Find 'Strong Buy' Stocks for September with this Screener
Benjamin Rains
4 min read
Despite the slight pullback on the last day of August, all three major U.S. indexes posted monthly gains. The Dow climbed 1.2%, while the Nasdaq jumped roughly 4%, and the S&P 500 popped nearly 3%. The benchmark index posted its seventh straight monthly climb and August marked its best showing since April.
Wall Street reacted positively to Jerome Powell’s speech late last week. The Fed chairman continued his dovish tone on interest rates despite concerns about rising prices. The central bank is planning to scale back its bond purchases at some point later this year. But investors appear focused on the fact that interest rates will favor stocks for the foreseeable future even when the Fed finally begins to lift rates.
Weekly jobless claims hovering at their lowest levels since March 2020 amid Delta variant worries is another positive sign as we start September. On top of that, the overall earnings picture continues to improve, even though positive Q3 revisions have slowed.
Some investors might want to consider buying strong stocks to start the new month, with trading volumes likely to return to normal levels soon after the Labor Day holiday. And utilizing our Filtered Zacks Rank 5 Stock Screener is a great place to start…
Zacks Rank #1 (Strong Buy) stocks outperform the market in both good and bad times. However, there are over 200 stocks that earn a Zacks Rank #1 at any given time. Therefore, it’s helpful to understand how to apply filters to the Zacks Rank in order to narrow the list down to a more manageable and tradable set of stocks.
Parameters
Clearly, there are only three items on this screen. But together, these three filters can result in some impressive returns.
• Zacks Rank equal to 1
Starting with a Zacks Rank #1 is often a strong jumping off point because it boasts an average annual return of roughly 24.4% per year since 1988.
• % Change (Q1) Est. over 4 Weeks greater than 0
Positive current quarter estimate revisions over the last four weeks.
The Zacks Rank looks at earnings estimate revisions for the current year (F1) and the next year (F2). The additional component factors in current quarter (Q1) estimate revisions. The idea is pretty simple.
A company that has experienced downward revisions for the current quarter could soon see longer-term negative revisions. Meanwhile, if a company has earned positive earnings revisions for its current quarter, it might signal that more upward revisions could be coming down the road, which would make it an attractive buy.
• % Broker Rating Change over 4 Week equal to Top # 5
Top 5 stocks with the best average broker rating changes over the last four weeks.
In this screen, we are searching for positive broker rating changes or upgrades over the last four weeks. On top of that, we want to cut down on the number of stocks that come through. So, we configured the screen to select the top 5 stocks with the best broker rating upgrade.
Investors should note that broker ratings typically lean toward the upside. Therefore, our screen makes sure that the brokers are getting more bullish, or at the least not getting less bullish (or even bearish) on the stock.
It is worth noting that the actual broker ratings do not matter as much as the upgrade itself, because stocks with broker rating upgrades have been proven to outperform their counterparts that do not earn positive broker rating changes or downgrades.
This strategy comes loaded with the Research Wizard and is called bt_sow_filtered zacks rank5. It can be found in the SoW (Screen of the Week) folder.
Here are 2 of the 5 stocks that qualified for the Filtered Zacks Rank 5 strategy today…
See the rest of the stocks on this list and start trading the Filtered Zacks Rank 5 (or any of our other strategies) in your own account. Remember, the key to successful screening is finding screens that have produced profitable results in the past. And that's exactly what you get with the Research Wizard stock picking and backtesting program.
Get the rest of the stocks on this list and start looking for the newest companies that fit these criteria. It's easy to do. And it could help you find your next big winner. Start screening for these companies today with a free trial to the Research Wizard. You can do it.
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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.
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