Unlocking Investment Potential with Zacks Premium’s Unique Insights

For both new and veteran investors, harnessing the stock market with confidence is a shared ambition. Zacks Premium offers a diverse range of tools to achieve this goal.

With daily updates on the Zacks Rank and Zacks Industry Rank, full access to the Zacks #1 Rank List, Equity Research reports, and specialized stock screens, this research service is designed to enhance your investing knowledge and confidence.

Zacks Premium also provides access to the Zacks Style Scores.

Understanding the Zacks Style Scores

The Zacks Style Scores use specific criteria to evaluate stocks based on three popular investment categories, serving as valuable indicators alongside the Zacks Rank. This system helps investors identify securities with the best chances of outperforming the market over the next 30 days.

Each stock receives a rating of A, B, C, D, or F based on its value, growth, and momentum factors. An A rating is superior to a B, indicating a stronger chance for the stock to excel.

The Style Scores are categorized into four distinct types:

Value Score

The Value Score focuses on identifying quality stocks available at attractive prices. It considers ratios like P/E, PEG, Price/Sales, and Price/Cash Flow to spotlight stocks that are undervalued in the market.

Growth Score

The Growth Score prioritizes a company’s future earnings potential and overall financial stability. It examines metrics such as projected and historical earnings, sales, and cash flow to identify stocks expected to experience sustained growth.

Momentum Score

Momentum investing takes advantage of existing trends in stock prices or earnings projections. The Momentum Score indicates optimal times for stock purchases based on short-term price changes and fluctuations in earnings estimates.

VGM Score

The VGM Score combines all three Style Scores, providing a comprehensive rating that highlights stocks with the strongest value, growth prospects, and momentum. This score is particularly effective when used alongside the Zacks Rank.

Integrating Style Scores with the Zacks Rank

The Zacks Rank is a proprietary system that leverages earnings estimate revisions to guide investors in building a successful portfolio.

Stocks rated #1 (Strong Buy) have yielded an impressive +25.41% average annual return since 1988, substantially outperforming the S&P 500 during the same period. The Zacks Rank evaluates numerous stocks, with over 200 often earning a Strong Buy rank and around 600 assigned a #2 (Buy) rank on any given day.

This results in more than 800 highly rated stocks, making stock selection a daunting task for investors.

That’s how Style Scores assist in the decision-making process.

To optimize returns, investors should look for stocks with a Zacks Rank of #1 or #2 and Style Scores of A or B. Even stocks with a #3 (Hold) rank that carry A or B scores warrant consideration for potential upside.

It is crucial to align these scores with earnings outlooks. A stock with a #4 (Sell) or #5 (Strong Sell) rating—despite having high Style Scores—may still face declining earnings forecasts and an increased likelihood of falling share prices.

Therefore, holding more stocks with a #1 or #2 Rank and Scores of A or B is generally preferable.

Featured Stock: Meta Platforms (META)

Meta Platforms is recognized as the largest social media entity globally. The company has expanded its portfolio from the original Facebook app to incorporate several other platforms, including Instagram and WhatsApp, thanks to strategic acquisitions. Together with Messenger, these applications serve nearly 3.24 billion users daily as of March 31, 2024.

META is rated #2 (Buy) in the Zacks Rank and boasts a VGM Score of B.

For growth investors, META represents an attractive option; it holds a Growth Style Score of A, anticipating year-over-year earnings growth of 51.5% for the current fiscal year.

In the past 60 days, 16 analysts have raised their earnings estimates, leading to a Zacks Consensus Estimate increase from $21.36 to $22.53 per share. Moreover, META has an average earnings surprise of 11.3%.

With robust Growth and VGM Style Scores and a solid Zacks Rank, META should be considered by savvy investors.

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Meta Platforms, Inc. (META): 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.