Monitor These 5 Broker-Backed Stocks for Strong Returns

In recent times, stock markets have witnessed sharp volatility, largely driven by ongoing tariff-related challenges. These pressures have heightened worries about an economic slowdown. Moreover, we are by no means out of the woods as far as inflation is concerned. Given this uncertain backdrop, choosing stocks to secure strong returns is not an easy task for individual investors.

One way to achieve the above objective is by following broker advice. Brokers are deemed to be experts in the field of investing. We believe that investors should keep an eye on broker-favorite stocks like Kimball Electronics KE, Alaska Air Group ALK, AutoNation AN, Asbury Automotive Group ABG and American Axle & Manufacturing Holdings AXL for healthy returns.

We have designed a screen to shortlist stocks based on improving analyst recommendations and upward estimate revisions over the last four weeks. Also, since the price/sales ratio is a strong complementary valuation metric in the presence of broker information, it has been included. The price/sales ratio takes care of the company’s top line, making the strategy a well-rounded one.

Screening Parameters 

# (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).

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 concerning this ratio).

Current 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 eliminates the ADR and Canadian stocks).

Here are five of the 10 stocks that made it through the screen:

Kimball Electronics operates across the globe. This multifaceted manufacturer offers Electronics Manufacturing Services and Contract Manufacturing Organization solutions to customers across the world.

Kimball Electronics surpassed the Zacks Consensus Estimate for earnings in three of the last four quarters and matched estimates in the other quarter. The average beat is 23.7%. The stock currently sports a Zacks Rank #1 (Strong Buy).

You can see the complete list of today’s Zacks #1 Rank stocks here

Alaska Air is based in Seattle, WA. The airline is being aided by low fuel costs. The carrier’s shareholder-friendly attitude also bodes well.

Over the past 60 days, the Zacks Consensus Estimate for 2025 earnings has been revised 1.9% upward. Alaska Air surpassed the Zacks Consensus Estimate for earnings in three of the last four quarters and missed once. The average beat is 29%. ALK currently carries a Zacks Rank #3 (Hold).

AutoNation is one of the largest automotive retailers in the nation, backed by a wide geographical footprint and a growing dealer network. Its ongoing store expansion strategy is helping it reach a broader customer base across key markets. Strategic acquisitions continue to fuel growth, including the recent purchase of two dealerships in the Greater Denver area.

AutoNation is also leaning into digital transformation with its AutoNation Express platform, which streamlines online vehicle buying and selling. AN surpassed the Zacks Consensus Estimate for earnings in three of the past four quarters and missed the mark once. The average beat was 7.5%. AN currently carries a Zacks Rank #3.

Asbury’s diversified product mix and multiple streams of income improve its risk profile and position it for top-line growth. Its e-commerce platform— Clicklane— is driving growth. Strategic buyouts are helping the auto retailer increase its market share. Asbury’s rollout of Tekion’s Automotive Retail Cloud is emerging as a strategic tailwind. 

Asbury currently carries a Zacks Rank #3. ABG beat the Zacks Consensus Estimate for earnings in two of the last four quarters and missed in the other two, the average beat being 5.9%. 

American Axle & Manufacturing: Its considerable strides and collaborations in the electric drive space and efforts to optimize its portfolio bode well for top- and bottom-line growth. Frequent business wins augur well for American Axle’s prospects. AXL recently won several contracts, underscoring its strength in both electric and Internal Combustion Engine markets.

AXL surpassed the Zacks Consensus Estimate for earnings in each of the past four quarters by a massive average of 584.1%. The stock carries a Zacks Rank #3 at present.

You can get the rest of the stocks on this list by signing up now for your 2-week free trial to the Research Wizard and start using this screen in your own trading. Further, you can also create your own strategies and test them first before taking the investment plunge.

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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This article originally published on Zacks Investment Research (zacks.com).

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