Selecting stocks from the vast investment universe is not an easy task, more so when markets have been volatile like the last few weeks. For this, one needs to understand the fundamentals of every company and try to place these against the present economic background to figure out how it may fare as an investment.
One way to screen stocks is to follow broker recommendation. Brokers have a deeper insight into what’s happening in a particular company along with a better understanding of the overall sector and the industry.
Brokers research on a company’s publicly available financial statements, attend conference calls and engage in talks directly with the top management. They even talk directly to customers to gauge what they like or dislike about the products and services offered by the company.
Therefore, after proper research, brokers rate that particular company’s stock. Naturally, when an analyst upgrades a stock, one can easily rely on it.
However, just depending on broker upgrades is not the right way to build an investment portfolio. One must also take into consideration other factors to ensure solid returns.
Picking 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: Our research shows that stocks with a VGM Score of A when combined with a Zacks Rank #1 or 2 offer the best upside potential.
Here are three stocks that qualified the screening:
WellCare Health Plans, Inc. WCG, based in Tampa, FL, provides managed care services for government-sponsored health care programs. Its 2018 earnings are expected to rise 20.5%. The stock, carrying a Zacks Rank #2, has witnessed 8.3% upward revision in broker ratings over the past four weeks.
Micron Technology, Inc. MU, headquartered in Boise, ID, provides semiconductor systems. Its fiscal 2018 earnings are expected to increase 136.3%. The stock, sporting a Zacks Rank #1, has witnessed 3.9% upward revision in broker ratings over the past four weeks.
Bermuda-based Marvell Technology Group Ltd. MRVL designs, develops, and markets analog, mixed-signal, digital signal processing, and embedded and standalone integrated circuits. The company’s earnings are expected to grow 16% in fiscal 2019. The stock, carrying a Zacks Rank #2, has witnessed 5.9% upward revision in broker ratings over the past four weeks.
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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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