It is quite difficult to pick winning stocks in a volatile market. It could happen that one might end up with stocks not worth investing in. This is where guidance from “experts in the field” comes in handy.

Since brokers are in direct communication with companies, they have deeper insight into what’s happening in there. Hence, following what the majority of brokers are saying about a stock helps in understanding its potential.   

Brokers analyze fundamentals of the company and place them against the current economic backdrop to figure out how the stock will fare as an investment. Further, they have greater understanding of the overall industry and economy.

Specifically, brokers analyze the company’s publicly available financial statements, attend conference calls and communicate directly with top management. They even talk to customers to understand what they like or dislike about the products and services offered by the company.

So, a broker rating is backed by extensive study of a company’s fundamentals. When a broker upgrades a stock, one can easily rely on it.

Nevertheless, it’s not right to solely depend on broker upgrades to build investment portfolio. One should take into consideration certain other factors to ensure strong returns.

Choosing the Winning Strategy

We have a screening strategy that will help in your search for potential winners:

Broker Rating Upgrades (4 weeks) of 1% or more: The screen selects stocks that have witnessed broker rating upgrades of 1% or more over the last four weeks.

Current Price greater than 5: The stocks must be trading above $5.

Average 20-day Volume greater than 100,000: A large trading volume guarantees that the stock is easily tradable.

Zacks Rank equal to #1 or #2: No matter whether market conditions are good or bad, stocks with a Zacks Rank #1 (Strong Buy) or #2 (Buy) have a proven record of success. 

VGM Score equal to A or B: Our research shows that stocks with a VGM Score of A or B when combined with a Zacks Rank #1 or 2 offer the best upside potential.