No matter your age or your experience: taking full advantage of the stock market and investing with confidence are common goals for all investors. Fortunately, Zacks Premium offers several ways to do both.
The popular research service can help you become a smarter and more confident investor by giving you access to daily updates of Zacks Rank and Zacks Industry Rank, Zacks # 1 Rank List, stock research reports and premium stock screens.
Zacks Premium also includes Zacks style scores.
What are Zacks’ style notes?
Zacks Style Scores, developed alongside the Zacks Rankings, are complementary metrics that rate stocks based on three widely followed investment methodologies; they also help investors choose stocks with the best chance of beating the market over the next 30 days.
Each share is assigned a rating of A, B, C, D or F depending on its value, growth and dynamic characteristics. Just like in school, an A is better than a B, a B is better than a C, etc.
The 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.
While good value is important, growth investors focus more on the financial strength and health of a business, as well as its prospects for the future. The Growth Style Score takes into account projected and historical earnings, sales and cash flow to uncover which stocks will experience long-term sustainable growth.
Dynamic traders and investors live by the saying “the trend is your friend”. This style of investing involves taking advantage of upward or downward trends in a stock’s price or earnings outlook. Using factors such as the weekly 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 want a combination of the three style scores, the VGM score will be your friend. It rates each stock based on their combined weighted styles, helping you find the companies with the most compelling value, the best growth forecasts, and the most promising momentum. It’s also one of the best metrics to use with Zacks Rank.
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.
Investors can count on the success of the Zacks Rank, with # 1 (strong buy) stocks producing an unmatched average annual return of + 25.41% since 1988, more than double the performance of the S&P 500. But the model assesses a large number of stocks, and there are over 200 companies with a strong buy rank, plus another 600 with a # 2 (buy) rank, on any given day.
That adds up to over 800 top-rated stocks, and it can be difficult trying to pick the best stocks for you and your portfolio.
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 # 1 or # 2 rank that also have style scores of A or B. If you find yourself looking at stocks with a # 3 (Hold) rank, make sure they have also scores of A or B 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.
Here’s an example: A stock with a # 4 (sell) or # 5 (strong sell) rating, even one with style ratings of A and B, always has a downside profit outlook, and there is more likely that its price drops too much.
So the more stocks you own with a # 1 or # 2 rank and A or B scores, 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, 2020, the company operated facilities in 41 states and Puerto Rico through 345 collection operations, 220 transfer stations, 186 active landfills, 76 recycling centers, seven treatment, recovery and disposal facilities, 9 salt water disposal well. The company is engaged in 75 gas to energy and renewable energy conversion projects in landfills and was responsible after the closure of 128 closed landfills. The was incorporated in Delaware in 1996.
RSG is # 3 (Hold) in the Zacks ranking, with a VGM score of B.
Additionally, the company could be a top choice for growth investors. RSG has a growth style score of B, forecasting year-over-year profit growth of 14% for the current year.
For fiscal 2021, four analysts revised their earnings estimates upward over the past 60 days, and Zacks’ consensus estimate rose from $ 0.07 to $ 4.06 per share. RSG posts an average profit surprise of 17.4%.
With a strong Zacks ranking and top VGM Growth and Style scores, RSG should be on the shortlist of investors.
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Republic Services, Inc. (RSG): Free Inventory Analysis Report
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