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Why MSCI (MSCI) is a Top Stock for the Long-Term

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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.

The Zacks Premium service makes this easier. It features 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 of these can help you quickly identify 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, wouldn't you jump at the chance for access to a curated list of stocks to kickstart your investing journey?

That's what the Zacks Focus List offers. It's a portfolio of 50 stocks that serve as a starting point for long-term investors to build their individual portfolios. The stocks included in the list are set to outperform the market over the next 12 months.

What makes the Focus List even more helpful is that each selection is accompanied by a full Zacks Analyst Report, which explains the reasoning behind every stock's selection and why we believe it's a good pick 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.

Brokerage analysts are in charge of determining a company's growth and profitability expectations, or earnings estimates. These analysts work together with company management to evaluate all factors that may affect future earnings, like interest rates, the economy, and sector and industry optimism.

What a company will earn down the road also needs to be taken into consideration, and this is why earnings estimate revisions are so important.

The stocks that receive positive changes to earnings estimates are more likely to receive even more upward changes in the future. Take this example: if an analyst raised their estimates 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.

Four primary factors make up the Zacks Rank: Agreement, Magnitude, Upside, and Surprise. Each is given a raw score that's recalculated every night and compiled into the Rank, and with this data, stocks are then 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.

Because stock prices react to revisions, buying stocks with rising earnings estimates can be very profitable. Focus List stocks offer investors a great opportunity to get into companies whose future earnings estimates will be raised, potentially leading to price momentum.

Focus List Spotlight: MSCI (MSCI - Free Report)

MSCI Inc. provides investment decision support tools, including indexes; portfolio construction and risk management products and services; Environmental, Social and Governance (ESG) research and ratings; and real estate research, reporting and benchmarking offerings.

On October 10, 2018, MSCI was added to the Focus List at $166.96 per share. Shares have increased 179.01% to $465.83 since then, and the company is a #3 (Hold) on the Zacks Rank.

For fiscal 2021, five analysts revised their earnings estimate upwards in the last 60 days, and the Zacks Consensus Estimate has increased $0.23 to $9.60. MSCI boasts an average earnings surprise of 7.7%.

Additionally, MSCI's earnings are expected to grow 22.6% for the current fiscal year.

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