Regardless 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 access to 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 historical 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.
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.
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 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 monitor: Check Point software (CHKP)
Based in Tel Aviv, Israel, Check Point Software Technologies Ltd. has become a well-known provider of information technology (IT) security solutions worldwide.
CHKP is a #3 (Hold) on the Zacks rank, with a VGM score of B.
Aggressive investors should take note of this computer and technology stock. CHKP has a Momentum Style Score of B and the shares are up 15.9% over the past four weeks.
12 analysts have revised their earnings estimate up in the past 60 days for fiscal 2022. Zacks’ consensus estimate rose $0.08 to $7.32 per share. CHKP shows an average earnings surprise of 3.6%.
With a strong Zacks ranking and top Momentum and VGM style scores, CHKP 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 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 .
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Check Point Software Technologies Ltd. (CHKP): Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.