5 Broker-Favored Stocks to Watch Amid Cooling Inflation

Inflation is showing signs of cooling, while consumer spending is increasing. U.S. consumer prices increased less than expected in May as cheaper gasoline partially offset higher rents. This was the fourth consecutive month when the core inflation rise was less than expected. Consumer confidence rebounded in May, indicating that people now have more faith in the economy’s prospects. 

Trade negotiations with several countries are ongoing. In this brightening scenario, monitoring broker-favorite stocks like BrightSpring Health Services BTSG, Allegiant Travel ALGT, CVR Energy CVI, Alta Equipment Group ALTG and Cracker Barrel Old Country Store CBRL appears prudent.

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).

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 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 eliminates the ADR and Canadian stocks).

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

BrightSpring: The company provides complementary and integrated home- and community-based pharmacy and health solutions for complex populations in need of specialized and/or chronic care. Through BTSG’s service lines, including pharmacy, home health care and primary care, rehabilitation, and behavioral health, the company provides comprehensive care and clinical solutions in all 50 states to over 400,000 customers, clients, and patients daily.

BrightSpring’s 2025 earnings growth rate is pegged at 96.4%. The Zacks Consensus Estimate for BTSG’s 2025 sales indicates a rise of 9.1% from 2024’s actuals. The stock carries a Zacks Rank #2 (Buy) currently. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here

Allegiant Travel is gaining from a buoyant air travel demand scenario. Efforts to upgrade its fleet are praiseworthy as well. ALGT aims to end 2025 with a fleet size of 122.

ALGT’s earnings surpassed estimates in three of the last four quarters (missing the mark once). The average beat was 32.7%. Allegiant currently carries a Zacks Rank #3 (Hold).

Established in 2006, CVR Energy is a holding company primarily involved in renewable energy, petroleum refining, marketing and nitrogen fertilizer manufacturing through its stake in CVR Partners. It is committed to developing renewable biofuels and actively participating in the energy transition to reduce carbon emissions.

CVI beat the Zacks Consensus Estimate for earnings in three of the trailing four quarters, missing the mark in the other. The company currently carries a Zacks Rank of 3.

Alta Equipment Group is a leading provider of premium material handling, construction and environmental processing equipment and related services. ALTG, currently carrying a Zacks Rank #3, offers its customers a one-stop shop for their equipment needs through its broad, industry-leading product portfolio.

ALTG has an expected earnings growth rate of 27.6% for the current year. The Zacks Consensus Estimate for June quarter earnings has been revised 10% upward over the past 60 days.  Alta currently carries a Zacks Rank of 3.

Cracker Barrel is prioritizing menu innovation and pricing to drive growth. The company is introducing the latest offerings, including shareable starters and specialty beverages, while optimizing pricing to enhance value. These initiatives aim to attract customers and support profitability.

CBRL has outpaced the Zacks Consensus Estimate for earnings in three of the last four quarters, missing the mark on the other occasion, the average beat being 68.5%. CBRL shares have gained 7.4% over the past six months. CBRL currently carries a Zacks Rank #3.

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.

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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.

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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