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Actionable news in BREW: Craft Brew Alliance, Inc.,

Zacks.com featured highlights: Craft Brew Alliance, EZCORP, Service Corporation, Transocean Partners and Barnes & Noble

For Immediate Release

Chicago, IL – August 30, 2016 - Stocks in this week’s article include: Craft Brew Alliance Inc. (BREW), EZCORP, Inc. (EZPW), Service Corporation International (SCI), Transocean Partners LLC (RIGP) and Barnes & Noble, Inc. ( BKS).

Screen of the Week of Zacks Investment Research:

5 Stocks About to Pop on New Analyst Coverage

The importance of new analyst coverage is evident from the extensive data it unearths for investors. Analysts are privy to vital information and are crucial to investment decisions.

Coverage initiation of a stock by analyst(s) usually portrays bigger investor inclination. Investors, on their part, often assume that there is something special in a stock to attract analysts to cover it. In other words, they believe that the company coming under the microscope definitely holds some value.

Do analysts create value for companies by initiating coverage? Of course they do because they play an important intermediary role with their extensive access to relevant data. Many investors have a deep trust in the research work done by analysts as they fear that lack of information while researching on their own might trigger inefficiencies.

Obviously, stocks are not randomly chosen to cover. A new coverage on a stock usually reflects a reassuring future envisioned by the analyst(s). At times, increased investor focus on a stock motivates analysts to take a closer look at it. After all, who doesn’t like to produce something that is already in demand? Hence, we often find that analysts’ ratings on newly added stocks are more favorable than their ratings on continuously covered stocks.

Needless to say, the average change in broker recommendation is more preferable than a single recommendation change.

Impact on Stock Price

The price movement of a stock is generally a function of the recommendations on it from new analysts. Stocks typically see an upward price movement with a new analyst coverage compared to what they witness with a rating upgrade under an existing coverage. Positive recommendations – Buy and Strong Buy – generally lead to a significantly positive price reaction than Hold recommendations. On the contrary, analysts hardly initiate coverage with a Strong Sell or Sell recommendation.

Now, if an analyst gives a new recommendation on a company that has very few or no existing coverage, investors start paying more attention to it. Also, any new information attracts portfolio managers to build a position in the stock.

So, it’s a good strategy to bet on stocks that have seen increased analyst coverage over the last few weeks.

Screening Criteria

Number of Broker Ratings now greater than the Number of Broker Ratings four weeks ago (This will shortlist stocks that have recent new coverage.)

Average Broker Rating less than Average Broker Rating four weeks ago ('Less than' means 'better than' four weeks ago.)

The number of increased analyst coverage and improving average rating are the primary criteria of this strategy, but one should consider other relevant parameters to make the strategy foolproof. Here are the other screening parameters:

Price greater than or equal to 5 (as a stock below $5 will not likely create significant interest for most of the investors).

Average Daily Volume greater than or...


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