With the turbulent 2022 coming to an end, it’s time for investors to re-assess their portfolio and investment strategy for the New Year. While recent economic data point to the effectiveness of the Federal Reserve’s ultra-aggressive monetary tightening, we are still not out of the woods. The central bank is expected to keep interest rates high till inflation comes down reasonably.
This has made investors wary, as higher rates will likely lead to a recession/economic slowdown in 2023. The bearish sentiments are leading to huge market volatility, making it difficult for individual investors to pick stocks independently and generate solid returns. At this stage, one way to choose the right stocks in the current situation is to follow rating upgrades by brokers. In this regard, stocks like
The Chefs’ Warehouse, Inc.
CHEF
,
Synopsys, Inc.
SNPS
,
Enphase Energy, Inc.
ENPH
,
ONEOK, Inc.
OKE
and
Fabrinet
FN
are worth a look.
As brokers directly communicate with the top management, they have a deeper understanding of what is happening in a particular company. They meticulously assess companies’ publicly available documents and even attend conference calls.
Brokers have an extra understanding of the overall sector and industry. They place company fundamentals against the current economic backdrop to determine how a particular stock will fare as an investment.
Hence, when brokers upgrade a stock, you can rely on their judgment. But solely depending on broker upgrades is not a good way to build your investment portfolio. Several other factors should be taken into consideration to ensure steady returns.
Selecting the Winning Strategy
We have a screening strategy that will help you in your search for potential winners:
Broker Rating Upgrades (Four 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 trade 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:
Despite good or bad market conditions, stocks with a Zacks Rank #1 (Strong Buy) or 2 (Buy) have a proven record of success. You can see
the complete list of today’s Zacks #1 Rank stocks here
.
VGM Score
of 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.
Here are five of the seven stocks that qualified for the screening:
Ridgefield, CT-based
Chefs’ Warehouse
is engaged in the distribution of specialty food products. CHEF’s product portfolio includes nearly 50,000 stock-keeping units, such as specialty food products, such as artisan charcuterie, specialty cheeses, unique oils and vinegars, truffles, caviar, chocolate and pastry products.
Chefs’ Warehouse’s 2023 earnings are projected to grow 9.7%. The company, sporting a Zacks Rank #1 at present, has witnessed a 16.7% upward revision in broker ratings over the past four weeks.
Mountain View, CA-based
Synopsys
is a vendor of electronic design automation software for the semiconductor and electronics industries. SNPS’ products are used to design a chip, from concept to the point of delivery to the manufacturer for fabrication.
The company’s earnings for fiscal 2023 are expected to increase 13.8%. Synopsys, currently carrying a Zacks Rank #2, has witnessed an 8.3% upward revision in broker ratings over the past four weeks.
Headquartered in Fremont, CA,
Enphase Energy
is a global energy technology company that delivers energy management technology for the solar industry. ENPH designs, develops, manufactures and sells home energy solutions, which connect energy generation, energy storage and control and communications management on one intelligent platform.
Enphase Energy’s 2023 earnings are projected to rise 25.8%. The company, carrying a Zacks Rank #2 at present, has witnessed a 4.4% upward revision in broker ratings over the past four weeks.
ONEOK
, based in Tulsa, OK, is an energy company engaged in natural gas and natural gas liquids businesses. OKE’s operations are divided into three reportable business segments: Natural Gas Gathering and Processing, Natural Gas Liquids and Natural Gas Pipelines.
ONEOK’s 2023 earnings are projected to increase 13.9%. The company, carrying a Zacks Rank #2 at present, has witnessed a 7.1% upward revision in broker ratings over the past four weeks.
Cayman Islands-based
Fabrinet
provides optical packaging and precision optical, electro-mechanical and electronic manufacturing services. FN offers a wide range of advanced optical and electro-mechanical capabilities in the manufacturing process.
The company’s earnings for fiscal 2023 are expected to increase 22%. Fabrinet, currently carrying a Zacks Rank #2, has witnessed a 20% upward revision in broker ratings over the past four weeks.
Get the rest of the stocks on the list and start putting this and other ideas to the test. It can all be done with the Research Wizard stock picking and backtesting software.
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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