For Immediate Release
Chicago, IL - January 24, 2019- Stocks in this week's article include Gibraltar Industries Inc. ROCK , Unisys Corp. UIS , K12 Inc LRN , Blue Hills Bancorp, Inc. BHBK and Independent Bank Corp. INDB . Kevin Matras screens for companies showing their 'first' profit and explains why they are ones to watch.
Screen of the Week written by Kevin Matras of Zacks Investment Research:
Buy These 5 Stocks on New Analyst Coverage
There's no denying that the lack of consistency in information creates inefficiencies that might result in misinterpretation of stocks. Initiation of coverage by analysts offers critical information on a stock which is of great value to investors.
Coverage initiation on a stock by analyst(s) usually depicts increased investor inclination. Investors, on their part, often assume that there is something in the stock that has attracted analyst attention. In other words, they believe that the company coming under the radar definitely has some value which can be tapped into.
Obviously, stocks are not arbitrarily chosen to cover. New coverage on a stock usually reflects an encouraging future envisioned by the analyst(s). At times, increased investor focus on a stock motivates analysts to take a closer look at it.
Needless to say, the average change in broker recommendation is preferred over a single recommendation change.
How Does Analyst Coverage Influence Stock Price?
The price movement of a stock is generally a function of the recommendations on it from new analysts. Stocks typically see an upward price movement with a new analyst coverage compared to what they witness with a rating upgrade under an existing coverage. Positive recommendations - Buy and Strong Buy - generally lead to a significantly positive price reaction than Hold recommendations. On the contrary, analysts hardly initiate coverage with a Strong Sell or Sell recommendation.
Now, if an analyst gives a new recommendation on a company that has limited or no existing coverage, investors start paying more attention to it. Also, any new information attracts portfolio managers to build a position in the stock.
So, it's a good strategy to bet on stocks that have seen increased analyst coverage over the last few weeks.
For the rest of this Screen of the Week article please visit Zacks.com at: https://www.zacks.com/stock/news/348946/buy-these-5-stocks-on-new-analyst-coverage
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