JTaking full advantage of the stock market and investing with confidence are common goals for new and old investors, and Zacks Premium offers many 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?
Zacks Style Scores, developed alongside the Zacks Ranking, are complementary indicators that rate stocks based on three widely followed investment methodologies; they also help investors choose stocks that have 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.
Momentum traders and investors live by the saying “the trend is your friend”. This style of investing involves taking advantage of rising or falling trends in a stock’s price or earnings prospects. Using factors such as the week-to-week price change and the monthly percentage change in earnings estimates, the Momentum Style Score can indicate favorable times to create a position in 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
A proprietary stock rating model, Zacks Rank uses the power of earnings estimate revisions, or changes to a company’s earnings outlook, to help investors create a performing portfolio.
Investors can count on the success of Zacks Rank, with #1 stocks (Strong Buy) producing an unmatched average annual return of +25.41% since 1988, more than double the performance of the S&P 500. But the model values a large number of stocks, and there are over 200 companies with a strong buy rank, plus another 600 with a #2 (buy) rank, every 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.
You want to make sure you’re buying stocks with the highest probability of success, and to do that you’ll need to choose stocks with a Zacks #1 or #2 rating that also have A or B style scores. you like a security that is only ranked #3 (Hold), it should also have scores of A or B to ensure as much upside potential as possible.
The direction of a stock’s earnings estimate revisions should always be a key factor when deciding which stocks to buy, since the scores were created to work with the Zacks Ranking.
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 downside earnings forecast, and a much greater probability than the its share price falls. as well as.
So the more stocks you have with a rank of #1 or #2 and scores of A or B, the better.
Stock to watch: Jakks Pacific (JAKK)
Based in Malibu, California, JAKKS Pacific is a multi-brand company that has been designing and marketing a wide range of toys and consumer products since 1995.
JAKK is #1 (Strong Buy) on the Zacks Ranking, with a VGM score of A.
Aggressive investors should take note of these consumer discretionary stocks. JAKK has a Momentum Style Score of B, and the shares are up 0.3% over the past four weeks.
For fiscal 2022, one analyst has revised its earnings estimate up in the past 60 days, and Zacks’ consensus estimate has risen $0.56 to $2.81 per share. JAKK has an average earnings surprise of 63.1%.
With a strong Zacks ranking and top Momentum and VGM style scores, JAKK should be on the investor shortlist.
Breakout biotech stocks with triple-digit profit potential
The biotechnology sector is expected to surpass $2.4 trillion by 2028, with scientists developing treatments for thousands of diseases. They are also finding ways to modify the human genome to literally erase our vulnerability to these diseases.
Zacks just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors take advantage of 7 stocks poised to outperform. Recommendations from previous editions of this report produced gains of +205%, +258% and +477%. Stocks in this report could perform even better.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.