In a volatile market, a basic fundamental analysis of companies is not enough to zero in on stocks that have the potential to generate solid returns. In such a situation, expert advice helps picking the right stocks. And one could simply follow broker rating upgrades, as they have a deeper insight into stocks, the sectors and the overall economy.
Brokers directly communicate with the top management. They also thoroughly study the publicly available documents and attend conference calls.
In addition, brokers scrutinize the fundamentals of companies and place them against the current economic backdrop to find out how the stocks will fare as an investment option. Therefore, by following broker rating upgrades, you can easily find attractive stocks.
But solely depending on broker upgrades is not advisable. You must take into consideration a few other factors before adding a stock to your investment portfolio. This way you can ensure steady returns.
The following screening strategy will help you in finding potential winners:
The Winning Strategy
Broker Rating Upgrades (4 weeks): The screen selects 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. You can see the complete list of today’s Zacks #1 Rank stocks here.
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 seven stocks that made it through the screen:
Headquartered in Irvine, CA, Tilly's, Inc. TLYS is a specialty retailer in the action sports industry selling clothing, shoes and accessories. Over the trailing four quarters, the company delivered an average positive surprise of 73.4%.
Francesca's Holdings Corporation FRAN, headquartered in Houston, TX, operates a chain of retail boutiques. It offers fashion apparel, jewelry, accessories, and gifts. The company boasts a strong surprise history, with a trailing four-quarter average beat of 15.4%.
Greif, Inc. GEF, based in Delaware, OH, produces and sells industrial packaging products across the globe. The company boasts a strong surprise history, with a trailing four-quarter average beat of 21.3%.
Fort Mill, SC-based Domtar Corporation UFS designs, manufactures, markets, and distributes communication papers, specialty and packaging papers, and absorbent hygiene products. The company boasts a strong surprise history, with a trailing four-quarter average beat of 85.3%.
Finisar Corp. FNSR, based in Sunnyvale, CA, offers optical subsystems and components for data communication and telecommunication applications in the U.S., Malaysia, China, and worldwide. The company boasts a strong surprise history, with a trailing four-quarter average beat of 35.8%.
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.
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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
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