Here is a couple of stocks that might be worth your attention this week. This short list was compiled with help of various sources of data, including Buy recommendations from several renowned stock data providers and analytical services. This is why I'm calling the approach a consensus strategy. The stocks I'm going to present you below are generally believed to outperform the stock market in the coming months, they have a consensus recommendation of Buy, their fundamentals are scored considerably better than most stocks and their average target price by stock analysts is above current market valuation.
In order to consider buying the stock's shares, the following criteria need to be satisfied:
- TheStreet score: A+ or A
- Zacks Rank: 1 (Strong Buy), 2 (Buy) or 3 (Hold)
- Weiss Ratings recommendation: A or B
- Yahoo Finance recommendation: at least mixed Buy/Hold
- MarketBeat recommendation: at least mixed Buy/Hold
- Yahoo Finance target price: min. 5% higher than current price
- MarketBeat target price: min. 5% higher than current price
- Piotroski F-Score: min. 4
- Moody's Daily Credit Risk: 1 to 6
- InvestorsObserver Overall Score: min. 50
Note: Descriptions of those criteria are provided at the end of this post.
If you decide to buy any of the below stocks, you might want to consider the following selling conditions (at least one of them should be satisfied):
- price is higher or close to target
- profit is in range 20% - 30%
- loss is higher than 50%
- TheStreet recommendation is changed to Sell
- Weiss Ratings recommendation is changed to Sell
- Yahoo Finance recommendation is changed to Sell
Let's now take a look at the stocks I've identified with this strategy today.
AKAMAI TECHNOLOGIES INC (AKAM)
Sector: Technology Services
Industry: Internet Software/Services
Employees: 7724
Description: Akamai Technologies, Inc. engages in the provision of cloud services for delivering, optimizing, and securing content and business applications over the Internet. Its products include security, web performance, media delivery, and network operator.
Dividend: NA
Current valuation: $108.84
Valuation of entry parameters:
- TheStreet score: A
- Zacks Rank: Hold
- Weiss Ratings recommendation: B (Buy)
- Yahoo Finance recommendation: Buy
- MarketBeat recommendation: Buy
- Yahoo Finance target price: $124.65
- MarketBeat target price: $117.70
- Piotroski F-Score: 8
- Moody's Daily Credit Risk: 4
- InvestorsObserver Overall Score: 77
CASEYS GENERAL STORES INC (CASY)
Sector: Retail Trade
Industry: Specialty Stores
Employees: 37153
Description: Casey's General Stores, Inc. engages in the management and operation of convenience stores and gasoline stations. It provides self-service gasoline, a wide selection of grocery items and an array of freshly prepared food items. The firm offers food, beverages, tobacco products, health and beauty aids, automotive products, and other non-food items.
Dividend: Casey's General Stores pays an annual dividend of $1.28 per share, with a dividend yield of 0.75%. CASY's next quarterly dividend payment will be made to shareholders of record on Monday, November 16. The company has grown its dividend for the last 17 consecutive years and is increasing its dividend by an average of 9.86% each year. Casey's General Stores pays out 18.03% of its earnings out as a dividend.
Current valuation: $171.86
Valuation of entry parameters:
TheStreet score: A+
Zacks Rank: Strong Buy
Weiss Ratings recommendation: B (Buy)
Yahoo Finance recommendation: Buy
MarketBeat recommendation: Buy / Hold
Yahoo Finance target price: $193.56
MarketBeat target price: $191.11
Piotroski F-Score: 7
Moody's Daily Credit Risk: 4
InvestorsObserver Overall Score: 55
CHEMED CORP (CHE)
Sector: Health Services
Industry: Medical/Nursing Services
Employees: 16641
Description: Chemed Corp. engages in the provision of healthcare and maintenance services. It operates through the following segments: VITAS and Roto-Rooter. The VITAS segment offers hospice and palliative care services to patients through a network of physicians, registered nurses, home health aides, social workers, clergy, and volunteers. The Roto-Rooter segment includes plumbing, drain cleaning, water restoration, and other related services to residential and commercial customers.
