For new and old investors, taking full advantage of the stock market and investing with confidence are common goals. Zacks Premium offers plenty of 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.
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.
Each stock is assigned a letter grade of A, B, C, D or F based on its value, growth and dynamic qualities. With this system, an A is better than a B, a B is better than a C, and so on, meaning the higher the score, the better the chance the stock will 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. .
While good value is important, growth-oriented investors focus more on a company’s financial strength and health, as well as its future prospects. The Growth Style Score considers forecasted and historical earnings, sales and cash flow to uncover stocks that will experience sustainable long-term growth.
Momentum trading is all about taking advantage of up or down 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
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.
Stock #1 (Strong Buy) has produced an unmatched average annual return of +25.41% since 1988, more than double the performance of the S&P 500 over the same period. However, the Zacks Ranking looks at a ton of stocks, and there can be over 200 companies with a Strong Buy rank, and another 600 with a #2 (Buy) rank, on any given 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.
To have the best chance of big returns, you’ll always want to consider stocks with a Zacks #1 or #2 ranking that also have A or B style scores, which will give you the greatest likelihood of success. If you are considering stocks with a #3 (Hold) rank, it is important that they also have scores of A or B to ensure the most upside potential.
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 watch: Sysco (SYY)
Based in Houston, TX, Sysco Corporation, through its subsidiaries, markets and distributes a line of food and related products primarily to the foodservice or out-of-home catering industry. The company provides products and related services to approximately 425,000 customers, including restaurants, healthcare and educational facilities, lodging establishments and other food service customers.
SYY is #2 (buy) on the Zacks rank, with a VGM score of A.
It also boasts a value style score of B thanks to attractive valuation metrics like a forward P/E ratio of 20.28; value investors should take this into account.
For fiscal 2022, one analyst revised their earnings estimate up in the past 60 days, and Zacks’ consensus estimate rose $0.02 to $3.23 per share. SYY is posting an average earnings surprise of 9.1%.
With a strong Zacks ranking and high-level value and VGM style scores, SYY 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, such as 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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Sysco Corporation (SYY): Free Inventory 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.