DEFINITION of Focus List
A focus list is a list of recommended stocks published by an investment firm's research department. Focus lists generally consist of a small number of stocks that the firm believes are the most attractive opportunities at the time.
BREAKING DOWN Focus List
A focus list is a virtual portfolio that research departments use to battle it out against other firms for bragging rights in stock picking. Analysts' recommendations are the fountainhead of equity research reports and should be used in tangent with proprietary research and investment methodologies in order to make investment decisions.
How Analyst Recommendations Work
Analyst stock recommendations are determined by taking an average of all analyst recommendations and classifying them as Strong Buy, Buy, Hold, Underperform or Sell. In order to reach an opinion and communicate the value and volatility of a covered security, analysts research public financial statements, listen in on conference calls and talk to managers and the customers of a company, typically in an attempt to come up with findings for a research report. The definitions of the analyst ratings vary from firm to firm, but largely adhere to the following criteria:
- Buy: Also known as strong buy and "on the recommended list." Needless to say, buy is a recommendation to purchase a specific security.
- Sell: Also known as strong sell, it's a recommendation to sell a security or to liquidate an asset.
- Hold: In general terms, a company with a hold recommendation is expected to perform at the same pace as comparable companies or in line with the market.
- Underperform: A recommendation that means a stock is expected to do slightly worse than the overall stock market return. Underperform can also be expressed as "moderate sell," "weak hold" and "underweight."
- Outperform: Also known as "moderate buy," "accumulate" and "overweight." Outperform is an analyst recommendation meaning a stock is expected to do slightly better than the market return.
Example of a Focus List
Charles Schwab clients can find stocks with extensive screening tools, stock lists and guidance from Schwab and six independent research firms. All Schwab clients can access Schwab Equity Ratings, their proprietary method for identifying stocks they believe will outperform or underperform the market over the next 12 months.
A focus list made public by Credit Suisse in 2017 recommended the following stocks:
- Affiliated Managers Group
- Twenty-First Century Fox
- Hormel Foods
- JPMorgan Chase
- Pioneer Natural Resources
- Walgreens Boots Alliance
- Whole Foods Market
- Johnson Controls