Dividend: Chemed pays an annual dividend of $1.36 per share, with a dividend yield of 0.29%. CHE's most recent quarterly dividend payment was made to shareholders of record on Friday, September 4. The company has grown its dividend for the last 11 consecutive years and is increasing its dividend by an average of 7.43% each year. Chemed pays out 9.75% of its earnings out as a dividend.
Current valuation: $470.63
Valuation of entry parameters:
TheStreet score: A
Zacks Rank: Hold
Weiss Ratings recommendation: B (Buy)
Yahoo Finance recommendation: Buy
MarketBeat recommendation: Buy
Yahoo Finance target price: $565.0
MarketBeat target price: $520.00
Piotroski F-Score: 7
Moody's Daily Credit Risk: 1
InvestorsObserver Overall Score: 55
DOLLAR GENERAL CORP (DG)
Sector: Retail Trade
Industry: Discount Stores
Employees: 143000
Description: Dollar General Corp. engages in the operation of merchandise stores. Its offerings include food, snacks, health and beauty aids, cleaning supplies, basic apparel, housewares, and seasonal items. It sells brands including Clorox, Energizer, Procter & Gamble, Hanes, Coca-Cola, Mars, Unilever, Nestle, Kimberly-Clark, Kellogg\'s, General Mills, and PepsiCo.
Dividend: Dollar General pays an annual dividend of $1.44 per share, with a dividend yield of 0.71%. DG's next quarterly dividend payment will be made to shareholders of record on Tuesday, October 20. The company has grown its dividend for the last 4 consecutive years and is increasing its dividend by an average of 7.72% each year. Dollar General pays out 21.40% of its earnings out as a dividend.
Current valuation: $205.03
Valuation of entry parameters:
TheStreet score: A+
Zacks Rank: Hold
Weiss Ratings recommendation: A (Strong Buy)
Yahoo Finance recommendation: Buy
MarketBeat recommendation: Buy
Yahoo Finance target price: $222.76
MarketBeat target price: $213.70 (upside of 4.7%, slightly below the 5% threshold)
Piotroski F-Score: 7
Moody's Daily Credit Risk: 4
InvestorsObserver Overall Score: 74
INTERCONTINENTAL EXCHANGE (ICE)
Sector: Finance
Industry: Investment Banks/Brokers
Employees: 5989
Description: Intercontinental Exchange, Inc. engages in the management of online marketplace. It operates through the Trading and Clearing; and Data and Listings segments. The Trading and Clearing segment offers transaction-based executions and clearing activities. The Data and Listings segment includes securities and subscription-based data services.
Dividend: Intercontinental Exchange pays an annual dividend of $1.20 per share, with a dividend yield of 1.22%. ICE's next quarterly dividend payment will be made to shareholders of record on Thursday, December 31. The company has grown its dividend for the last 1 consecutive years and is increasing its dividend by an average of 17.39% each year. Intercontinental Exchange pays out 30.93% of its earnings out as a dividend.
Current valuation: $98.71
Valuation of entry parameters:
TheStreet score: A
Zacks Rank: Hold
Weiss Ratings recommendation: B (Buy)
Yahoo Finance recommendation: Buy
MarketBeat recommendation: Buy
Yahoo Finance target price: $111.88
MarketBeat target price: $106.42
Piotroski F-Score: 7
Moody's Daily Credit Risk: 4
InvestorsObserver Overall Score: 63
LOCKHEED MARTIN CORP (LMT)
Sector: Electronic Technology
Industry: Aerospace & Defense
Employees: 110000
Description: Lockheed Martin Corp. operates as a global security and aerospace company, which engages in the research, design, development, manufacture, integration, and sustainment of technology systems, products, and services. It operates through the following business segments: Aeronautics, Missiles and Fire Control (MFC), Rotary and Mission Systems (RMS) and Space.
Dividend: Lockheed Martin pays an annual dividend of $9.60 per share, with a dividend yield of 2.53%. LMT's next quarterly dividend payment will be made to shareholders of record on Friday, September 25. The company has grown its dividend for the last 17 consecutive years and is increasing its dividend by an average of 9.96% each year. Lockheed Martin pays out 43.74% of its earnings out as a dividend.
