Zacks.com Featured Expert Kevin Matras Highlights: Chef's Warehouse, Easterly Government Properties, Opus Bank, TowneBank And UGI
Zacks Investment Research | Dec 05, 2017 09:24PM ET
For Immediate Release
Chicago, IL – December 6, 2017 - Stocks in this week’s article include: The Chef’s Warehouse (NASDAQ:CHEF) , Easterly Government Properties (NYSE:DEA) , Opus Bank (NASDAQ:OPB) , TowneBank (NASDAQ:TOWN) and UGI Corp. (NYSE:UGI) . Kevin Matras screens for companies showing their 'first' profit, and explains why they are ones to watch.
The Power of New Analyst Coverage
Screen of the Week written by Kevin Matras of Zacks Investment Research:
Broker recommendations -– love them or hate them, they do have their place. And we all look at them eventually.
Whether you're a small individual investor or a large institutional portfolio manager (or somewhere in between), who doesn't like it when a stock gets an upgraded rating or sees a new analyst jumping in with coverage? We all do. (Although I should note that, in general, the change in the average broker recommendation is a better indicator than the actual recommendation itself.)
Anyway, today I want to talk about companies that receive new analyst coverage.
One of the things that generates analyst coverage is investor interest. How else can you explain the increased analyst coverage for Facebook (NASDAQ:FB) (a company that's only been public for 2 1/2 yrs.) in comparison to a company like GE (public for more than 40 yrs.)?
And as new coverage is initiated, it becomes more visible, which in turn means potentially more demand (read higher prices).
This is often the case because analysts almost always initiate coverage with a positive recommendation. (Why write a research report on a company not widely followed only to say it stinks?)
And when it comes to companies with little to no analyst coverage, that one new recommendation can sometimes give portfolio managers the validation they need to build a position. (And the more money they can invest, the more they can potentially influence prices.)
The best way to use this information is to look for companies with analyst coverage that has increased over the last 4 weeks.
Simply look at the number of analyst recommendations now in comparison to the number of analyst recommendations 4 weeks ago. An increase in coverage is bullish whereas a decrease in coverage is bearish.
It's typically more bullish if the increase went from none to one or if the coverage was minimal to begin with. (Going from 25 to 26 isn't going to have the same impact because that 26th analyst isn't discovering something 'new'.) But increased coverage is better than decreased coverage –- assuming the coverage is positive of course.
For the rest of this Screen of the Week article please visit Zacks.com at: Zacks Investment Research
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