Discovering which stocks are best positioned to see their price increase is surely a daunting task, but by utilizing a tool like the Zacks Rank, it becomes much easier, and much more profitable.

Stocks with a #1 (Strong Buy) ranking have a long history of outperforming the markets over a one-to-three-month time period, and it’s important to note that only 5% of the Zacks Rank universe receives this unique grade. Not only does this ranking system help identify the most elite companies, but it also enables people to hold a certain security while it continues to gain in value beyond the three-month investment horizon.

Below is an example that demonstrates how an investor could have used the Zacks Rank to find a stock that was just beginning to see accelerated price appreciation. And by following this ranking methodology, they could have held the stock while it beat and raised estimates for three consecutive quarters.

Deckers Outdoor Brands (DECK Quick QuoteDECK - Free Report)

Deckers is a global leader in designing, marketing, and distributing innovative footwear, apparel, and accessories developed for both every day and high-performance lifestyles. Its portfolio of brands includes UGG, Koolaburra, HOKA ONE ONE, Teva, and Sanuk. Decker’s products are sold in over 50 countries through select department and specialty stores, company-owned and operated retail stores, and select online stores and company-owned websites.

DECK was first added to the Zacks Rank #1 (Strong Buy) list around the time it reported its fiscal 2018 first quarter results. A loss of $-1.28 per share surpassed the Zacks Consensus of $-1.67 per share. Total net sales surged over 20% to $210 million thanks to earlier than planned global wholesale shipments and an increase in direct-to-consumer comparable sales. At the closing bell on July 21, shares of Deckers closed at $66.27.

After dropping down to a #2 (Buy), the retailer surged up to Strong Buy status once again on November 3, soon after Deckers reported strong second quarter results; it maintained this ranking for about two months. Earnings of $1.54 and revenues of $482.5 million soared past estimates, while gross margin expanded 220 basis points. As a result, management increased its fiscal 2018 sales and EPS guidance. About 5 months after first hitting the top of the Zacks Rank, DECK closed up 18.5% but remained flat from where they were in July.

Deckers reported another impressive batch of results for its third quarter, and on February 9, the stock was added to the #1 (Strong Buy) list. Net sales increased 6.6% to $810 million, while EPS had no trouble beating the Zacks Consensus. UGG sales increased 4.3%, while Teva sales grew 33.4% year-over-year. The company kept this top ranking again for around two months. Eight months after its first Strong Buy listing, DECK shares have increased well over 40% to $93.26.

Right now, DECK is a #3 (Hold). While it took a while for the company to find its groove, once it did, Deckers had no trouble taking off, and its investors have certainly reaped the rewards of earnings growth and rising estimates.

This table shows the price performance of DECK (in red), as well as the 12-month forward looking EPS estimate (in green) from about the past one-year period. During this stretch, DECK never moved lower than a Zacks Rank #3 (Hold).

By utilizing the Zacks Rank, investors are able to easily identify elite stocks that are best positioned to beat the market on a consistent basis, and how to hold those top stocks as they continue to grow.

Zacks Editor-in-Chief Goes "All In" on This Stock

Full disclosure, Kevin Matras now has more of his own money in one particular stock than in any other. He believes in its short-term profit potential and also in its prospects to more than double by 2019. Today he reveals and explains his surprising move in a new Special Report. Download it free >>