Maximizing Investment Success: Understanding Zacks Premium and Its Style Scores

Investors, both new and seasoned, often aim to navigate the stock market with confidence. Zacks Premium provides an array of tools to help achieve this goal, including daily updates of the Zacks Rank and Zacks Industry Rank, access to the Zacks #1 Rank List, Equity Research reports, and Premium stock screens.

Demystifying Zacks Style Scores

The Zacks Style Scores, designed alongside the Zacks Rank, offer investors insights into selecting stocks with the potential for strong performance over the next month. Stocks are rated from A to F based on value, growth, and momentum attributes. An A rating indicates a higher likelihood of outperforming the market compared to lower scores.

The Style Scores are divided into four distinct categories:

Value Score

Value investors focus on finding stocks that are priced below their true worth. The Value Style Score evaluates metrics such as P/E, PEG, Price/Sales, and Price/Cash Flow, allowing investors to identify discounted opportunities.

Growth Score

In contrast, growth investors prioritize a company’s financial health and future potential. The Growth Style Score assesses projected and historical earnings, sales, and cash flow to pinpoint stocks poised for sustainable growth.

Momentum Score

Momentum investors capitalize on trends, following the adage “the trend is your friend.” The Momentum Style Score uses data like recent price changes and monthly shifts in earnings estimates to signal optimal times to invest in rapidly moving stocks.

VGM Score

For those who appreciate a blend of investing styles, the VGM Score integrates all three Style Scores. This comprehensive rating assesses value, growth forecasts, and momentum, helping investors identify the most compelling stocks.

Connecting Style Scores and the Zacks Rank

The Zacks Rank, a proprietary stock-rating model, leverages earnings estimate revisions to guide investors in building successful portfolios. Stocks rated #1 (Strong Buy) have historically produced an impressive +25.41% average annual return since 1988, significantly outperforming the S&P 500. However, with over 200 stocks rated as Strong Buy and another 600 rated #2 (Buy), the abundance of choices can be daunting.

This is where Style Scores become invaluable. To maximize returns, investors should prioritize stocks with a Zacks Rank of #1 or #2, coupled with Style Scores of A or B. For those considering #3 (Hold) stocks, it’s crucial they also possess A or B Scores to enhance upside potential.

When selecting stocks, pay attention to the direction of earnings estimate revisions. For instance, a stock with a #4 (Sell) or #5 (Strong Sell) rating—even with favorable Style Scores—carries a greater risk due to a declining earnings forecast.

Spotlight on Meta Platforms (META)

Meta Platforms, the largest social media company globally, has expanded its offerings from the original Facebook app to include acquisitions like Instagram and WhatsApp, along with the Messenger app. Now, as of March 31, 2024, nearly 3.24 billion people use Meta’s suite of apps daily.

META holds a Zacks Rank of #2 (Buy) and boasts a VGM Score of B. Momentum investors may find META particularly appealing as its shares have risen by 15.4% in the past month.

Additionally, one analyst revised their earnings estimate upward for fiscal 2024, signaling positive momentum. The Zacks Consensus Estimate has increased by $0.10 to $21.37 per share, with META showing an average earnings surprise of 12.6%.

With a solid ranking supplemented by strong Momentum and VGM Style Scores, META stands out as a significant opportunity for investors.

Is Investing in Meta Platforms, Inc. (META) Right for You?

If you’re eager to discover the top stocks to consider over the next month, Zacks Investment Research offers a free report on the 7 best stocks to buy.

Since 1978, Zacks Investment Research has provided investors with critical tools and independent insights. The Zacks Rank, known for its consistent performance, has achieved an impressive average gain of +24.08% per year, effectively doubling the S&P 500’s returns from January 1, 1988, to May 6, 2024.

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Meta Platforms, Inc. (META): 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.