Zacks Beats The Major Brokers

Independent consulting firm Investars found that you would make more money by following Zacks Equity Research than looking at brokerage ratings.

Over a variety of periods, our long-term buy recommendations earned investors more money than those made by the major brokerage firms. Similarly, our sell recommendations helped investors identify which stocks to avoid.

Investars calculated that Zacks Equity Research's buy-recommended stocks rose 23.9% over the past 5 years, nearly 200% better than the Russell 2000.

To put this performance in perspective, let's look at how Investars says other firms performed. Following the buy recommendations from Goldman Sachs, Standard & Poor's, Deutsche Bank, Citigroup, Piper Jaffray, Raymond James, BMO Capital Markets and Ameriprise would have lost you money. Not a single one of those well-known brokerage firms had a positive return.

At the same time, Zacks Equity Research did a great job of telling you which stocks to avoid, or even short. According to Investars, Zacks' sell-recommended stocks fell 50% more than the Russell 2000. In other words, not only did Zacks warn you about the bad stocks, we helped keep you out of the worst of the worst - the ones that wreck your portfolio.

The Secret Behind Our Strong Performance

What's our secret? Combining our powerful quantitative model with the expertise of seasoned analysts.

Zacks harnesses the power of earnings estimate revisions to create two quantitative models: a short-term (1-3 month) indicator - the Zacks Rank - and a long-term (6+ months) indicator - the Zacks Recommendation. The Zacks Recommendation is an extension of the Zacks Rank and is designed specifically for long-term investors. Both models are applied to approximately 4400 stocks.

In addition, we employ a staff of 50 analysts with expertise in the specific industries they cover. Since there are often factors such as valuation, business conditions and management effectiveness that can be better spotted by a trained investment professional, we allow our analysts to override the quantitative model when they feel it is necessary.

Since our analysts cannot cover every stock, subscribers to Zacks Premium have access to 2 types of reports: analyst reports and snapshot reports.

Analyst Reports contain the analysts' recommendations as well as their in-depth written description on the company. These reports can range from 5 to 20 pages on the individual stock. Or simply, as many pages as necessary to impart to you why to buy, hold or sell the stock. These reports are available for the 1,150 stocks covered by our analyst team.

Snapshot Reports contain the quantitative recommendations and a quick overview of the key fundamental drivers behind the recommendation. This is contained in a 1-page document for approximately 3,250 stocks not covered by analysts.

The Best of Both Worlds

There are many stocks with a long-term buy recommendation that are also on the short-term Zacks #1 Rank and Zacks #2 Rank lists. Combining both rating systems is a profitable strategy, and one I use for finding candidates for the Zacks Elite Focus List.

Here are 5 stocks that are buy-rated from both a short- and long-term perspective:

• Autozone Inc. (AZO - Analyst Report)
• Salesforce.com (CRM - Analyst Report)
• Hot Topic (HOTT - Analyst Report)
• ISIS Pharmaceutical (ISIS - Analyst Report)
• Tesoro Corporation (TSO - Analyst Report)

Zacks Premium subscribers can view the full list of Zacks Equity Research's buy-recommended stocks. In addition, subscribers can also screen for stocks that are buy-rated from both a short- and long-term perspective with the Custom Screener.

Click here for more information about Zacks Premium, including how to get a free trial.

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