Sometimes you just get too much of a good thing!
Take the Zacks Rank, for example. You know it’s one of the most successful stock rating systems out there, but at any given time there are hundreds of stocks with a Zacks Rank #1 (Strong Buy) or Zacks Rank #2 (Buy).
You can’t buy them all.
That’s where the Zacks Style Scores come in. These indicators help to fine tune that long list of stocks to increase your odds of outperformance, and they’re split into Value, Growth and Momentum scores depending on what kind of investor you are.
But if you want everything in one place, then there’s the VGM, which combines all three styles into one score.
It’s also the focus of the Top VGM Buys screen.
In addition to the Zacks Rank and VGM, the screen also looks for stocks in the top 50% of the Zacks Industry Rank as well as several other criteria.
Below are three names that passed this rigorous test.
FedEx (FDX - Free Report)
Not every company can say they broke up with Amazon (AMZN) and were better for it. But that’s what FedEx (FDX - Free Report) did last year. It gave the old “I think we should see other people” routine to the trailblazer that revolutionized retail. And yet, shares are up more than 129% since the coronavirus low.
Fortunately, there are plenty of fish in the sea for FDX these days, especially with mega-retailers like Walmart (WMT) and Target (TGT) making impressive strides in ecommerce. Then the pandemic hit, and FDX became much more important than we could’ve imagined a few months ago.
It’s no surprise that a space like Transportation – Air Freight & Cargo would be in the Top 2% of the Zacks Industry Rank during this difficult time, helping FDX report solid fiscal first quarter results.
Earnings per share of $4.87 crushed the Zacks Consensus Estimate by approximately 88%. Meanwhile, revenue of $19.3 billion jumped more than 13% year over year and topped our expectations of around $17.5 billion.
Ground revenues improved 36% due to the growth in residential delivery volume. FedEx Express saw its adjusted operating income more than double.
The company doesn’t want to make specific predictions for the future, but that hasn’t kept analysts from expecting big things moving forward. The Zacks Consensus Estimate for this year (ending May 2021) has climbed 50.9% to $15.14 over the past two months, while next year (ending May 2022) is up 36.4% in that time to $16.63. Both periods have seen improvement of more than 4% in just the past 7 days.
Therefore, analysts expect earnings growth of nearly 10% for next fiscal year over this one, which makes sense. The ecommerce cat is out of the bag, and the eventual end of this pandemic isn’t going to put it back in.
Consumers will continue to buy online long after the masks are put away, which puts FDX in a great position moving forward.
Best Buy (BBY - Free Report)
When life itself depends on you staying home and out of the public, then you’ve almost got to buy the biggest T.V. imaginable and as many video games as possible. It’s really the only responsible thing to do!
However, such purchases are only part of the reason why shares of Best Buy (BBY - Free Report) have soared approximately 120% since the coronavirus low. This consumer electronics giant serves an even more important function by helping consumers make the transition to the new work/learn-at-home dynamic
It's been satisfying heavy demand for laptops, tablets, appliances and the like as people are forced to become homebodies. As a result, BBY recently reported impressive fiscal second quarter results.
Enterprise revenue grew 4% to approximately $9.9 billion in the quarter, which includes a 3.5% advance to $9.13 billion for the domestic segment and a 9.4% increase to $782 million for the international segment.
Comparable store sales domestically were up 5%, while online comps surged 242%. And that’s the big statistic for retailers these days, especially a company like Best Buy with stores that were only open “by appointment” for six weeks of the quarter.
On the bottom line, BBY has now beaten the Zacks Consensus Estimate for 11 straight quarters. Most recently, earnings of $1.71 jumped 58% year over year, while also topping expectations by nearly 57%. It now has a four-quarter average of approximately 33%.
As expected, BBY doesn’t feel comfortable offering a guidance right now. However, analysts are still expecting positive things for a company that already proved it could survive in a post-Amazon world… and is now showing it can thrive during a pandemic.
The Zacks Consensus Estimate for this year, ending January 2021, soared 24% over the last 30 days to $7.12. Next year’s estimate is up 10.6% in that time to $7.32.
Jabil (JBL - Free Report)
Before its fiscal fourth quarter report last week, Jabil (JBL - Free Report) was a Zacks Rank #3 (Hold). But now, this global supplier of electronic manufacturing services (EMS) is a Zacks Rank #1 (Strong Buy). So what gives?
Well, that quarter saw JBL beat on both the top and bottom lines by double-digit percentages, which convinced analysts to dramatically boost their expectations for the company. The Zacks Consensus Estimate for this year, ending August 2021, jumped 7% in the past week to $3.79.
The revisions were even greater for next fiscal year, ending August 2021. The Consensus has advanced 10% in the same amount of time to $4.50, which suggests year-over-year improvement of nearly 19%.
Shares of JBL have soared more than 75% since the coronavirus low in late March, but its still down year-to-date. Therefore, the company has a lot of ground to recover in the future, which it will be able to do as the coronavirus (hopefully…fingers crossed) eventually loses its grip on this economy sometime next year.
For the fiscal fourth quarter, JBL reported earnings per share of 98 cents. The result was up 11.4% from last year and topped the Zacks Consensus Estimate by more than 48%. Revenue of $7.3 billion also improved more than 11% year over year while bettering our expectations by 16.7%.
Revenues for EMS, which account for 61% of the total, were up 8% to $$.45 billion. Meanwhile, Diversified Manufacturing Services makes up the remaining 39% and improved 17% to $2.85 billion.
Results benefited from contract wins in healthcare, automotive, cloud and 5G.
For the fiscal first quarter, JBL expects net revenue between $6.7 billion and $7.3 billion with core diluted EPS of $1.15 to $1.35.
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