5 Stocks Loved by Brokers Worth Watching Currently

After spiking in the first quarter of 2024, inflation has been weakening from April. In fact, per the June data, the annual rate of inflation dropped to its lowest level in more than two years, raising hopes of a rate cut in September. This bodes well as low interest rates improve consumer outlays, decrease the cost of borrowings and, in turn, boost economic growth.

Additionally, second-quarter quarter earnings have been impressive so far, with many companies reporting better-than-expected earnings per share. Given this brightening scenario, investors would like to design a winning portfolio of stocks for impressive returns. One way to do so is by following broker advice. Stocks like ADTRAN ADTN, Bread Financial BFH, Owens & Minor OMI, Bally's Corporation BALY and AMC Networks AMCX are worth monitoring.

We have designed a screen to shortlist stocks based on improving broker recommendations and upward revisions in earnings estimates over the past four weeks. Also, since the price/sales ratio is a strong complementary valuation metric in the presence of broker information, it has been included. The price/sales ratio takes care of the company's top line, making the strategy a well-rounded one.

Screening Criteria

# (Up- Down Rating)/ Total (4 weeks) =Top #75 (This gives the list of the 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).

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

Price greater than 5 (as a stock trading below $5 will not likely create significant interest for most of the 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 in terms of 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:

ADTRAN is poised to capitalize on its strengths in ultra-broadband and fiber-to-the-home solutions along with Software-Defined or SD access and Ethernet passive optical network solutions. Its global leadership in SD access is likely to ensure a steady stream of revenues as it helps clients reduce costs and accelerate service delivery and deployment.

ADTN currently carries a Zacks Rank #3 (Hold). The Zacks Consensus Estimate for ADTN's 2024 earnings has remained stable over the past 60 days.

Bread Financial is based in Columbus, OH. The company continues to benefit from data-driven marketing strategies. Solid receivables growth in Card Services should drive its top line. Acquisitions and divestitures will aid the company in growing inorganically and expanding its international footprint.

Over the past 60 days, the Zacks Consensus Estimate for BFH's current-quarter earnings has increased 31%. Bread Financial currently carries a Zacks Rank #3.

Owens & Minor is a global healthcare solutions company. Shares of this Zacks Rank #3 company have gained 28% in the past month. In 2024, the company's earnings are expected to witness growth of 14.7% from 2023 actuals.

The Zacks Consensus Estimate for Owens & Minor's 2024 earnings is currently pegged at $1.56 per share, indicating a 2% upward revision over the past 30 days. OMI's earnings surpassed estimates in each of the last four quarters, with an average beat of 11.1%.

Bally's shares have been moving north lately following news of its merger agreement with Standard General L.P., valued at approximately $4.6 billion. The agreement involves combining Bally's with The Queen Casino & Entertainment Inc., a regional casino operator. 

Over the past 60 days, the Zacks Consensus Estimate for BALY's current-quarter earnings has increased 57%. The company currently carries a Zacks Rank #2 (Buy).

AMC Networks is benefiting from a rising focus on high-quality programming and strong partnerships, which, in turn, are driving subscriber growth and ad revenues.

Over the past 60 days, the Zacks Consensus Estimate for AMCX's current-quarter earnings has remained stable at $1.38 per share. The radio and television broadcast company currently carries a Zacks Rank #3.

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.

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