Picking stocks from the vast investment universe is not an easy task. For this, one has to understand the fundamentals of every company and try to place them against the current economic background to figure out how it may fare as an investment.
One way to accomplish this task is to follow broker recommendation. Brokers have more insight into what’s happening in a particular company as they directly communicate with management. Also, they have deeper understanding of the overall industry.
Specifically, brokers research on a company’s publicly available financial statements, listen to conference calls and engage in talks directly with the top management. At times, they even talk with customers to gauge what they like or dislike about the products and services offered by the company.
So, it is only after thorough research that brokers decide to rate a particular company’s stock. Naturally, when an analyst upgrades a stock, one can easily rely on it.
However, solely depending on analysts’ upgrades is not the right way to build investment portfolio. One should also take into consideration other factors to ensure solid returns.