Unlocking Investment Potential: The Zacks Focus List
At Zacks, we strive to empower our members with comprehensive tools and insights, guiding them through the intricacies of the stock market to achieve long-term investment success.
The Zacks Premium service is designed to streamline this process. Members gain daily insights with updates on the Zacks Rank and Zacks Industry Rank, along with complete access to the Zacks #1 Rank List and detailed Equity Research reports. Additionally, premium stock screens, such as the Earnings ESP filter, assist in quickly pinpointing which stocks to buy or sell, alongside identifying today’s leading industries.
Furthermore, the Zacks Premium service features the Focus List—a long-term portfolio that includes the top stocks recognized for their potential to outperform the market through a winning mix of growth and momentum.
Understanding the Zacks Focus List
Developing an investment portfolio can be overwhelming; wouldn’t you want to see a carefully curated selection of top-performing stocks?
The Zacks Focus List comprises 50 stocks predicted to outperform the market over the next year. Each selection is intended as a building block for long-term investors aiming to construct an individual portfolio.
One notable advantage of the Focus List is that every stock chosen is accompanied by a comprehensive Zacks Analyst Report. These reports explain the rationale behind each selection and why we believe it represents a sound long-term investment.
Past performance reinforces the Focus List’s value. In 2020, it achieved an annualized return of 13.85%, significantly higher than the S&P 500’s 9.38%. Over the longer term, from February 1, 1996, to March 31, 2021, the portfolio has returned 2,519.23%, compared to the S&P’s 854.95%.
Methodology Behind the Focus List
The stock selection process for the Focus List highlights our consistent focus on earnings estimate revisions.
Earnings estimates reflect the anticipated growth and profitability of companies, driven by analysts who collaborate with management to evaluate all factors that may impact earnings. These elements include interest rates, economic conditions, and industry sentiment.
Understanding a company’s future earnings potential is essential. This is where earnings estimate revisions play a crucial role.
When a stock is subject to upward earnings estimate revisions, it often leads to further upward adjustments. For instance, if an analyst raises their estimate one month, there’s a higher probability it will happen again the following month, attracting similar actions from other analysts.
The Zacks Rank leverages the weight of earnings estimate revisions, utilizing a proprietary stock-rating model. This model relies on shifts in a company’s quarterly earnings forecasts to guide investors in creating a successful portfolio.
The Zacks Rank is built upon four core factors: Agreement, Magnitude, Upside, and Surprise. Each factor is assigned a raw score that is recalibrated nightly, leading to the overall Rank. Stocks are classified into five categories, from “Strong Buy” to “Strong Sell.”
The Focus List features stocks carefully chosen from a pool of #1 (Strong Buy) or #2 (Buy) rated companies, ensuring that each addition reflects positive consensus among analysts.
Investing in stocks with rising earnings estimates can be highly rewarding, as stock prices typically react positively to these revisions. By selecting stocks from the Focus List, investors can position themselves in companies likely to see their earnings estimates rise, potentially fueling price growth.
Focus List Highlight: Goldman Sachs (GS)
Founded in 1869, The Goldman Sachs Group, Inc. is a prominent global financial holding company engaging in investment banking, securities, investment management, and consumer banking services. Headquartered in New York, Goldman Sachs operates in key financial hubs around the world.
Goldman Sachs was added to the Focus List on July 11, 2018, at a share price of $226.85. Since then, its shares have risen by 128.94%, reaching $519.35, and it currently holds a #2 (Buy) rating on the Zacks Rank.
In the past 60 days, six analysts updated their earnings forecasts for fiscal 2024 upward. The Zacks Consensus Estimate has risen by $1.17 to $37.15, and the company enjoys an average earnings surprise of 29.3%.
Analysts project a substantial earnings growth of 62.4% for Goldman Sachs in the current fiscal year.
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The Goldman Sachs Group, Inc. (GS): Free Stock Analysis Report
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The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