Current valuation: $378.1
Valuation of entry parameters:
TheStreet score: A+
Zacks Rank:
Weiss Ratings recommendation: B- (Buy)
Yahoo Finance recommendation: Buy
MarketBeat recommendation: Buy
Yahoo Finance target price: $438.65
MarketBeat target price: $448.33
Piotroski F-Score: 8
Moody's Daily Credit Risk: 3
InvestorsObserver Overall Score: 68
MERCK & CO (MRK)
Sector: Health Technology
Industry: Pharmaceuticals: Major
Employees: 71000
Description: Merck & Co., Inc. engages in the provision of health solutions through its prescription medicines, vaccines, biologic therapies, animal health, and consumer care products. It operates through the following segments: Pharmaceutical, Animal Health, Healthcare Services, and Alliances.
Dividend: Merck & Co., Inc. pays an annual dividend of $2.44 per share, with a dividend yield of 2.95%. MRK's next quarterly dividend payment will be made to shareholders of record on Wednesday, October 7. The company has grown its dividend for the last 1 consecutive years and is increasing its dividend by an average of 6.90% each year. Merck & Co., Inc. pays out 47.01% of its earnings out as a dividend.
Current valuation: $82.72
Valuation of entry parameters:
TheStreet score: A
Zacks Rank: Hold
Weiss Ratings recommendation: B- (Buy)
Yahoo Finance recommendation: Buy
MarketBeat recommendation: Buy
Yahoo Finance target price: $95.94
MarketBeat target price: $94.54
Piotroski F-Score: 8
Moody's Daily Credit Risk: 3
InvestorsObserver Overall Score: 69
MICROSOFT CORP (MSFT)
Sector: Technology Services
Industry: Packaged Software
Employees: 163000
Description: The Company develops, licenses, and supports a range of software products, services and devices. The Company's products include operating systems; cross-device productivity applications; server applications; business solution applications etc. It also designs, manufactures, and sells devices, including personal computers (PCs), tablets, gaming and entertainment consoles, phones, other intelligent devices, and related accessories, that integrate with its cloud-based offerings. It offers an array of services, including cloud-based solutions that provide customers with software, services, platforms, and content, and it provides solution support and consulting services.
Dividend: Microsoft pays an annual dividend of $2.04 per share, with a dividend yield of 1.03%. MSFT's next quarterly dividend payment will be made to shareholders of record on Thursday, December 10. The company has grown its dividend for the last 10 consecutive years and is increasing its dividend by an average of 8.74% each year. Microsoft pays out 35.42% of its earnings out as a dividend.
Current valuation: $197.61
Valuation of entry parameters:
TheStreet score: A+
Zacks Rank: Hold
Weiss Ratings recommendation: B (Buy)
Yahoo Finance recommendation: Buy
MarketBeat recommendation: Buy
Yahoo Finance target price: $228.71
MarketBeat target price: $217.45
Piotroski F-Score: 8
Moody's Daily Credit Risk: 2
InvestorsObserver Overall Score: 73
UNITEDHEALTH GROUP INC (UNH)
Sector: Health Services
Industry: Managed Health Care
Employees: 325000
Description: UnitedHealth Group, Inc. engages in the provision of health care coverage, software, and data consultancy services. It operates through the following segments: UnitedHealthcare, OptumHealth, OptumInsight, and OptumRx. The UnitedHealthcare segment utilizes Optum's capabilities to help coordinate patient care, improve affordability of medical care, analyze cost trends, manage pharmacy benefits, work with care providers more effectively, and create a simpler consumer experience.
Dividend: UnitedHealth Group pays an annual dividend of $5.00 per share, with a dividend yield of 1.70%. UNH's next quarterly dividend payment will be made to shareholders of record on Tuesday, September 22. The company has grown its dividend for the last 10 consecutive years and is increasing its dividend by an average of 20.35% each year. UnitedHealth Group pays out 33.09% of its earnings out as a dividend.
