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.
The popular research service can help you become a smarter, more confident investor, giving you access to daily updates from the Zacks Ranking and Zacks Industry Ranking, Zacks #1 Ranking List, stock research and premium stock screens.
It also includes access to Zacks style sheet music.
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.
Based on their value, growth and momentum characteristics, each stock is assigned a rating of A, B, C, D or F. The higher the score, the better the chance that the stock will outperform; an A is better than a B, a B is better than a C, etc.
Style Scores are divided into four categories:
For value investors, it’s about finding good stocks at good prices and finding out which companies are trading at fair value before the market takes a swing. The Value Style Score uses ratios such as P/E, PEG, Price/Sales, Price/Cash Flow and a host of other multiples to help select 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 trading is all about taking advantage of upward or downward trends 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 good times to initiate a position in a security, using factors such as one-week price change and monthly percentage change in earnings estimates.
What if you like to use all three types of investment? 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, helping to target the companies with the most attractive value, the best growth forecasts and the most promising momentum.
How Style Scores Work with Zacks Ranking
The Zacks Ranking, which is a proprietary stock rating model, uses revisions to earnings estimates, or changes to a company’s earnings forecast, to help build a winning 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.
Because the scores were created to work with the Zacks Ranking, the direction of revisions to a stock’s earnings estimates should be a key factor when deciding which stocks to buy.
For example, a stock with a #4 (sell) or #5 (strong sell) rating, even one with scores of A and B, will always have a declining earnings forecast, and a greater chance that its price will stock is also falling.
So the more stocks you have with a rank of #1 or #2 and scores of A or B, the better.
Stock to watch: Republic services (RSG)
Republic Services is the second largest provider of non-hazardous solid waste collection, transfer, disposal, recycling and energy services in the United States. As of December 31, 2021, the company operated facilities in 41 states and Puerto Rico through 356 collection operations, 239 transfer stations, 198 active landfills, 71 recycling processing centers, three treatment, recovery and disposal facilities. disposal, 6 salt water disposal wells. The company is engaged in 77 landfill gas-to-energy and renewable energy projects and was responsible after the closure of 124 closed landfills. The was incorporated in Delaware in 1996.
RSG is a #3 (Hold) on the Zacks rank, with a VGM score of B.
Aggressive investors should take note of this business services stock. RSG has a Momentum Style Score of A, and the shares are up 0.1% over the past four weeks.
An analyst has revised up its earnings estimate in the past 60 days for fiscal 2022, while Zacks’ consensus estimate rose $0 to $4.62 per share. RSG also claims an average earnings surprise of 8.2%.
With a strong Zacks ranking and top Momentum and VGM style scores, RSG 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 step in at any time.
This company could rival or surpass other recent Zacks stocks that are expected to double, such as 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.