Zacks.com Featured Highlights: Commercial Vehicle Group, Boise Cascade, Datalink, DXP Enterprises And Global Brass & Copper

For Immediate Release

Chicago, IL – August 24, 2016 - Stocks in this week’s article include: Commercial Vehicle Group Inc. (CVGI), Boise Cascade Company (BCC), Datalink Corporation (DTLK), DXP Enterprises, Inc. ( DXPE) and Global Brass & Copper Holdings, Inc. (BRSS).

Screen of the Week of Zacks Investment Research:

Top 5 Stocks That Brokers Favor Right Now

Broker ratings are often the driving force behind a stock’s performance. This is because, it’s not easy for an individual investor to identify the underlying factors that could help or hurt a stock. And the perception that brokers being the specialists have the knowhow leads individual investors following them. So, adding broker rating upgrades to one’s stock screening criteria could optimize returns.

For an individual investor, identifying a stock’s driving force is akin to searching for ‘a needle in a haystack.’ This is where the role of broker ratings comes in handy. Of the three types of brokers/analysts (sell-side, buy-side and independent) present in the investment world, sell-side analysts are most common. Various brokerage firms employ them to provide unbiased opinion to investors after thorough research. Buy-side analysts are employed by hedge funds, mutual funds etc. while the independent ones simply sell their reports to investors.

Brokers, not only scrutinize the publicly available financial documents, but also attend company conference calls and other presentations. Naturally, it is in the best interest of investors to pay heed to such well-researched information as they aim to generate maximum returns from their portfolio.

Earnings Estimate Revisions

Since brokers arrive at their recommendation (buy, sell or hold) on a stock after thoroughly analyzing the nitty-gritties associated with the company, it is natural that for investors to be guided by the direction of estimate revisions while deciding their course of action on a particular stock. The estimate revisions serve as an important pointer regarding the price of a stock. In fact, a rating upgrade generally leads to stock price appreciation. Similarly, the price of a stock may plummet following a rating downgrade.

One of the well-accepted winning strategies is to maintain a diversified portfolio to generate handsome returns irrespective of the surrounding market conditions. For example, in a regime of extremely low oil prices, analysts become bullish on airline stocks and consequently raise estimates. Naturally, adding such stocks to one’s portfolio in such a scenario might prove to be a winning strategy. Similarly, analysts might trim estimates and downgrade a stock following some adverse events like lackluster earnings performance or pipeline failure (for a biotech player). Naturally, investors would look to off load such stocks from their portfolio based on brokers’ stance.

Making the Most of What Analysts Say

We have designed a screen to shortlist stocks based on improving analyst recommendation and upward revisions to earnings estimates over the last four weeks. Also, since the price/sales ratio is a strong complementary valuation metric in the presence of analyst information, 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 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 criteria are in 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:

Commercial Vehicle Group Inc. (CVGI), based in New Albany, Ohio, provides interior systems, vision safety solutions, and other services to the commercial vehicle industry. The company has delivered massive earnings surprises (in excess of 100%) in each of the last two quarters. The 2016 Zacks Consensus Estimate for earnings has increased 61.5% to 21 cents per share over the last 60 days.

Boise Cascade Company (BCC), based in Boise, ID, operates as a wood products manufacturer and building materials distributor. The company has an impressive track with respect to earnings, having surpassed the Zacks Consensus Estimate in three of the last four quarters by an average in excess of 100%.

Datalink Corporation (DTLK) , based in Eden Prairie, Minnesota, is a provider of data center services and solutions. The company’s expected earnings growth rate, over the next 3-5 years, is well over 100%. The 2016 Zacks Consensus Estimate for earnings has increased 22.6% to 38 cents per share over the last 60 days.

DXP Enterprises, Inc. (DXPE), based in Houston, Texas, engages in distributing, maintenance, repair and operating (MRO) products, equipment, and services to industrial customers in the U.S. The company has surpassed the Zacks Consensus Estimate in three of the last four quarters. The 2016 Zacks Consensus Estimate has improved significantly over the 60 days and currently hints at an earnings of 30 cents per share compared with a loss of 38 cents 2 months ago.

Global Brass & Copper Holdings, Inc. (BRSS): The company, based in Schaumburg, IL, is a converter, fabricator, distributor and processor of copper and brass products primarily in North America. The company also engages in metal melting and casting, rolling, drawing, extruding and stamping to fabricate finished and semi-finished alloy products. The 2016 Zacks Consensus Estimate for earnings has increased 4.2% to $2.24 per share over the last 60 days. The company’s 2016 earnings are projected to grow at 8%, which compares favorably to the industry average of a loss of 1.6%.

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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 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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