On Sept. 18, 2024, the Federal Reserve cut interest rates by 50 basis points in response to the cooling inflation scenario. This was the first time that interest rates were slashed since March 2020. While a 25-basis-point rate cut was more or less assured, the 50-basis-point rate cut highlights the Fed’s increasing focus on bolstering the job market. The Fed signaled that it will cut the rate by another half a percentage point in the current year.

The economy is likely to benefit from this considerable rate cut. Given this brightening scenario, investors should design a winning portfolio of broker-friendly stocks for impressive returns. Brokers are deemed to be experts in the field of investing. Stocks such as American Airlines AAL, Alaska Air Group ALK, Warner Bros. Discovery WBD, Dana DAN and Best Buy Company BBY should grace their portfolios.

We have designed a screening process 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 or Down Rating)/Total (four weeks) = Top #75 (This gives the list of the top 75 companies that witnessed net upgrades over the last 4 weeks.)

% change in Q(1) est. (four 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 more than 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 ($ million) = Top #3000 (This gives us stocks that are the top 3000 in terms of 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 screening:

American Airlines is based in Fort Worth, TX. A gradual increase in air travel demand (particularly for leisure) is aiding AAL. However, high operating costs are hurting its bottom line.

The Zacks Consensus Estimate for third-quarter 2024 earnings has been unchanged at 4 cents per shareover the past 90 days. AAL currently carries a Zacks Rank #3 (Hold).You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here