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The price action in the stock market this year has illustrated how important it is to remain disciplined and follow a rule-based strategy. A strategy that is mainly mechanical can free investors from emotional decision-making. Emotions can prevent investors from making sound decisions and are one of our biggest threats to achieving an acceptable rate of return on our investments.
Rule-based strategies remove the reliance of making decisions based on predictions or guesswork. Investing using a clear set of rules allows investors to follow a disciplined approach. And here at Zacks, we provide our subscribers with a rule-based strategy that has consistently outperformed the market year after year.
How to Predict Explosive Gains
At the heart of this strategy is the Zacks Rank, which analyzes earnings estimate revisions. These earnings revisions have been shown to be the most powerful force impacting stock prices. Stocks with rising estimates have significantly outperformed the S&P 500. In fact, based on a recent 34-year study, a portfolio of Zacks Rank #1 (Strong Buy) stocks beat the market with an average annual return of over 25% per year – more than double that of the S&P’s 11.1%.
That’s why it is so crucial to keep an eye on which stocks are ranked favorably by the Zacks Rank system. Let’s take a look at a current example in today’s investment climate.
A Zacks ‘Strong Buy’ and Consistent Outperformer
Carlisle Companies (CSL - Free Report) operates as a global, diversified manufacturer of engineered products. The company engages in the design and sale of a wide range of roofing and waterproofing products, in addition to heating and air-conditioning hardware. CSL also offers wire and cable technologies such as optical fiber for commercial aerospace, sensors for military applications, and liquid products and adhesives for automotive refinishing. Carlisle Companies was founded in 1917 and is based in Scottsdale, AZ.
CSL has exceeded earnings estimates in every quarter for the past five years running. The differentiated manufacturer most recently reported Q1 earnings back in April of $4.26 per share, a 67.72% surprise over the $2.54 estimate. CSL has delivered a trailing four-quarter average earnings surprise of 23.01%, aiding the stock’s 37.8% return in the past year. The stock is also up nearly 5% this year while the market has been in correction mode.
Carlisle Companies Incorporated Price, Consensus and EPS Surprise
What the Zacks Model Unveils
The Zacks Earnings ESP (Expected Surprise Prediction) seeks to find companies that have recently seen positive earnings estimate revision activity. The idea is that this recent information can serve as a more accurate predictor of the future, which can give investors a leg up during earnings season.
The technique has proven to be quite useful in finding positive surprises. In fact, when combining a Zacks Rank #3 or better with a positive Earnings ESP, stocks delivered a positive surprise 70% of the time according to our 10-year backtest.
CSL is a Zacks Rank #1 (Strong Buy) and has a +3.64% Earnings ESP. Another beat may be in the cards when the company reports its Q2 results later in July. Analysts have raised Q2 estimates by 23.13% in the past 60 days. The Zacks Consensus Estimate now stands at $4.95, reflecting potential growth of 129.17% versus the same quarter last year.
Keep an eye on CSL as the stock continues to outperform the market.
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The One Trigger That Predicts Explosive Gains
The price action in the stock market this year has illustrated how important it is to remain disciplined and follow a rule-based strategy. A strategy that is mainly mechanical can free investors from emotional decision-making. Emotions can prevent investors from making sound decisions and are one of our biggest threats to achieving an acceptable rate of return on our investments.
Rule-based strategies remove the reliance of making decisions based on predictions or guesswork. Investing using a clear set of rules allows investors to follow a disciplined approach. And here at Zacks, we provide our subscribers with a rule-based strategy that has consistently outperformed the market year after year.
How to Predict Explosive Gains
At the heart of this strategy is the Zacks Rank, which analyzes earnings estimate revisions. These earnings revisions have been shown to be the most powerful force impacting stock prices. Stocks with rising estimates have significantly outperformed the S&P 500. In fact, based on a recent 34-year study, a portfolio of Zacks Rank #1 (Strong Buy) stocks beat the market with an average annual return of over 25% per year – more than double that of the S&P’s 11.1%.
That’s why it is so crucial to keep an eye on which stocks are ranked favorably by the Zacks Rank system. Let’s take a look at a current example in today’s investment climate.
A Zacks ‘Strong Buy’ and Consistent Outperformer
Carlisle Companies (CSL - Free Report) operates as a global, diversified manufacturer of engineered products. The company engages in the design and sale of a wide range of roofing and waterproofing products, in addition to heating and air-conditioning hardware. CSL also offers wire and cable technologies such as optical fiber for commercial aerospace, sensors for military applications, and liquid products and adhesives for automotive refinishing. Carlisle Companies was founded in 1917 and is based in Scottsdale, AZ.
CSL has exceeded earnings estimates in every quarter for the past five years running. The differentiated manufacturer most recently reported Q1 earnings back in April of $4.26 per share, a 67.72% surprise over the $2.54 estimate. CSL has delivered a trailing four-quarter average earnings surprise of 23.01%, aiding the stock’s 37.8% return in the past year. The stock is also up nearly 5% this year while the market has been in correction mode.
Carlisle Companies Incorporated Price, Consensus and EPS Surprise
What the Zacks Model Unveils
The Zacks Earnings ESP (Expected Surprise Prediction) seeks to find companies that have recently seen positive earnings estimate revision activity. The idea is that this recent information can serve as a more accurate predictor of the future, which can give investors a leg up during earnings season.
The technique has proven to be quite useful in finding positive surprises. In fact, when combining a Zacks Rank #3 or better with a positive Earnings ESP, stocks delivered a positive surprise 70% of the time according to our 10-year backtest.
CSL is a Zacks Rank #1 (Strong Buy) and has a +3.64% Earnings ESP. Another beat may be in the cards when the company reports its Q2 results later in July. Analysts have raised Q2 estimates by 23.13% in the past 60 days. The Zacks Consensus Estimate now stands at $4.95, reflecting potential growth of 129.17% versus the same quarter last year.
Keep an eye on CSL as the stock continues to outperform the market.