Definition
The term strong buy is used to identify the stocks a sell-side analyst believes will significantly outperform the overall market in the near term. A strong buy is a bullish recommendation, and is associated with a stock the analyst feels their clients should hold in their portfolio.
Explanation
Sell-side analysts are responsible for generating periodic research reports for their clients. These reports highlight recent company news as well as projections of future earnings developed through the use of proprietary models. While these reports contain a lot of detail, they also contain a summary recommendation.
Analyst recommendations are not standardized, but they can be generalized. A strong buy is the maximum recommendation assigned to a stock. These are the companies the analyst believes will outperform the market, industry and competitors. In addition to strong buy, bullish recommendations might include: Buy, Outperformer, Sector Outperformer, and Overweight. The analyst is essentially telling the investor the company's stock can be expected to significantly outperform the market over the next twelve to twenty-four months.
Related Terms
accumulate, buy-side analyst, sell-side analyst, hold, underperform, strong sell
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