For new and old investors, taking full advantage of the stock market and investing with confidence are common goals. Zacks Premium offers many ways to do both.
With daily Zacks Rank and Zacks Industry Rank 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, more confident investor.
It also includes access to Zacks style sheet music.
What are Zacks’ style notes?
Zacks Style Scores are a unique set of guidelines that rate stocks against three popular investment types and were developed as complementary metrics for the Zacks Ranking. This combination helps investors choose stocks with the best chance of beating the market over the next 30 days.
Each stock is assigned an alphabetical rating of A, B, C, D or F based on its value, growth and momentum. With this system, an A is better than a B, a B is better than a C, and so on, which 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 under their true 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 multitude of other multiples to highlight 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 investors, who live by the saying “the trend is your friend”, are more interested in taking advantage of upward or downward trends in a stock’s price or earnings outlook. Using the weekly price change and the monthly percentage change in earnings estimates, among other factors, the Momentum Style Score can help determine when to buy 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 is a proprietary stock rating model that harnesses the power of revisions to earnings estimates, or changes to a company’s earnings forecasts, to help investors build a performing 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.
With over 800 top-rated stocks, it can certainly be difficult to choose which ones are right for you and which suit 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 # 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.
The direction of revisions to a stock’s earnings estimates should always be a key factor when choosing which stocks to buy, as 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 has A and B ratings, always has declining profit expectations, and it’s much more likely that its share price is also falling.
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 # 2 (Buy) in the Zacks ranking, with a VGM score of B.
Dynamic investors should take note of this Business Services action. RSG has a Momentum Style Score of B and shares have risen 8.2% in the past four weeks.
Three analysts have revised their earnings estimates upward in the past 60 days for fiscal 2021. Zacks’ consensus estimate has risen from $ 0.02 to $ 4.06 per share. RSG posts an average profit surprise of 14.2%.
With a solid Zacks ranking and top Momentum and VGM style scores, RSG should be on the shortlist of investors.
Republic Services, Inc. (RSG): Free Inventory Analysis Report
To read this article on Zacks.com, click here.
Zacks investment research