5 Stocks to Consider for Your Portfolios Following Broker Upgrades

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The U.S. equity markets are in good health despite geopolitical tensions. Many U.S. companies have seen an uptick in their stock price following Donald Trump’s victory in the Presidential election. The Trump administration’s expected policies and anticipation of less regulatory scrutiny have lifted the stock price of certain companies.

Investors should take advantage of the post-election rally to design their stock portfolios for healthy returns. One way to do this would be to follow the advice of brokers, as they are deemed to be experts in the field of investing. Having broker-friendly stocks like Air Canada ACDVF, DXC Technology DXC, Cracker Barrel Old Country Store CBRL, Sally Beauty Holdings SBH and Deluxe DLX in one’s portfolio is advisable.

We have designed a screen to shortlist stocks based on improving analyst recommendations and upward revisions to earnings estimates over the last four weeks. Also, since the price/sales ratio is a strong complementary valuation metric in the presence of analyst information, it has also been included. The price/sales ratio takes care of the company’s top line, making the strategy foolproof.

Screening Criteria

# (Up-Down Rating)/ Total (4 weeks) = Top #75(This gives the list of the top 75 companies that have witnessed net upgrades over the last 4 weeks).

Percentage 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).

We have also added the following screening parameters to ensure that the strategy is a winning one:

Price-to-Sales Ratio = Bot%10(The lower the ratio, the better. Companies meeting this criterion are in the bottom 10% of our universe of more than 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 ($ million) = 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:

Air Canada, Canada’s leading airline, is benefiting from the buoyant scenario concerning air travel demand. Driven by this tailwind, shares of this carrier have gained 31.5% in the past six months.

Over the past 60 days, the Zacks Consensus Estimate for 2024 earnings has gained 39.6%. ACDVF currently carries a Zacks Rank #3 (Hold).