Current valuation: $292.79
Valuation of entry parameters:
TheStreet score: A
Zacks Rank: Buy
Weiss Ratings recommendation: B (Buy)
Yahoo Finance recommendation: Buy
MarketBeat recommendation: Buy
Yahoo Finance target price: $345.36
MarketBeat target price: $339.52
Piotroski F-Score: 7
Moody's Daily Credit Risk: 4
InvestorsObserver Overall Score: 83
VERTEX PHARMACEUTICALS INC (VRTX)
Sector: Health Technology
Industry: Biotechnology
Employees: 3000
Description: Vertex Pharmaceuticals, Inc. engages in the business of discovering, developing, manufacturing and commercializing small molecule drugs for patients with serious diseases. It focuses on development and commercializing therapies for the treatment of cystic fibrosis, infectious diseases including viral infections such as influenza and bacterial infections, autoimmune diseases such as rheumatoid arthritis, cancer, inflammatory bowel disease and neurological disorders including pain and multiple sclerosis.
Dividend: NA
Current valuation: $262.03
Valuation of entry parameters:
TheStreet score: A
Zacks Rank: Hold
Weiss Ratings recommendation: B (Buy)
Yahoo Finance recommendation: Buy
MarketBeat recommendation: Buy
Yahoo Finance target price: $306.43
MarketBeat target price: $296.15
Piotroski F-Score: 5
Moody's Daily Credit Risk: 4
InvestorsObserver Overall Score: 53
WERNER ENTERPRISES INC (WERN)
Sector: Transportation
Industry: Trucking
Employees: 13276
Description: Werner Enterprises, Inc. engages in the provision of logistics services. It operates through the Truckload Transportation Services and Werner Logistics segments. The Truckload Transportation Services segment consists of one-way truckload and specialized services units such as the medium-to-long haul van fleet which provides a consumer non durable products and commodities in truckload quantities. The Werner Logistics segment provides non-trucking services to customers such as truck brokerages which uses contracted carriers to complete customer shipments.
Dividend: Werner Enterprises pays an annual dividend of $0.36 per share, with a dividend yield of 0.85%. WERN's next quarterly dividend payment will be made to shareholders of record on Tuesday, October 20. The company has grown its dividend for the last 1 consecutive years and is increasing its dividend by an average of 4.00% each year. Werner Enterprises pays out 15.06% of its earnings out as a dividend.
Current valuation: $41.7
Valuation of entry parameters:
TheStreet score: A
Zacks Rank: Buy
Weiss Ratings recommendation: B (Buy)
Yahoo Finance recommendation: Hold / Buy
MarketBeat recommendation: Buy
Yahoo Finance target price: $50.8
MarketBeat target price: $45.21
Piotroski F-Score: 6
Moody's Daily Credit Risk: 4
InvestorsObserver Overall Score: 69
Now, a few words on the criteria I'm using and sources of data.
1. TheStreet score
The first filtering step is to get stocks with Buy recommendation at TheStreet stock screener (https://www.thestreet.com/r/ratings/reports/ir-screener.html). I'm only keeping stocks with A or A+ rating (top ones), although A-, B+, B and B- are Buys as well.
From thestreet.com:
A (Excellent) - The stock has an excellent track record for maximizing performance while minimizing risk, thus delivering the best possible combination of total return on investment and reduced volatility. It has made the most of the recent economic environment to maximize risk-adjusted returns compared to other stocks. While past performance is just an indication -- not a guarantee -- we believe this fund is among the most likely to deliver superior performance relative to risk in the future as well.
And about the methodology (source: https://www.thestreet.com/r/ratings/reports/detail/T.html):
TheStreet Ratings' stock model projects a stock's total return potential over a 12-month period including both price appreciation and dividends. Our Buy, Hold or Sell ratings designate how we expect these stocks to perform against a general benchmark of the equities market and interest rates. While our model is quantitative, it utilizes both subjective and objective elements. For instance, subjective elements include expected equities market returns, future interest rates, implied industry outlook and forecasted company earnings. Objective elements include volatility of past operating revenues, financial strength, and company cash flows.
