With a new year upon us, I was interested to see what the brokers were saying and what their best picks were. So I decided to build a top down broker screen and see for myself. Let’s get right into it.
I first wanted to isolate their top Sectors.
* Average Broker Rating: Best 8 sectors with the lowest Average Broker Rating
I picked the best 8 Sectors since that represents half of the Sectors in our Universe. We specified the ‘lowest’ average broker rating of course because the lower the broker rating the better. Then I wanted to find the stocks getting broker rating upgrades.
* % Broker Rating Change – 4 weeks: Top 10 stocks in each Sector
This item selects the top stocks with the biggest broker rating change or broker rating upgrade over the last 4 weeks. Since we said top 10 stocks in each sector and since we screened for the best 8 sectors, we’ll get 80 stocks passing our screen at this point. And from a wide range of industries within those sectors.
Not surprisingly, it’s been proven that broker rating upgrades significantly outperform stocks with no upgrades, and even more so ones with downgrades. This screen will put only those stocks that have seen a recent upgrade on the list.
Then, I wanted to find the ones with the best upward estimate revisions.
* F1 Earnings Estimate Revisions for last 1 week Last 4 weeks: Top 30 stocks
For this one we’re looking for the stocks with the highest total upward earnings estimate revisions for F1 over the last 1 week and 4 weeks combined. With the start of earnings season, we’re looking for the ones with the best upward revisions.
As we all know, earnings estimate revisions are one of the most powerful forces impacting stock prices, and this screen will put them on our radar. Plus, seeing a broker raise their estimates right before earnings is usually a good sign and shows their confidence.
My screen narrowed the list down to 30 stocks. Here are 5 from that list for this week (1/10/11):
- BEAV – BE Aerospace, Inc.
- DHR – Danaher Corp.
- KNL – Knoll, Inc.
- SSCC – Smurfit-Stone Container Corp.
- SON – Sonoco Products Co.
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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.
