The Zacks Rank system is a unique tool used to identify a stock’s expected performance over a one-to-three-month time period. More specifically, a company that receives the coveted #1 (Strong Buy) ranking is expected to be one of the best performing stocks over the near term, as only the top 5% of all companies rated by Zacks receives this standing.
The Zacks Rank helps find companies both big and small and has a proven track record of positive returns. Not only does this system help discover the best of the best, but it also enables you to stay in these top companies while they continue to appreciate in value past the initial time horizon.
Below, you’ll find an example that illustrates how to trade a Zacks Rank #1 stock, and how to ride the wave of earnings estimates revisions for market-beating gains.
Tailored Brands (TLRD - Free Report)
Based in Houston, TX, Tailored Brands is one of the largest specialty retailers of men’s tailored clothing and men’s formalwear in the U.S. and Canada. The company serves its customers mainly through its omni-channel network, which includes over 1,400 locations, its branded e-commerce websites, and its large portfolio of brands: Men's Wearhouse, Jos. A. Bank, Joseph Abboud, Moores Clothing for Men, K&G, and international apparel brands Dimensions, Alexandra, and Yaffy.
TLRD was made a #1 (Strong Buy) stock for the first time in early September last year after the retailer released its second quarter fiscal 2017 earnings report. The company soared past EPS estimates but revenues missed our consensus. While comparable retail segment net sales were only up 0.1%, comps at Jos. A. Bank surged 7.8% thanks to an increase in transactions and units. Overall, Q2 saw Tailored Brands utilize its “efficient expense structure” to generate strong cash flow. Shares closed that initial trading day at $12.19.
The stock was made a #1 again on December 8 after it reported third quarter results. Earnings and revenues both easily beat the Zacks Consensus Estimate. Again, the company posted solid comparable sales at Jos. A. Bank, as well as sequential comparable sales improvement at Men's Wearhouse and K&G. Four months after first becoming a Zacks Rank #1, shares of TLRD increased over 60% to $19.54.
TLRD was made a #1 again on April 13, most likely due to analyst bullishness as Tailored Brands readies for its first quarter 2018 earnings report. Nine months after first becoming a Zacks Rank #1, shares of TLRD increased 134.2% to $28.55. Additionally, shares are up around 240% in the past one-year period.
This table shows the price performance of TLRD (in red), as well as the 12-month forward looking EPS estimate (in green) from the time the stock first earned a Zacks Rank #1 (Strong Buy). During this stretch, TLRD 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.
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