IRegardless of your age or experience: taking full advantage of the stock market and investing with confidence are common goals for all investors. Luckily, Zacks Premium offers several different ways to do both.
With daily Zacks Ranking and Zacks Industry Ranking updates, full access to the Zacks #1 Ranking List, Stock Research Reports, and Premium Stock Screens, the Research Service can help you become a smarter and more confident investor.
Zacks Premium also includes Zacks style scores.
What are Zacks style scores?
Developed alongside Zacks Rank, Zacks Style Scores are a group of complementary indicators that help investors select 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 based 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. This means that the higher the score, the more likely the stock is to outperform.
Style Scores are divided into four categories:
Finding good stocks at good prices and finding out which companies are trading at fair value is what value investors like to focus on. Thus, the value style score takes into account ratios such as P/E, PEG, price/sales, price/cash flow and a host of other multiples to highlight the most attractive and discounted stocks. .
Growth-oriented investors, on the other hand, are more concerned with a company’s financial strength and health, as well as its future prospects. The Growth Style Score looks at things like forecasted and historic earnings, sales and cash flow to find stocks that will experience sustainable growth over time.
Aggressive investors, who live by the saying “the trend is your friend”, are more interested in taking advantage of rising or falling trends in a stock’s price or earnings prospects. Using the week-to-week price change and monthly percentage change in earnings estimates, among other factors, the Momentum Style Score can help determine favorable times to buy high-momentum stocks.
If you enjoy using all three types of investing, the VGM score is for you. It’s a combination of all Style Scores, and it’s an important indicator to use with Zacks Rank. The VGM score rates each stock based on its shared weighted styles, narrowing down the companies with the most attractive value, the best growth forecasts and the most promising momentum.
How Style Scores Work with Zacks Ranking
Zacks Rank is a proprietary stock rating model that harnesses the power of earnings estimate revisions, or changes to a company’s earnings forecast, to help investors build a successful portfolio.
Stock #1 (Strong Buy) has 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 Rank looks at a ton of stocks, and there can 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 to choose from, it can certainly feel overwhelming deciding which ones are right for you and your investment journey.
This is where Style Scores come in.
To maximize your returns, you want to buy stocks with the highest probability of success. This means choosing stocks with a Zacks rank #1 or #2 that also have style scores of A or B. If you find yourself looking at stocks with a #3 (hold) rank, make sure that They also have A or B scores to ensure as much upside potential as possible.
As mentioned above, the scores are designed to work with the Zacks ranking, so any changes 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 one that displays scores of A and B, still has a downward earnings forecast, and a much greater probability than its share price drops. as well.
So the more stocks you have with a rank of #1 or #2 and scores of A or B, the better.
Stock to Watch: Nutrien (NTR)
Based in Saskatoon, Canada, Nutrien Ltd. is a leading integrated supplier of agricultural inputs and services. It supplies growers through its main global retail network and operates more than 2,000 outlets in the United States, Canada, Australia and South America. The company plays an important role in helping farmers around the world increase their food production in a sustainable way. It produces three nutrients for crops – potash, nitrogen and phosphate.
NTR is #1 (Strong Buy) on the Zacks Ranking, with a VGM score of A.
Additionally, the company could be a top pick for growth investors. NTR has a growth style score of A, forecasting year-over-year earnings growth of 112.4% for the current fiscal year.
For fiscal 2022, eight analysts have revised their earnings estimate higher in the past 60 days, and Zacks’ consensus estimate rose $3.77 to $13.23 per share. NTR shows an average earnings surprise of 60.3%.
With a strong Zacks ranking and top VGM growth and style scores, NTR should be on the investor shortlist.
Zacks names ‘only one best choice for doubling up’
From thousands of stocks, 5 Zacks experts have each picked their favorite to skyrocket by +100% or more in the coming months. Of these 5, Research Director Sheraz Mian selects one to have the most explosive advantage of all.
It’s a little-known chemical company that’s up 65% year-on-year, but still very cheap. With relentless demand, rising earnings estimates for 2022 and $1.5 billion for stock buybacks, retail investors could jump in at any moment.
This company could rival or surpass other recent Zacks stocks which are expected to double like Boston Beer Company which jumped +143.0% in just over 9 months and NVIDIA which jumped +175.9% in one year .
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.