In recent times, stock markets have witnessed sharp volatility, largely driven by ongoing tariff-related challenges. These pressures have heightened worries about an economic slowdown. Moreover, we are by no means out of the woods as far as inflation is concerned. Given this uncertain backdrop, choosing stocks to secure strong returns is not an easy task for individual investors.
One way to achieve the above objective is by following broker advice. Brokers are deemed to be experts in the field of investing. We believe that investors should keep an eye on broker-favorite stocks like Kimball Electronics KE, Alaska Air Group ALK, AutoNation AN, Asbury Automotive Group ABG and American Axle & Manufacturing Holdings AXL for healthy returns.
We have designed a screen to shortlist stocks based on improving analyst recommendations and upward estimate revisions over the last four weeks. Also, since the price/sales ratio is a strong complementary valuation metric in the presence of broker information, it has been included. The price/sales ratio takes care of the company’s top line, making the strategy a well-rounded one.
# (Up- Down Rating)/ Total (4 weeks) =Top #75 (This gives the list of top 75 companies that have witnessed net upgrades over the last 4 weeks).
% change in Q (1) est. (4 weeks) = Top #10 (This gives the top 10 stocks that have witnessed earnings estimate revisions over the past 4 weeks for the upcoming quarter).
Price-to-Sales = Bot%10 (The lower the ratio, the better. Companies meeting this criterion are in the bottom 10% of our universe of over 7,700 stocks concerning this ratio).
Current Price greater than 5 (as a stock trading below $5 will not likely create significant interest for most of the investors).
Average Daily Volume greater than 100,000 shares over the last 20 trading days (Volume has to be significant to ensure that these are easily traded).
Market value ($ mil) = Top #3000 (This gives us stocks that are the top 3000 in terms of market capitalization).
Com/ADR/Canadian= Com (This eliminates the ADR and Canadian stocks).
Here are five of the 10 stocks that made it through the screen:
Kimball Electronics operates across the globe. This multifaceted manufacturer offers Electronics Manufacturing Services and Contract Manufacturing Organization solutions to customers across the world.
Kimball Electronics surpassed the Zacks Consensus Estimate for earnings in three of the last four quarters and matched estimates in the other quarter. The average beat is 23.7%. The stock currently sports a Zacks Rank #1 (Strong Buy).
