Zacks.com Highlights: Dean Foods, Big Lots, AMC Entertainment Holdings, Commercial Metals And Delek US Holdings

For Immediate Release

Chicago, IL – Oct 23, 2017 - Stocks in this week’s article include: Dean Foods Company, Big Lots (NYSE:BIG), AMC Entertainment Holdings, Inc., Commercial Metals Company and Delek US Holdings, Inc.

Screen of the Week of Zacks Investment Research:

5 Broker-Favorite Stocks to Keep an Eye On

Proper guidance is often the difference between success and failure in life. The same holds true for the investing world as well. The need for proper guidance from brokers is all the more required now as the Q3 earnings season is underway and investors will target stocks that have the potential to surpass earnings expectations in the current reporting cycle. This is because an earnings beat generally leads to stock price appreciation.

The task of designing one’s portfolio with outperformers is by no means an easy one. This is because, a deluge of stocks flood the market at any given point in time. In the absence of proper guidance, identifying a winning stock is akin to searching for ‘a needle in a haystack’, for an investor. Proper guidance, in this respect, comes from brokers, who are deemed 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.

Be Guided by Broker Advice

Brokers, not only scrutinize the publicly available financial documents, but also attend company conference calls and other presentations. Naturally, it is in the best interest of investors to pay heed to such well-researched information as they aim to generate maximum returns from their portfolio. The estimate revisions serve as an important pointer regarding the price of a stock. In fact, a rating upgrade normally leads to stock price appreciation and vice versa.

One of the well-accepted investment strategies is to maintain a diversified portfolio to generate handsome returns irrespective of the market conditions. For instance, in the face of extremely low oil prices, analysts adopt a bullish stance on airline stocks and consequently raise estimates. Naturally, adding such stocks to one’s portfolio in such a scenario might prove to be a winning strategy. Similarly, analysts might trim estimates and downgrade a stock following adverse events like lackluster earnings or pipeline failure (for a biotech player). Unsurprisingly, investors look to offload such stocks from their portfolio on the basis of broker advice.

To take care of the earnings performance, we have designed a screen based on improving analyst recommendation and upward estimate revisions 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 also been included. The price/sales ratio takes care of the company’s top line, thereby making the strategy foolproof.

Screening Criteria

# (Up- Down Rating)/ Total (4 weeks) =Top #75: This gives the list of top 75 companies that have witnessed net upgrades over the last 4 weeks.

% change in Q (1) est. (4 weeks) = Top #10: This gives the top 10 stocks that have witnessed earnings estimate revisions over the past 4 weeks for the upcoming quarter.

To ensure that the strategy is a winning one, covering all bases, we have added the following screening parameters:

Price-to-Sales = Bot%10: The lower the ratio the better. Companies meeting this criterion are in bottom 10% of our universe of over 7,700 stocks with respect to this ratio.

Price greater than 5: A stock trading below $5 will not likely create significant interest for most investors.

Average Daily Volume greater than 100,000 shares over the last 20 trading days: Volume has to be significant to ensure that these are easily traded.

Market value ($ mil) = Top #3000: This gives us stocks that are the top 3000 if one judges by market capitalization.

Com/ADR/Canadian= Com: This takes out the ADR and Canadian stocks.

Here are five of the 10 stocks that made it through the screen:

Dean Foods Company, based in Dallas, TX, is a leading processor and distributor of milk and other dairy products in the United States as well as a leading manufacturer of various specialty food products. This Zacks Rank #3 (Hold) company has a healthy 7% expected EPS growth rate for 3–5 years.

Based in Columbus, OH and founded in 1967, Big Lots is a broad-line closeout retailer in the United States. The company offers products under various merchandising categories, which include Food, Consumables, Furniture, Seasonal, Soft Home, Hard Home, and Electronics & Accessories. The company has an impressive track record with respect to earnings, having surpassed the Zacks Consensus Estimate in each of the past four quarters by an average of 81.1%. The stock carries a Zacks Rank #2 (Buy). You can see Zacks Investment Research

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Written By: Zacks Investment Research