Inflation in November rose the most in seven months. However, investors believe that inflation is still not that high to prevent the Fed from cutting interest rates. The reason for this optimism is that despite the rise, the consumer price index or CPI and the core CPI, which excludes volatile food and energy prices, were in line with expectations. The in-line readings leave the door open for the Fed to cut rates further at its upcoming December meeting.
Investors would like to take advantage of this encouraging prospect and design a winning portfolio for healthy returns. Given the enormity and difficulty of this task, investors are advised to take help from brokers, deemed to be experts in the field of investing. Broker-favorite stocks such as American Airlines AAL, Air Canada ACDVF, ABM Industries ABM, Dollar Tree DLTR and AdvanSix ASX should be monitored for this purpose.
We have designed a screen to shortlist stocks based on improving broker recommendations and upward revisions in earnings estimates over the past 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.
Screening Criteria
# (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 with respect to this ratio).
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 takes out the ADR and Canadian stocks).
Here are five of the 10 stocks that made it through the screen:
American Airlines is based in Fort Worth, TX. The gradual increase in air travel demand (particularly leisure) aids AAL. However, high operating costs are hurting the bottom line.
Over the past 60 days, the Zacks Consensus Estimate for 2025 earnings has increased 10.5%. AAL currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here
Air Canada is benefiting from the buoyant scenario with respect to air travel demand. Driven by this tailwind, shares of this carrier have gained 56% in the past three months.
Over the past 60 days, the Zacks Consensus Estimate for 2025 earnings per share has improved 14.1%. ACDVF currently carries a Zacks Rank #2 (Buy).
New York-based ABM Industries is a provider of integrated facility solutions in the United States and other countries. ABM currently carries a Zacks Rank #3. The company has an impressive surprise history, with its earnings surpassing the Zacks Consensus Estimate in each of the last four quarters, the average beat being 12.5%.
The company's comprehensive transformational initiative called 2020 Vision has helped it attain long-term profitable growth through an industry-based go-to-market approach. The multi-year comprehensive strategic plan, ELEVATE is expected to accelerate ABM’s organic growth, improve its strategic and comprehensive positioning, and reinforce profitability.
Dollar Tree has made significant progress over the years in optimizing its store portfolio through new store openings, renovations, re-banners and closings.
Dollar Tree’s restructuring and expansion initiatives, as evident from steady store openings and improvement of distribution centers, are likely to drive revenues. Over the past 60 days, the Zacks Consensus Estimate for next year earnings per share has improved 0.3%. DLTR currently carries a Zacks Rank #3.
New Jersey-based AdvanSix is a manufacturer of nylon 6 resin, chemical intermediates and ammonium sulfate fertilizer. It is benefiting from its differentiated product portfolio, exposure to diverse end markets and favorable demand and pricing.
ASIX surpassed the consensus estimate in three of the trailing four quarters. It has a trailing four-quarter earnings surprise of 18.9%, on average. AdvanSix carries a Zacks Rank #3.
You can get the rest of the stocks on this list by signing up now for a 2-week free trial to the Research Wizard stock picking and backtesting software. You can also create your own strategies and test them first before making investments.
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.
Click here to sign up for a free trial to the Research Wizard today.
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
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
