For investors old and new, getting the most out of the stock market and investing with confidence is a common goal. Zacks Premium offers a variety of ways to do both.
This research service includes daily updates to the Zacks Rank and Zacks Industry Rank, complete access to the Zacks #1 Rank list, stock research reports, and premium stock screens, all designed to help you get smarter, more It will help you become a confident investor.
Zacks Premium also includes Zacks Style Scores.
What is the Zacks Style Score?
The Zacks Style Scores were developed alongside the Zacks Rank and are a complementary metric that evaluates stocks based on three widely followed investment methodologies. It also helps investors choose stocks that are most likely to beat the market over the next 30 days.
Each stock is assigned an A, B, C, D, or F rating based on its value, growth, and momentum characteristics. Just like in schools, A is better than B, B is better than C, and so on, the higher the score, the more likely the stock will outperform.
Style scores are divided into four categories.
value score
The key for value investors is finding good stocks at good prices and discovering which companies are trading below their true value before the broader market takes hold. Value Style Scores utilize ratios such as P/E, PEG, price/sales, price/cash flow, and a number of other multiples to select the most attractive and discounted stocks.
growth score
Growth investors are concerned with the future prospects of a stock and the overall financial health and strength of a company. Therefore, the Growth Style Score analyzes characteristics such as expected and historical earnings, revenue, and cash flow to find stocks with the potential for sustainable growth over the long term.
momentum score
Momentum trading refers to taking advantage of rising or falling trends in stock prices and earnings prospects. These investors believe in the adage that “trend is your friend.” The Momentum Style Score can pinpoint when it’s a good time to build a position in a stock, using factors such as weekly price changes and monthly percentage changes in earnings forecasts.
VGM score
If you want to combine all three style scores, the VGM score is useful. We evaluate each stock with a combined weighting style to help you find the companies with the most attractive valuations, the best growth forecasts, and the most promising momentum. It’s also one of the best metrics to use in conjunction with the Zacks Rank.
Relationship between Style Score and Zacks Rank
The Zacks Rank is a unique stock rating model that harnesses the power of earnings estimate revisions – changes in company earnings expectations – to help investors build winning portfolios.
Since 1988, the #1 (Strong Buy) stocks have generated an unmatched average annual return of +25.41%, which more than doubles the performance of the S&P 500 over the same period. However, the Zacks Rank examines a large number of stocks, and on any given day, over 200 companies can have a Strong Buy rank, and over 600 can come in at a #2 (Buy) rank.
With over 800 top-rated stocks to choose from, choosing the right stock for you and your investment journey can certainly feel daunting.
That’s where Style Score comes in.
To maximize your chances of making big gains, we recommend always considering stocks with a Zacks Rank #1 or #2 and a Style Score of A or B. This gives you the best chance of success. If you’re considering a #3 (Hold) rated stock, a score of A or B is important to ensure the best possible upside potential.
As mentioned above, the score is designed to be tied to the Zacks Rank, so any changes to a company’s earnings outlook should be a deciding factor in choosing which stock to buy.
For example, a stock with a No. 4 (Sell) or No. 5 (Strong Sell) rating, even though it has scores of A and B, still has declining earnings forecasts and is more likely to see its stock price decline. Masu.
Therefore, the more stocks you own with a #1 or #2 rank and an A or B score, the better.
Stock to watch: Walmart (WMT)
Walmart Inc. has evolved from just a traditional brick-and-mortar retailer to an omnichannel player. In this context, the acquisitions of Bonobos, Moosejaw and Parcel. Partnership with Shopify and Goldman Sachs. Shipping programs like Walmart+ and Express Delivery. and its notable investment in online e-commerce platform Flipkart. These allow the company to keep pace with the changing retail ecosystem and remain strong in the presence of rivals such as Amazon and Target. Remarkably, the products offered by Walmart include almost everything, from groceries to cosmetics, electronics to stationery, home furnishings to health and wellness products, and apparel to entertainment products.
WMT has a Zacks Rank #2 (Buy) and a VGM Score of A.
Momentum investors should keep an eye on this retail/wholesale stock. WMT has a Momentum Style Score of A, and the stock has increased 0.6% over the past four weeks.
Three analysts have revised their fiscal 2024 earnings estimates upward in the past 60 days. The Zacks Consensus Estimate rose $0.02 to $6.44 per share. WMT boasts an impressive average return of 11.6%.
With a solid Zacks Rank and top-level Momentum and VGM Style Scores, WMT should be on any investor’s short list.
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Walmart Inc. (WMT): 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.