5 Broker-Loved Stocks to Watch Amid Steady Start to Q4 Earnings Season

The fourth-quarter earnings season is in its early stage, with 106 S&P 500 participants having reported results according to our latest Earnings Outlook, with 76.4% beating EPS estimates and 63.2% surpassing revenue estimates. The season is off to an impressive start, showcasing an improving earnings outlook.

Investors will be hoping that the momentum is maintained throughout the earnings season and a high proportion of companies report better-than-expected bottom-line numbers. This is because, generally, an earnings beat by a company often leads to an uptick in its stock price. Moreover, the scenario of easing inflation is a positive for investors.

Investors would like to take advantage of this rosy scenario by choosing appropriate stocks for a portfolio to achieve impressive returns. However, the task is not an easy one for individual investors. One way forward is to pay heed to broker advice. Brokers are considered experts in investing. We believe that investors monitor broker-favorite stocks like Cardinal Health CAH, AutoNation AN, Target Corporation TGT, Avnet AVT and ABM Industries ABM for healthy returns.

We have designed a screen to shortlist stocks based on improving broker recommendations and upward revisions in earnings estimates over the past 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 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.

To ensure that the strategy is a winning one, covering all bases, we have added the following screening parameters:

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.

Price greater than 5: A stock trading below $5 will not likely create significant interest for most 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 if one judges by 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:

Ohio-based Cardinal Health is one of the world’s largest healthcare services and products providers, operating across Pharmaceutical & Specialty Solutions, Global Medical Products & Distribution (“GMPD”) and other growth businesses.

The Zacks Consensus Estimate for CAH’s fiscal 2026 revenues suggests a year-over-year improvement of 16.3%. Cardinal Health boasts a long-term earnings growth rate of 14.7.% and currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

AutoNation is one of the largest automotive retailers in the United States. The company benefits from a wide geographic presence and a steadily expanding dealer network, which helps it reach more customers across key markets. AutoNation has been actively growing through acquisitions.

Beyond physical expansion, AutoNation is strengthening its digital capabilities through its AutoNation Express platform, making online vehicle buying and selling easier for customers. Over the past 60 days, the Zacks Consensus Estimate for AN’s 2026 earnings has been revised 0.3% upward. AutoNation currently carries a Zacks Rank #3 (Hold). 

Target is advancing a pivotal transformation with design-led merchandising, curated assortments and trend-forward owned brands that reinforce its style-and-value positioning. Target is leveraging advanced analytics to enhance demand forecasting, assortment planning and speed to market.

Over the past 60 days, the Zacks Consensus Estimate for AAL’s 2026 earnings has been revised 0.2% upward. The company surpassed the Zacks Consensus Estimate in two of the last four quarters and missed the mark on the other two occasions, with the average negative earnings surprise being 3.3%. Target currently carries a Zacks Rank #3.

Avnet is benefiting from the strength of the defense and data center end markets. Its continued focus on boosting the Internet of Things capabilities is helping it expand into newer markets and gain customers. Better sales execution is anticipated to aid revenue growth in the near term.

AVT, currently carrying a Zacks Rank of 3, has a decent surprise history, with its earnings surpassing the Zacks Consensus Estimate in three of the last four quarters and missing the mark on the other occasion. The average beat was 7.9%.

ABM Industries is a leading provider of integrated facility solutions, serving clients both in the United States and internationally. This company’s efforts to reward its shareholders bode well. ABM's2020 Vision and ELEVATE initiatives continue to drive growth.

ABM’s 2024 acquisition of Quality Uptime enhances its position in the fast-growing data center market, a key segment driven by rising AI investments. Over the past 60 days, the Zacks Consensus Estimate for ABM’s current-year earnings has been revised 2.2% upward.  ABM currently carries a Zacks Rank #3. 

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

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