(1:10) - Learning How The Zacks Ranking System Works (10:30) - Stocks On Sale: Finding Stocks With Rising Earnings During A Stock Selloff (27:15) - Episode Roundup: AAPL, NFLX, BB, HELE, NTGR, DCT, DTC Podcast@Zacks.com
Welcome to Episode #301 of the Zacks Market Edge Podcast.
Every week, host and Zacks stock strategist, Tracey Ryniec, will be joined by guests to discuss the hottest investing topics in stocks, bonds and ETFs and how it impacts your life.
This week, Tracey is going solo to talk about the Zacks Rank. How does it work? Why are some Zacks Rank #1 (Strong Buy) stocks selling off big in 2022?
Shouldn’t being a Strong Buy mean something?
What is the Zacks Rank?
The Zacks Rank was created in 1978 by Len Zacks, the founder of Zacks Investment Research. It processes analyst earnings estimates from roughly 3,000 analysts at 150 brokerage firms on over 4400 companies.
The Zacks Rank is based on revisions to analyst earnings estimates. When several analysts are all raising full year earnings estimates at the same time, it says something bullish might be going on at that company.
Similarly, if several analysts are all cutting estimates at the same time, maybe investors should take a closer look at the company to see what is going on. Those stocks are Zacks Rank #5 (Strong Sells).
The Zacks Rank is a short-term recommendation of 1 to 3 months and can change daily.
Screening for Zacks Strong Buy Stocks Near Their Lows
Using Zacks stock screener, Tracey searched for Zacks #1 (Strong Buys) and stocks trading within 10% of their 52-week lows.
How could a company have a high Zacks Rank but the Street was selling it off anyway?
There were 12 companies that fit the parameters.
5 Strong Buy Stocks Trading Near Their 52-Week Lows 1. Blackberry ( BB Quick Quote BB - Free Report)
Blackberry shares are down 13% year-to-date but have slid nearly 20% in the last 6 months.
Yet Blackberry is a Zacks Strong Buy. 1 estimate has been revised higher in the last 60 days.
Blackberry’s Zacks Consensus Estimate has moved higher during that time, rising to a loss of $0.13 from a loss of $0.20.
But is one estimate revision enough for you to be a buyer of Blackberry at these levels?
2. Helen of Troy ( HELE Quick Quote HELE - Free Report)
Helen of Troy, which makes consumer brands in housewares, health & home and beauty, including some of the best-known brands such as Dry Bar, Hydro Flask and OXO, has seen its shares slide 14.3% year-to-date.
But the analysts are much more bullish on Helen of Troy. 3 estimates are higher in the last 30 days for fiscal 2022, pushing up the Zacks Consensus Estimate to $11.72 from $11.30.
Helen of Troy shares aren’t dirt cheap, with a forward P/E of 17.8.
Is valuation an issue with Helen of Troy, even after the sell-off?
3. NETGEAR ( NTGR Quick Quote NTGR - Free Report)
NETGEAR is a network solutions company that makes wifi routers, cable modems and mobile wireless products.
NETGEAR shares have fallen 5.3% in 2022 but are down 33% over the last year.
It’s about to report earnings but one analyst has raised full year 2021 estimates in the last week. It has pushed up the 2021 Zacks Consensus Estimate to $2.29 from $2.27.
NETGEAR is cheap, with a forward P/E of 14.8.
Will NETGEAR keep its #1 Rank after it reports earnings?
4. Duck Creek Technologies ( DCT Quick Quote DCT - Free Report)
Duck Creek Technologies is a provider of core system solutions to the property & casualty and general insurance industry. It’s product is Duck Creek OnDemand, an enterprise software solution.
Shares of Duck Creek Technologies have fallen 13.2% year-to-date but are down 47% in the last year.
Analysts are bullish, however. 5 estimates have been revised higher for fiscal 2022 in the last month. None were lowered.
Duck Creek Technologies is now expected to make $0.09 for the year, up from $0.06.
Should Duck Creek Technologies be on your watch list?
5. Solo Brands ( DTC Quick Quote DTC - Free Report)
Solo Brands, is a digitally connected commerce business which owns 4 hot brands including Solo Stove, chubbies, ORU Kayak and ISLE. Solo Stove makes fire pits.
On Jan 10, Solo Brands announced that its Solo Stove brand saw organic revenue of $361 million for the year, up 170% year-over-year.
Yet shares of this newly public company have fallen 23% year-to-date.
Analysts remain bullish, however. 5 estimates have been revised higher for 2022 in the last 30 days, pushing Solo Brands’ 2022 Zacks Consensus Estimate up to $1.04 from $0.93.
Solo Brands trades with a forward P/E of just 10.7.
Is the market getting Solo Brands all wrong?
What Else Should You Know About the Zacks Rank and How to Use it to Find Stocks?
Tune into this week’s podcast to find out.