Getting the most out of the stock market and investing confidently are common goals for investors new and old, and Zacks Premium offers many different ways to do both.
The research service offers daily updates of the Zacks Rank and Zacks Industry Rank, full access to the Zacks # 1 Rank List, equity research reports, and premium stock screens to help you become a smarter, more confident investor.
Zacks Premium also includes access to the Zacks Style Scores.
What are the Zacks Style Scores?
Developed in conjunction with the Zacks Rank, the Zacks Style Scores are a group of complementary indicators to help investors choose stocks with the best chance of beating the market over the next 30 days.
Each stock is assigned a rating of A, B, C, D, or F based on its value, growth, and momentum characteristics. The better the score, the greater the chance the stock will outperform; an A is better than a B, a B is better than a C, and so on.
The style scores are divided into four categories:
Finding good stocks at good prices and figuring out which companies are trading below their true value are what value investors focus on. The Value Style Score takes into account ratios such as P / E, PEG, price / sales, price / cash flow and a variety of other multipliers in order to highlight the most attractive and discounted stocks.
Growth investors are more concerned about a stock’s future prospects and a company’s overall financial health and strength. Hence, the Growth Style Score analyzes traits such as forecast and historical earnings, sales, and cash flow to find stocks that will experience sustained growth over time.
Momentum investors who live by the adage “trend is your friend” are most interested in capitalizing on upward or downward trends in a stock’s price or earnings outlook. Using the weekly price change and the monthly percentage change in earnings estimates, the Momentum Style Score can, among other things, help determine favorable times for buying stocks with high momentum.
The story goes on
What if you want to use all three types of investments? The VGM score is a combination of all of the style scores, making it one of the most comprehensive indicators of Zacks rank. It rates each stock based on their combined weighted styles, which helps narrow down the companies with the most attractive value, the best growth forecast, and the most promising momentum.
How Style Scores Work with Zacks Rank
As a proprietary stock valuation model, the Zacks Rank harnesses the power of revising a company’s earnings estimates or changing a company’s earnings outlook to help investors create a successful portfolio.
It is very successful as the # 1 stock (Strong Buy) has achieved an unmatched average annual return of + 25.41% since 1988. That’s more than double the S&P 500. But because of the large number of stocks we rate, there are over 200 Strong Buy ranked companies plus another 600 ranked # 2 (Buy) on any given day.
However, it can feel overwhelming to pick the right stocks for you and your investment goals with over 800 top-rated stocks.
This is where the style scores come into play.
To maximize your return on investment, you want to buy stocks with the highest probability of success. This means that you will select stocks with a Zacks rank of # 1 or # 2 that also have style ratings of A or B. When looking at stocks that are ranked # 3 (hold), make sure they are rated A or B to help secure as much upside potential as possible.
As mentioned above, the scores are designed to work with Zacks rank, so any change in a company’s earnings outlook should be a determining factor in choosing which stocks to buy.
For example, a stock rated # 4 (Sell) or # 5 (Strong Sell), even one rated A and B, still has a declining profit forecast and a much greater likelihood of its stock price going down as well.
The more stocks you own with rank 1 or 2 and a rating of A or B, the better.
In stock: Dick’s Sporting Goods (DKS)
DICK’S Sporting Goods Inc. was founded in New York in 1948 under the labels Dick’s Clothing and Sporting Goods, Inc. It was previously incorporated as Delaware Corporation and renamed Dick’s Sporting Goods, Inc. in April 1999 and is based in Coraopolis, Pennsylvania.
DKS is # 3 (Hold) on the Zacks rank with a VGM score of A.
Momentum investors should watch this retail wholesale stock. DKS has a momentum style score of A and stocks are up 27% in the past four weeks.
Eight analysts have revised their earnings estimates upwards over the past 60 days for fiscal year 2022. The Zacks Consensus Estimate is up $ 3.32 to $ 12.03 per share. DKS shows an average surprise result of 117.4%.
With a solid Zacks rank and top-notch momentum and VGM style scores, DKS should be on the shortlist of investors.
5 shares set to double
Each was selected as the # 1 Most Popular Stock by a Zacks expert to gain + 100% or more in 2021. Previous recommendations increased by + 143.0%, + 175.9%, + 498.3% and + 673.0%.
Most of the stocks in this report fly under the Wall Street radar, which is a great opportunity to get in on the ground floor.
Check out these 5 possible home runs today >>
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DICKS Sporting Goods, Inc. (DKS): Free Stock Research Report
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