2. Zacks Rank
It is required that the Zacks Rank is Hold, Buy or Strong Buy (so we're avoiding stocks with Sell and Strong Sell recommendations). The Zacks Rating utilizes a completely different system, based on company earnings-related data, in particular earnings estimate revisions and earnings surprises, to predict profitability of holding the company's shares. More from [https://www.zacks.com/education/stock-education/zacks-rank-guide-6](http://(average, from experts)):
The Zacks Rank is a proprietary stock-rating model that uses trends in earnings estimate revisions and EPS surprises to classify stocks into five groups:
https://preview.redd.it/6cqfqr2hgjo51.png?width=480&format=png&auto=webp&s=a2d7a1f0ca9802574c1f22f2655b9e8acabce6f1
A portfolio of Zacks Rank #1 (Strong Buy) stocks has beaten the market in 26 of the last 31 years with an average annual return of +24.3% a year; more than double that of the S&P 500's +10.6% .
3. Weiss Ratings recommendation
We're only keeping stocks with Buy (B) or Strong Buy (A) recommendation.
Wjat are these scores? This is what I found at their website (https://weissratings.com/help/rating-definitions):
"A" Rating: Excellent. The company's stock has an excellent track record for providing strong performance with lower-than-average risk, and it is trading at a price that represents good value relative to the company's earnings prospects. While past performance is no guarantee of future results, our opinion is that this stock is among the most likely to deliver superior performance relative to risk in the future. Of course, even the best stocks can decline in a down market. But our "A" rating can generally be considered the equivalent of a "Strong Buy".
"B" rating: Good. The company's stock has a good track record for delivering a balance of performance and risk. While the risk-adjusted performance of any stock is subject to change, our opinion is that this stock is a good value, with good prospects for outperforming the market. Although even good investments can decline in a down market, our "B" rating is considered the equivalent of a "Buy".
4. Yahoo Finance recommendation and target price
It is required that the Yahoo Finance stock recommendation is at least mixed Buy/Hold from experts. Additionally, the predicted target price (average, from experts) should be at least 5% higher than the current one.
5. MarketBeat recommendation and taget price
Similar to Yahoo Finance, it is required that the MarketBeat stock recommendation is at least mixed Buy/Hold. Additionally, the predicted target price (average, from experts) should be at least 5% higher than the current valuation.
6. Piotroski F-Score
The Piotroski score is a number between 0-9 that reflects nine criteria used to determine the strength of a company's financial situation, including profitability, leverage or operating efficiency. Zero is the worst value and nine is the best. As we can read in Piotroski's paper from 2000:
In addition, an investment strategy that buys expected winners and shorts expected losers generates a 23% annual return between 1976 and 1996, and the strategy appears to be robust across time and to controls for alternative investment strategies.
It is required that the score is 4 or higher. The values were retrieved from https://www.gurufocus.com.
7. Moody's Daily Credit Risk
Moody's Daily Credit Risk Score is a 1-10 score, which provides a forward-looking, one-year measure of credit risk. It is updated daily and takes into account day-to-day market movements compared to a company's liabilities.
The value is retrieved from https://markets.businessinsider.com and is expected to be in the range of 1-6.
8. InvestorsObserver Overall Score
The rank has a value in between 0 and 100. It takes into account both technical analysis and fundamental stock data. An Overall Rank of N means that a given company is rated above N% of stocks, therefore the higher the number, the better. My requirement is that the company has InvestorsObserver Overall score of at least 50.
More detailed explanation from https://www.investorsobserver.com/learning-center/what-the-scores-mean/what-does-the-overall-score-mean:
The Overall Score combines our two technical scores (Short Term and Long Term) with our Fundamental Score into one metric. This makes our overall score a great place to start when evaluating stocks, regardless of your investing style.
A low score doesn't necessarily mean a stock is likely to go down, just that our system doesn't think there's much of a bullish case for it.
Please note that the company profile data (short description) was taken from https://www.tradingview.com (sometimes I shortened it) and dividend data was retrieved from MarketBeat.
I hope you enjoyed the reading. What do you think about this stock selection and the strategy? Feel free to leave a comment below.
Michael, the Investing Scientist
Disclosures:
- What you see here is my personal opinion, my own investments and should not be treated as investing advice
- I'm an amateur investor
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