The earnings season is in full swing and investors are keeping a close watch on the financial performance of companies. But taking investment decisions solely based on quarterly performance is not wise. Though earnings performance is a good enough indicator of a stock's prospects, identifying future growth drivers is not always an easy task.
Therefore, this is where expert advice comes in handy. One way to do this is to follow broker recommendations.
Since brokers are in direct communication with companies, they have deeper understanding into what's happening in it. Also, they analyze fundamentals of the company and place them against the present economic backdrop to figure out how the stock will fare as an investment. Further, brokers have more insight of the overall industry and economy.
Brokers analyze a company's publicly available financial statements, attend conference calls and communicate directly with top management. Additionally, they even talk to customers to understand what they like or dislike about the products and services offered by the company.
So, there's all-inclusive research behind the rating of a broker on a company's stock. So, following what the majority of brokers are saying about a stock can help investors understand its potential easily. Naturally, when an analyst upgrades a stock, one can easily rely on it.
Nevertheless, it's not right to depend only on brokers' upgrades to build your investment portfolio. One must take into consideration certain other factors to ensure strong returns.
Selecting the Winning Strategy
We have a screening strategy that will help in your search for potential winners:
Broker Rating Upgrades (four weeks) of 1% or more: The screen selects stocks that have witnessed broker rating upgrades of 1% or more over the last four weeks.
Current Price greater than 5: The stocks must be trading above $5.
Average 20-day Volume greater than 100,000: A large trading volume guarantees that the stock is easily tradable.
Zacks Rank equal to #1 or 2: No matter whether market conditions are good or bad, stocks with a Zacks Rank #1 (Strong Buy) or 2 (Buy) have a proven record of success. You can see the complete list of today's Zacks #1 Rank stocks here .
VGM Score of A or B: Our research shows that stocks with a VGM Score of A or B when combined with a Zacks Rank #1 or 2 offer the best upside potential.
Here are five out of 15 stocks that qualified the screening:
Based in Bellevue, WA, PACCAR IncPCAR designs, manufactures and distributes light, medium and heavy-duty commercial trucks. Its 2018 earnings are expected to rise 42%. The stock, carrying a Zacks Rank #2, has witnessed 4.8% upward revision in broker ratings over the past four weeks.
Jacobs Engineering Group Inc.JEC , headquartered in Dallas, TX, provides technical, professional and construction services. Its earnings are expected to increase 21.2% in fiscal 2019. The stock, sporting a Zacks Rank #1, has witnessed 7.7% upward revision in broker ratings over the past four weeks.
PayPal Holdings, Inc.PYPL operates as a technology platform company that enables digital and mobile payments on behalf of consumers and merchants. Current-year earnings for this San Jose, CA-based company are projected to increase 25.3%. The stock, carrying a Zacks Rank #2, has witnessed 2.9% upward revision in broker ratings over the past four weeks.
Murphy Oil CorporationMUR , headquartered in El Dorado, AR, operates as an oil and gas exploration and production company. Its earnings are expected to jump 1,453.9% in 2018. The stock, sporting a Zacks Rank #1, has witnessed 10% upward revision in broker ratings over the past four weeks.
Wintrust Financial CorporationWTFC , based in Rosemont, IL, operates as a financial holding company. Its 2018 earnings are expected to rise 37.5%. The stock, carrying a Zacks Rank #2, has witnessed 11.1% upward revision in broker ratings over the past four weeks.
Get the rest of the stocks on the list and start putting this and other ideas to the test. It can all be done with the Research Wizard stock picking and backtesting software.
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.
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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
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free reportPayPal Holdings, Inc. (PYPL): Free Stock Analysis ReportPACCAR Inc. (PCAR): Free Stock Analysis ReportWintrust Financial Corporation (WTFC): Free Stock Analysis ReportJacobs Engineering Group Inc. (JEC): Free Stock Analysis ReportMurphy Oil Corporation (MUR): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment Research