Back to top

Anatomy of Success

Aside from deciding what stock to buy; 'when' to buy it could be the question of all questions when it comes to investing.

The Zacks Rank, which keys in on earnings estimate revisions, can be a market timer's best friend as it'll show you when a stock is most likely to move.

As the saying goes, "earnings estimate revisions are the most powerful force impacting stock prices". And the Zacks Rank is one of the best ways to find those stocks with the best upward earnings estimate revisions ready to take off.


USANA Health Sciences (USNA - Snapshot Report)

After trending down into the close of 2012, USANA Health Sciences was not likely on many people's radar for stocks to buy.

But that all changed on February 8th when they were upgraded to a Zacks Rank #2 (Buy) after the stock received a hefty upward earnings estimate revision.

Investors piled in on this signal, sending USNA up 7.54% in one week's time. Three and a half months later, which included 15 upward earnings estimate revisions and 1 positive EPS surprise, the stock was up 64.82% vs. the S&P's 8.68% during that same time.

As you can see, the stock followed higher the steady increase of rising earnings estimates. That first upward revision clearly set in motion a continuous series of additional upward revisions (which is often the case), as the analysts covering the stock upgraded their outlook on it over and over again.



Finding stocks coming out of a bottom can be a phenomenally rewarding experience. But too many stocks can languish in this stock picker's "no man’s land" for far too long. Or worse, head even lower on its way to making a newer and lower bottom.

But it doesn't have to be that way. Whether a stock is at its recent lows (or at its highs, or somewhere in between), the catalyst of upward earnings estimate revisions sends a strong signal to the market that the stock is ready to respond.

But when you see this signal (Zacks Rank #1 (Strong Buy) or Zacks Rank #2 (Buy)), don't delay. Stocks like these are quick to move (as illustrated above), and will reward investors savvy enough to read the signs and take action.

Click here to see more Zacks Rank #1 and #2 stocks

Disclosure: Performance information for Zacks’ portfolios and strategies are available at: http://www.zacks.com/performance.

Please login to Zacks.com or register to post a comment.