Follow the leader.

We’ve all played this game at some point in our lives. The popular children’s game helps teach our kids to be patient and listen to directions. It also sharpens their observational skills as they must mimic the actions of the leader.

As investors we want to be in leading stocks. The problem for many investors is that they fail to notice the relevant signs and distinctions from the leaders. They are too busy holding on to former losers hoping to break even, and refuse to recognize the buy signals that leading stocks are demonstrating under the surface.

The best investors exemplify the skills we teach to our young people. They are extremely patient and wait for proper entry points. They know what to look for in terms of price patterns, sector rotation, and relative strength. These investors have built a process over time that enables them to identify leading stocks at any given point in time.

Here at Zacks, we give you the tools to help identify leading stocks and outperform the market. Our Zacks Industry Rank identifies the top industry groups that contain market leaders, providing a tailwind to your investing success. Our Zacks Rank methodology pinpoints stocks that are witnessing positive earnings estimate revision activity, allowing investors to jump on board before an emerging rally gets underway. And our Earnings ESP filter empowers investors by allowing them the opportunity to detect stocks that are most likely to beat consensus estimates.

These are just a select few of the benefits available to Zacks’ subscribers. Our Style Scores and Premium Screeners also assist investors in narrowing down the investable universe to only the top names. That’s the key – we only want to include the best of the best in our portfolio, which will allow us to maximize our investing potential.

Despite a correction to begin the year, there are a few pockets of the market that are working. These stocks have led the major indexes and are showing signs of continued outperformance.

Drug Companies Lead the Charge in 2025

The Zacks Medical – Biomedical and Genetics industry group contains many leading stocks that are sidestepping the general market correction. This group currently ranks in the top 26% out of more than 250 industries. Because this group is ranked in the top half of all Zacks Ranked Industries, we expect it to outperform the market over the next 3 to 6 months, just as it has so far this year:

Image Source: Zacks Investment Research

Note the favorable metrics for this industry group below:

Image Source: Zacks Investment Research

Historical research studies suggest that approximately half of a stock’s price appreciation is due to its industry grouping. In fact, the top 50% of Zacks Ranked Industries outperforms the bottom 50% by a factor of more than 2 to 1.

It’s no secret that investing in stocks that are part of leading industry groups can give us a leg up relative to the market. By focusing on leading stocks within the top industries, we can dramatically improve our stock-picking success.

One leading stock in this industry is Gilead Sciences (GILD Quick QuoteGILD - Free Report) . Gilead is a global, research-based biopharmaceutical company that discovers, develops, and commercializes innovative medicines. The company strives to transform and simplify care for people with life-threatening illnesses including treatments for HIV/AIDS, liver disease, cancer, inflammatory and respiratory diseases, and cardiovascular conditions.

Gilead, a Zacks Rank #2 (Buy) stock, boasts a strong track record of exceeding earnings estimates. The company delivered a trailing four-quarter average earnings surprise of 19.5%. Gilead most recently reported fourth-quarter earnings back in February of $1.90 per share, which marked a +13.8% surprise over consensus estimates.

Trading relatively undervalued at 14.5 times forward earnings, GILD stock has attracted institutional investment and is showing relative strength. The stock is up over 23% in 2025 and hit a 52-week high earlier this month.

Image Source: StockCharts

Jazz Pharmaceuticals (JAZZ Quick QuoteJAZZ - Free Report) is another company within the aforementioned industry group that is outperforming this year. A Zacks Rank #1 (Strong Buy), Jazz is a specialty biopharmaceutical company that identifies, develops, and commercializes pharmaceutical products in the United States, Europe, and internationally. The company maintains a strong drug portfolio with a primary focus in the areas of neuroscience and oncology.

The Dublin, Ireland-based company has built up an impressive reporting history, surpassing earnings estimates in three of the past four quarters. Jazz most recently delivered fourth-quarter earnings back in February of $6.60 per share, a 14% surprise over the $5.79/share consensus estimate.

JAZZ stock is ranked favorably by our Zacks Style Scores with a top ‘A’ rating in our Value category and an overall ‘B’ VGM score. The stock is undervalued and trades at just six times forward earnings, well below the industry average. Promising earnings and sales trends point to continued growth ahead.

This market leader has seen its stock advance more than 11% already this year, all while the general market remains in a correction. Only stocks that are in extremely powerful uptrends are able to experience this type of outperformance.

Image Source: StockCharts

What the Zacks Model Reveals

The Zacks Earnings ESP (Expected Surprise Prediction) looks to find companies that have recently seen positive earnings estimate revision activity. This more recent information can be a better predictor of the future, which can give investors a leg up during earnings season. The technique has proven to be quite useful for finding positive surprises. In fact, when combining a Zacks Rank #3 or better and a positive Earnings ESP, stocks produced a positive surprise 70% of the time.

JAZZ sports a Zacks Rank #1 (Strong Buy) and an Earnings ESP of +3.6%. Another beat may be in the cards when JAZZ reports Q1 results in May.