5 Broker-Loved Stocks to Keep An Eye On Amid Cooling Inflation

The favorable inflation reading for the month of April has come as a relief. The slowdown in inflation has put to rest, at least for now, the fears related to it. The improving picture with respect to profitability in the first-quarter 2024 earnings season is another bright spot.

To take advantage of this brightening picture, investors are advised to have broker-loved stocks like American Public Education APEI, Bread Financial BFH, Warner Bros. Discovery WBD, Dana Incorporated DAN and eXp World Holdings EXPI in their portfolios.

Why Follow Broker Advice?

Brokers are believed to be experts in the field of investing and the belief is not arbitrary but backed by solid reasoning. They are equipped with a clear insight into the nitty gritty of the investment world.

Brokers have at their disposal a lot more information on a company and its prospects than individual investors. Brokers directly communicate with the top management. They also thoroughly study the publicly available documents and attend conference calls. Since brokers meticulously follow the stocks in their coverage, they revise their earnings estimates after carefully examining the pros and cons of an event for the concerned company. Naturally, their estimate revisions serve as an important pointer regarding the price of a stock.

We have designed a screen based on improving broker recommendations and upward estimate revisions over the last four weeks. Also, since the price/sales ratio is a strong complementary valuation metric, 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 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).

We have also added the following screening parameters to ensure that the strategy is a winning one:

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:

American Public Education benefits from its solid enrollment momentum, strong digital marketing campaigns and tuition grants to military students. Moreover, American Public has undertaken several initiatives to address increasing cost pressure.

American Public currently carries a Zacks Rank #3 (Hold). APEI surpassed the Zacks Consensus Estimate for earnings in each of the past four quarters, the average beat being 138.2%.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Bread Financial, based in Columbus, OH, continues to benefit from data-driven marketing strategies. Solid receivables growth in Card Services should drive its top line. Acquisitions are expected to 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 inched up 1.4%. Bread Financial currently carries a Zacks Rank #3.

Warner Bros. Discovery benefits from impressive streaming subscriber growth, driven by an expanding content portfolio. The company’s focus on sports streaming, particularly live sports, is a further tailwind.

WBD currently carries a Zacks Rank #3. The Zacks Consensus Estimate for WBD’s 2025 earnings has been revised upward over the past 60 days by more than 100%.

Dana Incorporated is a provider of power-conveyance and energy-management solutions for vehicles and machinery in North America, Europe, South America, and the Asia Pacific. The company is headquartered in Maumee, OH.

DAN currently carries a Zacks Rank #3. The Zacks Consensus Estimate for DAN’s 2024 earnings has been revised upward over the past 60 days by 16.7%.

eXp World is a cloud-based real estate brokerage company. EXPI has been benefiting from increased agent productivity and a rise in average home sales prices.

EXPI currently carries a Zacks Rank #3. The Zacks Consensus Estimate for DAN’s 2024 earnings has been revised upward over the past 60 days by 66.7%.

You can get the rest of the stocks on this list by signing up now for a 2-week free trial to the Research Wizard stock picking and backtesting software. You can also create your own strategies and test them first before making investments.

The Research Wizard is a great place to begin. It’s easy to use. Everything is in plain language. And it’s very intuitive. Start your Research Wizard trial today. And the next time you read an economic report, open up the Research Wizard, plug your finds in, and see what gems come out.

Click here to sign up for a free trial to the Research Wizard today.

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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