HomeMost PopularThe Mighty Meta Platforms (META): Riding the Wave of Momentum

The Mighty Meta Platforms (META): Riding the Wave of Momentum

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Regardless of age or experience, navigating the stock market and investing confidently are shared aspirations among all traders. Fortunately, Zacks Premium offers various avenues to achieve both.

This esteemed research service equips you to become a more astute and self-assured investor by providing daily updates on the Zacks Rank and Zacks Industry Rank, the Zacks #1 Rank List, Equity Research reports, and Premium stock screens.

One of the standout features of Zacks Premium is the Zacks Style Scores.

Deciphering the Zacks Style Scores

The Zacks Style Scores is a distinctive framework that evaluates stocks based on three prevalent investing types. They were designed as supplementary indicators to the Zacks Rank, aiding investors in cherry-picking securities with the best prospects of outperforming the market in the upcoming 30 days.

Each stock receives a rating of A, B, C, D, or F based on its value, growth, and momentum attributes. Itโ€™s simpleโ€”the higher the score, the greater the likelihood of the stock outperforming. An A trumps a B, a B trumps a C, and so forth.

The Style Scores are categorized into four sections:

Value Score

For value investors, unearthing undervalued stocks at attractive prices is akin to discovering buried treasure. By considering metrics like P/E, PEG, Price/Sales, Price/Cash Flow, and a plethora of other multiples, the Value Style Score identifies the most enticing and discounted stocks on the market.

Growth Score

Growth-oriented investors focus on a stockโ€™s future potential and a companyโ€™s overall financial vitality. Therefore, the Growth Style Score scrutinizes factors such as anticipated and historical earnings, sales, and cash flow to pinpoint stocks poised for sustained growth over time.

Momentum Score

Adherents of momentum trading and investing live by the mantra โ€œthe trend is your friend.โ€ This strategy revolves around capitalizing on upward or downward trends in a stockโ€™s price or earnings outlook. By analyzing factors like one-week price changes and the monthly percentage shift in earnings estimates, the Momentum Style Score offers insights into opportune moments to take positions in high-momentum stocks.

VGM Score

If you prefer dabbling in all three investing styles, the VGM Score is tailor-made for you. It amalgamates all Style Scores and serves as a vital gauge to be used in conjunction with the Zacks Rank. The VGM Score rates each stock based on their diversified weighted styles, streamlining the process of pinpointing companies with the most enticing value, robust growth projections, and promising momentum.

Maximizing Returns with Style Scores and the Zacks Rank

The Zacks Rank, a proprietary stock-rating model, leverages earnings estimate revisions to streamline the construction of a winning portfolio.

The success of the Zacks Rank speaks for itself, with #1 (Strong Buy) stocks delivering an unparalleled +25.41% average annual return since 1988, overshadowing the S&P 500โ€™s performance twofold. Despite the model rating a substantial number of stocksโ€”comprising over 200 companies with a Strong Buy rank alongside another 600 with a #2 (Buy) rank on any given dayโ€”it can feel daunting to select the right stocks from the vast pool of over 800 top-rated picks.

And this is precisely where the Style Scores come into play.

To optimize your returns, focus on procuring stocks with the highest likelihood of success. This entails choosing stocks boasting a Zacks Rank of #1 or #2 while also flaunting Style Scores of A or B. Even when eyeing stocks with a #3 (Hold) rank, ensure they possess Scores of A or B to capture as much upside potential as feasible.

Given that the Scores were designed to complement the Zacks Rank, monitoring the trajectory of a stockโ€™s earnings estimate revisions is paramount while deciding which stocks to invest in.

For instance, a stock stamped with a #4 (Sell) or #5 (Strong Sell) rating, despite sporting Scores of A and B, will still harbor a dwindling earnings forecast, amplifying the risk of its stock price plummeting. Hence, the more stocks you hold with a #1 or #2 Rank alongside Scores of A or B, the brighter your investment prospects.

Stock under the Spotlight: Meta Platforms (META)

Meta Platforms reigns as the preeminent social media titan globally. Sprouting from a single Facebook app, the companyโ€™s product portfolio burgeoned to encompass various apps like the photo and video-sharing platform Instagram and the WhatsApp messaging app, courtesy of strategic acquisitions. Complemented by in-house creation Messenger, these apps collectively constitute the Meta family of products, catering to an audience of nearly 3.98 billion individuals on a monthly basis as of December 31, 2023.

META shines as a #2 (Buy) on the Zacks Rank, garnishing a VGM Score of B.

Amidst the realm of Computer and Technology stocks, META catches the eye of momentum investors. The company flaunts a Momentum Style Score of B, with its shares scaling up by 3.4% over the past four weeks.

For the fiscal year 2024, two analysts upped their earnings forecast in the last 60 days, propelling the Zacks Consensus Estimate by $0.19 to $20.01 per share. META boasts a stellar average earnings surprise of 19.7%.

Backed by a robust Zacks Rank and top-tier Momentum and VGM Style Scores, META is undeniably a prime contender for investor portfolios.

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The perspectives and opinions articulated herein belong to the author and do not necessarily mirror those of Nasdaq, Inc.

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