Zacks.com Highlights: Centene, Andersons, Builders FirstSource, United Continental Holdings And Dillard's

For Immediate Release

Chicago, IL – Feb 28, 2018 - Stocks in this week’s article include: Centene Corporation (NYSE:CNC) , The Andersons, Inc. (NASDAQ:ANDE) , Builders FirstSource, Inc. (NASDAQ:BLDR) , United Continental Holdings, Inc. (NYSE:UAL) and Dillard’s, Inc. (NYSE:DDS) .

Screen of the Week of Zacks Investment Research:

5 Stocks to Bet on Following Recent Broker Upgrades

We are at the tail end of the Q4 earnings season with the majority of the companies having already unveiled their quarterly financial numbers. The picture that has emerged so far is an extremely healthy one. The earnings season remains on track to end on a strong note, displaying substantial growth. A high proportion of companies have reported better-than-expected earnings per share in the current reporting cycle.

Generally, an earnings beat leads to stock price appreciation. In such a highly bullish scenario, investors tend to add outperformers to their respective portfolios for healthy returns.

However, with a deluge of earnings reports flooding the market during the reporting cycle, pinpointing outperformers is by no means an easy task for individual investors. In the absence of proper guidance, identifying a winning stock is akin to searching for ‘a needle in a haystack’, for an investor. The proper guidance, in this respect, comes from brokers, who are deemed to be experts, equipped with vast knowledge and know how as far the field of investing is concerned.

Of the three types of brokers/analysts (sell-side, buy-side and independent) present in the investment world, sell-side analysts are most common. Various brokerage firms employ them to provide unbiased opinion to investors after thorough research. Buy-side analysts are employed by hedge funds, mutual funds etc. while the independent ones simply sell their reports to investors.

Why Such Advice Is Invaluable

Brokers, irrespective of their types, undertake thorough research of the stocks covered by them. They have at their disposal a lot more information on a company and its prospects than individual investors.

To attain their objective, they go through minute details of the publicly available financial documents apart from attending company conference calls and other presentations. Consequently, the opinion of brokers should act as a valuable guide for investors while deciding their course of action (buy, sell or hold) on a particular stock.

Earnings Estimates Revisions: A Key Pointer

Since brokers follow the stocks in their coverage minutely, they revise their earnings estimates after carefully examining the pros and cons of an event for the concerned company. In fact, a rating upgrade or downgrade by brokers has the potential to immediately influence the price of the stock.

Since brokers arrive at their recommendation on a stock after thoroughly analyzing the nitty-gritty associated with the company, it is natural that if investors see them improving their recommendation on a particular stock, they are inclined to believe that there is a solid reason/logic behind it. In fact, a rating upgrade generally leads to stock price appreciation. Similarly, the price of a stock may plummet following a rating downgrade.

Estimates can move north for a number of reasons – favorable earnings performance, a bullish guidance, product launch or a favorable macro scenario.

Making the Most of Broker Opinions

The above write-up clearly suggests that by following broker actions, one can arrive at a winning portfolio of stocks. Keeping this in mind, we have designed a screen to shortlist stocks based on improving analyst recommendation 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 been included. The price/sales ratio takes care of the company’s top line, making the strategy foolproof.

And that's what we're screening for today…

For the rest of this Screen of the Week article please visit Zacks.com at: https://www.zacks.com/stock/news/293857/5-stocks-to-bet-on-following-recent-broker-rating-upgrades

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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.

About Screen of the Week

Zacks.com created the first and best screening system on the web earning the distinction as the "#1 site for screening stocks" by Money Magazine. But powerful screening tools is just the start. That is why Zacks created the Screen of the Week to highlight profitable stock picking strategies that investors can actively use.

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