A number of fundamental and technical aspects are involved in recognizing stocks with strong growth potential. It's not an easy task for individual investors to select stocks on their own and this is where expert advice comes in handy.
By following broker rating upgrades, an investor can effortlessly find attractive stocks. Brokers have greater insight into what's happening in a particular company, as they directly communicate with the top management. Also, they exhaustively go through the company's publicly available documents and attend conference calls.
Further, brokers have a deeper understanding of the overall industry. They also place the company fundamentals against the present economic backdrop to figure out how the stock will fare as an investment.
Therefore, when a broker upgrades a stock, you can certainly rely on their judgment. Nonetheless, depending solely on broker upgrade is not a great idea to build your investment portfolio. You should also take into account other factors to ensure steady returns.
The following screening strategy will help you in finding potential winners:
The Winning Strategy
Broker Rating Upgrades (4 weeks): The screen chooses stocks that have witnessed broker upgrades over the last four weeks.
Current Price greater than or equal to 5: The stocks must be trading at $5 or above.
Average 20-day Volume greater than 100,000: A large trading volume guarantees that the stock is easily tradable.
Zacks Rank equal to #1: No matter whether market conditions are good or bad, stocks with a Zacks Rank #1 (Strong Buy) have a proven record of success.
VGM Score equal to A: Our research shows that stocks with a VGM Score of 'A' or 'B' when combined with a Zacks Rank #1 or 2 (Buy) offer the best upside potential.
Here are five of the 11 stocks that made it through the screen:
Headquartered in Arkansas, Tyson Foods Inc.TSN produces, distributes and markets chicken, beef, pork, prepared foods and allied products. Over the trailing four quarters, the company delivered an average positive surprise of 12.2%.
NetApp, Inc.NTAP , headquartered in California, provides enterprise storage and data management software and hardware products and services. The company boasts a strong surprise history, with a trailing four-quarter average beat of 14.5%.
Cooper-Standard Holdings Inc.CPS , based in Novi, MI, operates as a supplier of systems and components for the automotive industry. The company boasts a strong surprise history, with a trailing four-quarter average beat of 51.2%.
Philadelphia, PA-based Urban Outfitters Inc.URBN is a lifestyle specialty retailer that offers fashion apparel and accessories, footwear, home décor and gifts products. The company boasts a strong surprise history, with a trailing four-quarter average beat of 6.7%.
Deckers Outdoor CorporationDECK , based in Goleta, CA, is a leading designer, producer, and brand manager of innovative, niche footwear and accessories developed for outdoor sports, and other lifestyle-related activities. The company boasts a strong surprise history, with a trailing four-quarter average beat of 25.2%.
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.
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
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