Stock Rockets : About Us

What services does StockRockets offer?

StockRockets provides a list of daily stock analyst recommendations published by equity buy-side analysts. Subscribers can sort the extensive analyst data in many ways. For instance, zeroing in on stocks with the highest price target upgrades. The majority of analyst actions occur prior to the opening of the U.S. stock market’s regular trading session, so StockRockets focuses on providing actionable information before the market opens. The goal of StockRockets is, as the name suggests, to identify stocks that have heightened odds of appreciating significantly over the near future. 

How might a trader or investor use this information to generate profits?

Significant changes in the ratings or price targets of analysts who analyze and publish reports often lead to unusual near-term (and longer term) price changes in those stocks. Often, significant analyst price target increases and upgraded ratings occur in response to major changes in the valuation of a given company resulting from new comporate developments. The investing world often views aggressive analyst upgrades and price target increases as signals a given stock is undervalued or has improved prospects. 

Likewise, downgrades or reduced price targets can signal stocks that are overvalued and drive negative price movements.

While analyst’s opinions are not always interpreted by investors as significant, if an analyst report or a group of reports reveals insights that “surprise” the market by offering a new bullish outlook, a stock can rocket higher. 

Isn’t it too late to buy a stock after an analyst recommendation, as the new information is very quickly reflected in the stock’s price?

In reality, stock prices may be slow to fully incorporate new information. This can be attributed to biases that have been identified by the field of behavioral economics. Including:

The anchoring bias. This bias occurs when investors rely too heavily on recent prices when analyzing new information and assessing appropriate new price levels. If a stock has traded between $20 and $25 for an extended period of time, investors may be reluctant to buy at $30, even though new developments suggest a company value significantly higher. Information cascade effects may also play a role in the slow drift of stock prices after significant news. Rather than trust their own analysis, or the new price targets set by analysts, investors may wait to see how the stock price reacts before buying or selling. These conservative traders wait for the behavior of other investors to confirm the new valuation thesis before buying. By-the-way, it isn’t just retail traders who are subject to these biases -- institutional investors are often slow to buy following good news and newly positive analyst reports.

There can be considerable profit opportunities for traders who recognize the undervalued pricing resulting from analyst actions and react promptly, before the herd of late comers react. 

Does buying immediately after significant analyst reports or price target changes always result in profitable trades?

Of course not. It’s important to consider the broader context in which the analyst report occurs. For instance, if the stock market is very weak, an analyst might be early in publishing an upgrade or price target increase. If investors in general are focused on selling stocks and raising cash, it may be difficult for a stock to “swim upstream” and move higher. Also, sometimes an analyst may be “late to the party,” publishing an upgrade only after other analysts have offered new opinions, and the stock has already discounted the new information. Bottom line: A trader or investor must do his or her own analysis, and develop his or her own strategy when trading based on analyst actions. 

However, the analyst of analyst activity offers a fertile area for traders and investors to identify undervalued situations. And occasionally to identify a stock before it blasts higher.  StockRockets is a valuable resource to help you discover these highly profitable situations.