The Zacks Rank is a short-term indicator designed to identify stocks likely to outperform over the next 1-3 months.
Over the last 25 years, the Zacks Rank has done just that, with the Zacks Rank #1 (Strong Buy) stocks nearly tripling the S&P 500 with an average annual return of over 26%, while the Zacks Rank #2 (Buy) stocks have nearly doubled the S&P with a market-beating return of over 18%.
And that doesn't mean you have to wait months to see the excess performance. Oftentimes the outperformance begins the moment a stock receives an upgrade to a Zacks Rank #1 or Zacks Rank #2. Once that happens, the fanfare begins.
Kirklands (KIRK - Analyst Report)
That's what happened with Kirklands. On May 24th 2013, KIRK was upgraded from a Zacks Rank #3 (Hold) to a Zacks Rank #2 (Buy) after reporting a 100% positive EPS surprise.
The upward earnings estimate revisions began rolling in afterwards, climbing each week for five consecutive weeks. And the price responded immediately, gaining each time the estimates were raised.
Within 5 short weeks, KIRK logged an impressive 19.29% gain. What's even more impressive is that it was done while the market abruptly pulled back by -3.47%.
In good markets or bad, when a stock receives upward earnings estimate revisions, those are the stocks to pay attention to. And quickly.
And when those upward revisions come week after week after week, you know you've got something special.
Remember, as earnings estimates go up, so does a stock's fair value. This is true whether the S&P is going up or down.
Now more than ever, as investors wrestle with which way the broader market will go, keep your eyes on a stock's earnings estimate revisions and it will show you how to navigate any market.
Click here to find more Zacks Rank #1 (Strong Buy) and Zacks Rank #2 (Buy) stocks
Disclosure: Performance information for Zacks portfolios and strategies are available at: https://www.zacks.com/performance.