On Tuesday, the market experienced a significant surge, leading the S&P 500 and Nasdaq to reclaim their 50-day moving averages. Following the August pullback, investors are now looking to regain control and are showing increased interest in growth stocks like Tesla and Nvidia.
Investors should closely monitor the 50-day moving average, as it serves as an important indicator of bullish sentiment. The release of the Fed’s preferred inflation gauge (the PCE) and the upcoming August jobs report are potential catalysts that could cause a flurry of buying or selling in the near term.
Analysts are growing more optimistic about the Fed’s ability to achieve a soft landing for the economy. The lower-than-expected job openings data indicates that the economy is cooling down while remaining resilient. Investors are pleased to see that the Fed is not becoming complacent, as slightly higher rates for a longer period are preferable to rising inflation.
The outlook for earnings remains strong despite the challenges faced during the second quarter. According to Zacks data, S&P 500 earnings are projected to surge in the coming years, making it wise for investors to remain exposed to the stock market in September and beyond.
Using New Analyst Coverage to Find Stocks
An effective strategy for finding potentially profitable stocks is to focus on those gaining analyst coverage. Analysts are more likely to cover a stock they believe has significant upside potential. By searching for stocks with increased analyst coverage, investors can identify market-beating opportunities.
Increased analyst coverage is generally considered bullish, while decreased coverage may indicate bearish behavior. Examining the change in the average broker recommendation is often more valuable than the recommendation itself.
In the search for stocks with analyst coverage, the following parameters can be applied:
- Number of broker ratings now greater than the number four weeks ago
- Average broker rating less than the average four weeks ago
- Prices greater than or equal to $5
- Average daily volume greater than or equal to 100,000 shares
One example of a stock that meets these criteria is MSA Safety Incorporated (MSA). The company is a global safety equipment and solutions provider, offering a range of products for various industries. MSA Safety has demonstrated impressive revenue growth and has a positive earnings outlook.
Despite the recent price increase, MSA stock still trades at a discount compared to its historical highs. By leveraging tools like the Research Wizard, investors can access valuable information about analyst coverage and make informed investment decisions.
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Zacks’ Super Screen
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