5 Stocks to Make the Most of New Analyst Coverage

Analysts don’t add a stock to their coverage randomly. New coverage on a stock is usually the result of huge investor focus on it or its promising prospects.

Interestingly, stocks typically see an incremental upward price movement with new analyst coverage compared to what they witness with continuation of existing analyst coverage. Of course, the price movement depends on the recommendations from new analysts. Positive recommendations — Buy and Strong Buy — lead to a significant positive incremental price reaction than Strong Sell, Sell or Hold recommendations.

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

However, one should preferably look for the average change in broker recommendation rather than a single recommendation change. Then again, an upgrade, an initiation or even increased coverage is equally important.

Keeping this mind, it’s a good strategy to focus on the number of analyst recommendations that have increased over the past few weeks.

Below, we have selected five stocks that have seen increased analyst coverage over the past 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).

Increased analyst coverage and improving average rating are the primary criteria of this strategy but one should consider other relevant parameters to make it 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 investors).

Average Daily Volume greater than or equal to 100,000 shares (if volume isn’t enough, it will not attract individual investors).

Here are five of the 18 stocks that passed the screen:

Raven Industries, Inc. RAVN: Headquartered in Sioux Falls, SD, this technology company currently carries a Zacks Rank #2 (Buy). The stock has gained 74.3% year to date compared with the industry’s 14.1% rally. Earnings estimates for 2021 have moved up 14.1% over the past 60 days. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

HCI Group, Inc. HCI: Headquartered in Tampa, FL, this is a holding company that conducts business activities through subsidiaries. The Zacks Rank #2 stock has surged 88.2% year to date, outperforming the industry’s 15.9% rally. Earnings estimates for 2021 have moved up 6.7% over the past 60 days. The company’s earnings are expected to grow 18.8% for 2022.

Brady Corporation BRC: Based in Milwaukee, WI, this company manufactures and supplies identification solutions and workplace safety products. The Zacks Rank #2 stock has increased 9.9% year to date compared with the industry’s 26.8% rally. Nonetheless, earnings estimates for the current year have moved up 3.1% over the past 60 days. Its earnings are expected to grow 25.6% for the current fiscal year.

LG Display Co., Ltd. LPL: Based in Seoul, South Korea, this company mainly manufactures and sells thin film transistor liquid crystal display panels. The Zacks Rank #3 (Hold) stock has gained 26% year to date, outperforming the industry’s 15.6% rally. Earnings estimates for 2021 have moved up 2.5% over the past 30 days. Its earnings are expected to grow 1,981.8% for 2021.

Anterix Inc. ATEX: Based in Woodland Park, NJ, this company operates as a wireless communications company. The Zacks Rank #3 stock has gained 64.8% year to date, outperforming the industry’s 24.4% rally. Loss estimates for 2021 have narrowed to $1.90 per share from $2.09 over the past 30 days. The company’s bottom line is expected to grow 39.3% for 2021.

You can get the rest of the stocks on this list by signing up now for your 2-week free trial to the Research Wizard and start using this screen in your own trading. Further, you can also create your own strategies and test them first before taking the investment plunge.

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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.

Disclosure: Performance information for Zacks’ portfolios and strategies are available at: https://www.zacks.com/performance

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Raven Industries, Inc. (RAVN) : Free Stock Analysis Report
 
LG Display Co., Ltd. (LPL) : Free Stock Analysis Report
 
HCI Group, Inc. (HCI) : Free Stock Analysis Report
 
Brady Corporation (BRC) : Free Stock Analysis Report
 
Anterix Inc. (ATEX) : Free Stock Analysis Report
 
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