From the desk of Steve Strazza @sstrazza
We’ve enjoyed a ton of success with our bottoms-up scans and the columns they’ve inspired over the past year.
We’ve already launched four columns around them since last summer, and we have more coming soon.
When we combine these scans with our traditional top-down approach, they make it almost impossible to miss profitable opportunities and key market themes.
Today, we’re sharing one of our internal favorites with you. It’s called “Fade The Street,” and we introduced it in a report last month which you can read here.
It was a big hit and there’s been a lot of change since then, so we thought a follow-up was appropriate.
Our Fade The Street scan leverages buy/sell ratings and price target data from sell-side analysts to identify strong stocks with significant potential tailwinds that can propel prices higher in the future.
How do we do this? Simple…
We scan for top-performing stocks that happen to be some of the most-hated and out-of-favor names on the street. Basically, we’re looking for stocks that analysts have called wrong – or at the very least, have current targets that are so dislocated from the market price that they warrant a change in position.
This “change in position” is often an upgrade/downgrade and/or price target revision. This is simply a part of the job as analysts are sometimes forced to throw in the towel if their valuation forecast becomes too dislocated from Mr. Market.
This dynamic creates the potential for news-driven catalysts in the names on this scan. When the sell-side shops and banks eventually take action and chase these stocks higher, investors will, too.
The idea is that we’ll already own the strongest names and simply be along for the ride. As analysts are forced to come out with upgrades and price hikes, they will drive prices higher and higher, fattening our pockets a little more with each note.
Let’s take a look at our current list now. It’s hard to believe Wall Street is so far off in some of these stocks that are at or near all-time highs.
Then again, I guess it’s not.
Regardless, somethings got to give…