How to Find ‘Strong Buy’ Stocks to Fight Market Uncertainty
The S&P 500 and Nasdaq both hit new 52-week lows Tuesday morning as Wall Street prepares to enter the heart of third-quarter earnings season later this week. Investors are also eagerly awaiting the release of the September inflation data on October 13th. Shares showed some signs of life through midday trading as the market attempted to break a four-day losing streak.
The overall picture of S&P 500 earnings has deteriorated somewhat rapidly since the summer as inflation and rising interest rates eat away at consumer spending and, in turn, economic growth and corporate earnings. JPMorgan, Citigroup and other giants head into the busy part of the quarterly earnings season at the end of the week. Investors will be more alert than ever to signs of economic health in the fourth quarter and early 2023.
September’s CPI data, to be released on Thursday, is another major test for the market, with investors hoping to see signs of a cooldown in prices. The US 10-year Treasury yield has rebounded since the start of the month, but still remains below its recent highs of 4%.
The market and economic turmoil could leave many investors on the sidelines. But parking your money in cash currently carries an 8% fee, and buying bonds can result in negative real returns.
Investors may be better suited to buying stocks that have raised their earnings outlook amid the broader downturn and may be poised to outperform the market going forward. Investors can use the Filtered Zacks Rank 5 Stock Screen to find potential winners who have given a bullish bottom line prediction as the broader earnings outlook wanes.
Zacks Rank #1 (strong buy) Stocks outperform the market in both good times and bad. However, there are over 200 stocks that receive a Zacks #1 rank at any given time. As such, it’s helpful to understand how filters are applied to Zacks rank to narrow the list down to a more manageable and tradable group of stocks.
parameter
Of course, there are only three items on this screen. But together, these three filters can lead to impressive returns.
• Zacks rank equals 1
Starting with a #1 Zacks rank is often a strong place to start, as it has averaged annual returns of about 24.4% per year since 1988.
• Estimated % change (Q1) over 4 weeks greater than 0
Positive revisions to current quarterly estimates over the last four weeks.
• % change in agent rating over 4 weeks equals top #5
The top 5 stocks with the best average broker rating have changed over the last four weeks.
This strategy loads with the research wizard and is called bt_sow_filtered zacks rank5. It can be found in the SoW (Screen of the Week) folder.
Here are two of five Stocks that qualified for the Filtered Zacks Rank 5 strategy today…
Black Stone Minerals, LP BSM
Black Stone Minerals is one of the largest owners of oil and natural gas mineral interests in the United States. Black Stone Minerals owns mineral interests and royalties in 41 states. BSM operates on the philosophy that its “large, diversified asset base and long-lived, non-cost-bearing mineral and royalty interests ensure stable to growing production and reserves over time, allowing the majority of the cash flow generated to be distributed to shareholders.”
BSM’s dividend is currently a whopping 9.8%, beating the industry average of 8.2%. Black Stone Minerals – Master Limited Partnerships’ Energy and Pipelines industry is currently ranked in the top 1% of over 250 Zacks industries. BSM’s stock is up 165% over the past two years, compared to the industry’s 145%. This includes a 15% pop over the past six months. Also, the top and bottom line prospects are pretty impressive.
Oxford Industries, Inc. OXM
Oxford Industries is a slightly under-the-radar standout clothing company that owns Tommy Bahama, Lilly Pulitzer, Southern Tide and other smaller brands. Oxford Industries has expanded its portfolio over the years and has seen tremendous growth in 2021. The company last beat our Q2 estimates in early September and issued an upbeat guidance, with its Zacks Consensus FY22 EPS estimate up 6% and its FY23 figure up over 12%.
Zacks estimates that Oxford Industries will see revenue growth of 22% in 2022 and an additional 13% in 2023, alongside 31% and 11% EPS growth, respectively. The growth outlook underscores the continued strength of higher-income consumers. The company also flexed its growth-oriented muscles when it announced the purchase of another brand, Johnny Was, on Sept. 19. OXM’s 2.5% dividend yield beats its industry and Nike’s 1.4%. Also, Oxford Industries stock is up 110% over the past two years, while up 2% over the past six months.
Check out the rest of the stocks on this list and start trading the Filtered Zacks Rank 5 (or any of our other strategies) in your own account. Remember, the key to successful screening is finding screens that have had profitable results in the past. And that’s exactly what you get with Research Wizard’s stock selection and backtesting program.
Get the rest of the stocks on this list and look for the latest companies that meet these criteria. It’s easy to do. And it could help you find your next big winner. Start researching these companies today with a free trial of the Research Wizard. You can do it.
Click here to sign up for a free trial of Research Wizard today.
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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 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 mentioned in this material.
Disclosure: Performance information on Zacks portfolios and strategies is available at: https://www.zacks.com/performance/
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