Here at Zacks, we offer our members many different opportunities to take full advantage of the stock market, as well as how to invest in ways that lead to long-term success.
One of our most popular services, Zacks Premium offers daily updates of the Zacks Rank and Zacks Industry Rank; full access to the Zacks #1 Rank List; Equity Research reports; and Premium stock screens like the Earnings ESP filter. All are useful tools to find what stocks to buy, what to sell, and what are today's hottest industries.
Also included in Zacks Premium is the Focus List. This is a long-term portfolio of top stocks that have all the traits to beat the market.
Breaking Down the Zacks Focus List
If you could get access to a curated list of stocks to kickstart your investment portfolio, wouldn't you jump at the chance to take a peek?
Enter the Zacks Focus List. It's a portfolio made up of 50 stocks that are set to beat the market over the next 12 months; each company selected serves as a foundation for long-term investors looking to create an individual portfolio.
Additionally, each selection is accompanied by a full Zacks Analyst Report, something that makes the Focus List even more valuable. The report explains in detail why each stock was picked and why we believe it's good for the long-term.
The portfolio's past performance only solidifies why investors should consider it as a starting point. For 2020, the Focus List gained 13.85% on an annualized basis compared to the S&P 500's return of 9.38%. Cumulatively, the portfolio has returned 2,519.23% while the S&P returned 854.95%. Returns are for the period of February 1, 1996 to March 31, 2021.
Focus List Methodology
When stocks are picked for the Focus List, it reflects our enduring reliance on the power of earnings estimate revisions.
Earnings estimates are expectations of growth and profitability, and are determined by brokerage analysts. Together with company management, these analysts examine every aspect that may affect future earnings, like interest rates, the economy, and sector and industry optimism.
Earnings estimate revisions are very important, since investors also need to take into consideration what a company will earn in the future.
When a stock receives upward earnings estimate revisions, it will likely get even more positive changes in the future. For instance, if an analyst raised their earnings outlook last month, they'll probably do so again this month, and other analysts will follow.
Harnessing the power of earnings estimate revisions is where the Zacks Rank comes in. The Zacks Rank, which is a unique, proprietary stock-rating model, employs earnings estimate revisions to make it easier to build a winning portfolio.
There are four main factors behind the Zacks Rank: Agreement, Magnitude, Upside, and Surprise. Each one of these features is then given a raw score that's recalculated every night and compiled into the Rank. Using this data, stocks are classified into five groups, ranging from "Strong Buy" to "Strong Sell."
The Focus List is comprised of stocks hand-picked from a long list of #1 (Strong Buy) or #2 (Buy) ranked companies, meaning that each new addition boasts a bullish earnings consensus among analysts.
It can be very profitable to buy stocks with rising earnings estimates, as stock prices respond to revisions. By adding Focus List stocks, there's a great chance you'll be getting into companies whose future earnings estimates will be raised, which can lead to price momentum.
Focus List Spotlight: Square ( SQ Quick Quote SQ - Free Report)
Headquartered in San Francisco, CA, Square, Inc. was incorporated in 2015. The company offers financial and marketing services through its comprehensive commerce ecosystem that helps sellers to start, run and grow their businesses.
SQ, a #3 (Hold) stock, was added to the Focus List on March 28, 2017 at $17.25 per share. Since then, shares have increased 1157.68% to $216.95.
For fiscal 2021, 10 analysts revised their earnings estimate upwards in the last 60 days, and the Zacks Consensus Estimate has increased $0.33 to $1.50. SQ boasts an average earnings surprise of 173.9%.
Earnings for SQ are forecasted to see growth of 78.6% for the current fiscal year as well.
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