zacks Profit from the Pros free email newsletter shares a new screening strategy. Learn more about it here https://at.zacks.com/?id=112
About Zacks
Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978. The later formation of the Zacks Rank, a proprietary stock picking system; continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time!Click here for your free subscription to Profit from the Pros.
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Zacks.com featured highlights include include LivaNova, Chatham Lodging, ASML, Heico and Etsy
For Immediate Release
Chicago, IL – September 20, 2017 - Stocks in this week’s article include LivaNova (Nasdaq: (LIVN - Free Report) – Free Report), Chatham Lodging Trust (NYSE: (CLDT - Free Report) – Free Report), ASML Holding (Nasdaq: (ASML - Free Report) – Free Report), Heico, Corp (NYSE: (HEI - Free Report) – Free Report) and Etsy, Inc. (Nasdaq: (ETSY - Free Report) – Free Report).
Screen of the Week of Zacks Investment Research by Kevin Matras:
The Power of New Analyst Coverage
Broker recommendations -– love them or hate them, they do have their place. And we all look at them eventually.
Whether you're a small individual investor or a large institutional portfolio manager (or somewhere in between), who doesn't like it when a stock gets an upgraded rating or sees a new analyst jumping in with coverage? We all do. (Although I should note that, in general, the change in the average broker recommendation is a better indicator than the actual recommendation itself.)
Anyway, today I want to talk about companies that receive new analyst coverage.
One of the things that generates analyst coverage is investor interest. How else can you explain the increased analyst coverage for Facebook (a company that's only been public for 2 1/2 yrs.) in comparison to a company like GE (public for more than 40 yrs.)?
And as new coverage is initiated, it becomes more visible, which in turn means potentially more demand (read higher prices).
This is often the case because analysts almost always initiate coverage with a positive recommendation. (Why write a research report on a company not widely followed only to say it stinks?)
And when it comes to companies with little to no analyst coverage, that one new recommendation can sometimes give portfolio managers the validation they need to build a position. (And the more money they can invest, the more they can potentially influence prices.)
The best way to use this information is to look for companies with analyst coverage that has increased over the last 4 weeks.
Simply look at the number of analyst recommendations now in comparison to the number of analyst recommendations 4 weeks ago. An increase in coverage is bullish whereas a decrease in coverage is bearish.
It's typically more bullish if the increase went from none to one or if the coverage was minimal to begin with. (Going from 25 to 26 isn't going to have the same impact because that 26th analyst isn't discovering something 'new'.) But increased coverage is better than decreased coverage –- assuming the coverage is positive of course.
Here's a screen to try:
• Number of Broker Ratings now greater than the Number of Broker Ratings four weeks ago
(This shows stocks where new coverage has recently been added.)
• Average Broker Rating less than Average Broker Rating four weeks ago
(By 'less than', I mean 'better than' four weeks ago.)
• And I'm applying all of the above parameters to stocks with Prices greater than or equal to 5 (most money managers won't even look at a stock under $5) and Average Daily Volume greater than or equal to 100,000 shares (if there's not enough volume, even individual investors won't want it).
Here are 5 stocks from this week's screen:
(Nasdaq: LIVN – Free Report) LivaNova
(from 2 analysts four weeks ago to 5)
(NYSE: CLDT – Free Report) Chatham Lodging Trust
(from 3 analysts four weeks ago to 5)
(Nasdaq: ASML – Free Report) ASML Holding
(from 6 analysts four weeks ago to 8)
(NYSE: HEI – Free Report) Heico, Corp.
(from 7 analysts four weeks ago to 9)
(Nasdaq: ETSY – Free Report) Etsy, Inc.
(from 8 analysts four weeks ago to 10)
Many screeners won't let you search for the number of analysts covering a stock, let alone comparing the amount of coverage they had weeks or even months ago. But you can with the Research Wizard. And you can backtest it all. Find out how to pick the right stocks right now by taking a free trial to the Research Wizard stock picking and backtesting program.
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.
Zacks Restaurant Recommendations: In addition to dining at these special places, you can feast on their stock shares. A Zacks Special Report spotlights 5 recent IPOs to watch plus 2 stocks that offer immediate promise in a booming sector. Download it free »
Sign up now for your free trial today and start picking better stocks immediately. And with the backtesting feature, you can test your ideas to see how you can improve your trading in both up markets and down markets. Don’t wait for the market to get better before you decide to do better. Start learning how to be a better trader today: https://at.zacks.com/?id=111
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.
About Screen of the Week
Zacks.com created the first and best screening system on the web earning the distinction as the "#1 site for screening stocks" by Money Magazine. But powerful screening tools is just the start. That is why Zacks created the Screen of the Week to highlight profitable stock picking strategies that investors can actively use. Each week, Zacks Profit from the Pros free email newsletter shares a new screening strategy. Learn more about it here https://at.zacks.com/?id=112
About Zacks
Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978. The later formation of the Zacks Rank, a proprietary stock picking system; continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time!Click here for your free subscription to Profit from the Pros.
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Contact: Jim Giaquinto
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Phone: 312-265-9268
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Visit: https://www.zacks.com/performance
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.