At Zacks we talk all the time about our ranking system, and how it helps you identify winning companies both big and small. Specifically, the stocks that receive the coveted Zacks Rank #1 (Strong Buy) label, which have historically outperformed the markets on a 1-3 month basis.
While the Zacks Rank is an excellent near term indicator for finding the best stocks, they system also helps you stay in the strongest ones while they continue to appreciate in price. This week’s example will demonstrate how getting into a Zacks Rank #1, and staying in that company for the long haul could have netted you a +300% gain.
Example: TAL Education Group
TAL Education Group (TAL - Free Report) is a large-cap growth stock that provides K-12 after-school tutoring service in China. It offers tutoring services to K-12 students covering academic subjects, including mathematics, English, Chinese, physics, chemistry and biology. The Company delivers its tutoring services through small classes, personalized premium services i.e. one-on-one tutoring and online course offerings. Its extensive network consists of learning centers and service centers in Beijing, Shanghai, Shenzhen, Guangzhou, Tianjin and Wuhan, as well as the Company's online platform.
On November 30th, 2015 TAL received a Zacks Rank #1, a little after the acquisition of Firstleap Education, a company that provided all subject tutoring services in the English language for kids in China aged 2-15 years old, and the addition of their Lewaijiao education product for teachers to tutor Chinese children in English. These moves caused analysts estimates to increase for the current and next fiscal years. The stock price closed at $7.34 on November 30th 2015.
On December 8,, 2015, Dave Bartosiak, then editor of the Home Run Investor service, added TAL to his portfolio while the stock was trading at $7.64. Dave held onto TAL all the way till November 13, 2017, when he sold TAL for $35.29 per share; a +361.9% gain. If you would have entered TAL when it first became a Zacks Rank #1, and sold in on November 13th, the move would have netted you a +381% gain.
The table below shows the performance of TAL, and the 12 month forward looking EPS estimate from when it became a Zacks Rank #1 till it was sold on November 13th of this year. The price is in red, and forward 12 month EPS estimate is in green.
Overall, by following the Zacks Ranking system, you can easily identify the best stocks which are positioned to beat the market on a consistent basis, and how to stay in those top stocks as they continue to see price appreciation.
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