TTaking full advantage of the stock market and investing with confidence are common goals for new and old investors, and Zacks Premium offers plenty of ways to do both.
The People’s Research Service can help you become a smarter, more confident investor, by giving you access to daily Zacks Rank and Zacks Industry Rank updates, Zacks # 1 Rank List, research reports on actions and Premium action screens.
It also includes access to Zacks style sheet music.
What are Zacks’ style notes?
Developed alongside Zacks Rank, Zacks Style Scores are a group of complementary indicators that help investors choose stocks with the best chance of beating the market over the next 30 days.
Each stock is assigned a rating of A, B, C, D or F depending on its value, growth and momentum characteristics. Just like in school, an A is better than a B, a B is better than a C, etc.
Style Scores are divided into four categories:
Value investors love to find good stocks at good prices, especially before the broad market reaches the true value of a stock. Using ratios such as P / E, PEG, Price / Sales, Price / Cash Flow, and many other multiples, the Value Style Score identifies the most attractive and discounted stocks.
Growth-oriented investors are more concerned with the future prospects of a stock, as well as the overall financial health and soundness of a company. Thus, the Growth Style Score analyzes characteristics such as projected and historical earnings, sales, and cash flow to find stocks that will experience sustainable growth over time.
Dynamic trading is all about taking advantage of an upward or downward trend in a stock’s price or earnings outlook, and these investors live by the saying “the trend is your friend”. The Momentum Style Score can identify the right times to create a position in a stock, using factors such as the price change over a week and the monthly percentage change in profit estimates.
What if you liked to use all three types of investing? The VGM score is a combination of all style scores, making it one of the most comprehensive metrics to use with the Zacks ranking. It rates each stock based on their combined weighted styles, which selects the companies with the most compelling value, the best growth forecasts and the most promising momentum.
How style scores work with the Zacks leaderboard
Zacks Rank, which is a proprietary stock rating model, uses revisions to earnings estimates, or changes to a company’s earnings forecasts, to help build a winning portfolio.
The # 1 (strong buy) stocks produced an unmatched average annual return of + 25.41% since 1988, more than double the performance of the S&P 500 over the same period. However, the Zacks rankings look at a ton of stocks, and there may be over 200 companies with a strong buy rank and another 600 with a # 2 (buy) rank, on any given day.
With over 800 top-rated stocks, it can be difficult to choose which ones are right for you and which suit your investment journey.
This is where Style Scores come in.
To have the best chance of getting big returns, you’ll always want to consider stocks with a Zacks # 1 or # 2 ranking that also have style scores of A or B, which will give you the greatest likelihood of success. If you are looking at stocks with a # 3 (Hold) rank, it is important that they also have A or B ratings to ensure as much upside potential as possible.
As mentioned above, Scores are designed to work with the Zacks Ranking, so any change in a company’s earnings outlook should be a deciding factor when deciding which stocks to buy.
For example, a stock with a # 4 (sell) or # 5 (strong sell) rating, even with A and B ratings, will still have declining earnings expectations and a greater chance than its stock price. also decline.
So the more stocks you own with a # 1 or # 2 rank and A or B scores, the better.
Stock to watch: Mosaic (MOS)
The Mosaic Company, based in Minnesota, is a leading producer and distributor of phosphate and potash concentrates for the global agricultural industry. It was formed through the combination of the fertilizer businesses of food giant Cargill Incorporated and IMC Global Inc. Mosaic is the world’s largest integrated phosphate producer and is also one of the world’s four largest potash producers.
MOS is # 1 (strong buy) in the Zacks ranking, with a VGM score of A.
Dynamic investors should take note of this Basic Materials action. MOS has a Momentum Style Score of B and stocks have risen 8% in the past four weeks.
Five analysts revised their earnings estimates up over the past 60 days for fiscal 2021, while Zacks’ consensus estimate rose $ 1.46 to $ 4.68 per share. MOS also boasts an average revenue surprise of 43%.
With a strong Zacks ranking and top Momentum and VGM style scores, MOS should be on the shortlist of investors.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.