Can Stocks Picked by Artificial Intelligence Beat the Market? 3 Stocks to Watch

stock picks by artificial intelligence stocks to watch

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last updated 14 May 2024

Artificial intelligence (AI) is hardly new to the world of stock picking. Until recently, however, it's pretty much been available only to institutional investors with deep pockets

Danelfin is trying to change all that. The financial technology firm's AI-driven analytics platform aims to level the playing field, giving regular folks access to institutional-level technology. The platform, which offers both free and premium plans, uses artificial intelligence to analyze more than 900 fundamental, technical and sentiment data points per day for all U.S.-listed shares and 600 stocks listed in Europe.

After churning through 10,000 daily indicators, Danelfin's algos produce a series of scores. The AI Score, which ranges from 1 to 10, indicates a stock's probability of beating the market over the next three months, or roughly 60 trading sessions. (Higher scores are better.) Danelfin also assesses stocks' volatility and their potential for nasty drawdowns. Stocks with superior Low Risk Scores should help tactical investors and traders sleep better at night.

AI picks stocks

The last step is to combine AI Score with Low Risk Score to suss out stocks that offer not only the highest probability for short-term outperformance, but also the lowest risk of loss.

Below please find three stocks to watch, based on Danelfin's AI platform awarding them the highest AI Risk/Reward Scores as of May 14. For good measure, we also took a look at what Wall Street analysts have to say about these names' prospects over the next 12 months or so.

Please remember that we're talking about the probability of a stock beating the market over the next few months or so, not days, and not years. That means the platform is pointing to the best stocks to buy for tactical investors and traders, not necessarily long-term investors.

Disclaimer

Share prices and other market data are as of May 14. AI Scores and rankings are courtesy of Danelfin as of May 14. Analysts' consensus recommendations and other data are courtesy of S&P Global Market Intelligence, unless otherwise noted.

Corebridge Financial

Market value: $18.3 billion
AI Score: 10.0
Low Risk Score: 6.0
AI Risk/Reward Score: 8.0

Shares in Corebridge Financial (CRBG), which sells retirement and insurance products, clobbered the broader market during the first few months of 2024. Indeed, CRBG rose by more than a third for the year-to-date through early May.

And if Danelfin is correct, the stock is just getting started. A perfect AI Score (combined with a comparatively low Low Risk score) has CRBG primed for outperformance over the next 60-or-so trading sessions, the algos contend.

Indeed, when Danelfin's platform has singled out CRBG in the past, the buy call has been a winner over the next three months an average of more than 80% of the time.

Wall Street analysts, who tend to look 12 to 18 months ahead, mostly like CRBG on that time frame too. Of the 11 analysts covering the stock surveyed by S&P Global Market Intelligence, four rate it at Strong Buy, three say it's a Buy and four have it at Hold. That works out to a consensus recommendation of Buy, with solid conviction.

Trane Technologies

Market value: $74.4 billion
AI Score: 10.0
Low Risk Score: 6.0
AI Risk/Reward Score: 8.0

You might not be familiar with Trane Technologies (TT), but look around your home or office and you'll probably stumble upon something made by one of its Trane, American Standard and Thermo King brands.

TT stock has been another big-time market beater in 2024. Through mid-May, shares were up by more than a third for the year-to-date. That beat the S&P 500 by about 20 percentage points on a price basis.

Danelfin sees even more outperformance through the second quarter and beyond. A perfect AI Score suggests TT will continue its winning ways – as does Danelfin's past average three-month win rate on the name of nearly 85%.

Meanwhile, a comparatively low Low Risk score means traders and tacticians should be able to sleep OK at night.

Would-be investors with longer time frames might want to note that some industry analysts think the easiest money has already been made. Of the 25 analysts covering TT stock, seven have it at Strong Buy, two say Buy, 14 call it a Hold and two rate it at Strong Sell. That works out to a consensus recommendation of Hold – or essentially market-matching performance over the next year or so.

Deckers Outdoors

Market value: $22.7 billion
AI Score: 10.0
Low Risk Score: 6.0
AI Risk/Reward Score: 8.0

Near-perfect or perfect scores for fundamentals, technicals and sentiment give Deckers Outdoors (DECK) the best shot at beating the broader market over the next three months, or roughly 60 trading sessions, per Danelfin.

Shares in the company known for Uggs and Teva footwear beat the broader market by more than 20 percentage points for the year-to-date through mid-May. Danelfin's algos suggest they'll continue to outperform.

DECK gets the same headline scores as the two stocks covered above, but it has stronger internal metrics. Even better, when Danelfin's platform has singled out DECK in the past, the buy call has been a winner over the next three months an average of more than 85% of the time.

Wall Street is bullish on Deckers over the longer haul too. Of the 21 analysts issuing opinions on the stock, 11 have it at Strong Buy, three say Buy and seven call it a Hold. That works out to a consensus recommendation of Buy, with high conviction.

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Dan Burrows is Kiplinger's senior investing writer, having joined the august publication full time in 2016.

A long-time financial journalist, Dan is a veteran of SmartMoney, MarketWatch, CBS MoneyWatch, InvestorPlace and DailyFinance. He has written for The Wall Street Journal, Bloomberg, Consumer Reports, Senior Executive and Boston magazine, and his stories have appeared in the New York Daily News, the San Jose Mercury News and Investor's Business Daily, among other publications. As a senior writer at AOL's DailyFinance, Dan reported market news from the floor of the New York Stock Exchange and hosted a weekly video segment on equities.

Once upon a time – before his days as a financial reporter and assistant financial editor at legendary fashion trade paper Women's Wear Daily – Dan worked for Spy magazine, scribbled away at Time Inc. and contributed to Maxim magazine back when lad mags were a thing. He's also written for Esquire magazine's Dubious Achievements Awards.

In his current role at Kiplinger, Dan writes about equities, fixed income, currencies, commodities, funds, macroeconomics, demographics, real estate, cost of living indexes and more.

Dan holds a bachelor's degree from Oberlin College and a master's degree from Columbia University.

Disclosure: Dan does not trade stocks or other securities. Rather, he dollar-cost averages into cheap funds and index funds and holds them forever in tax-advantaged accounts.