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?
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.
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.
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.
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.
Since stock prices respond to revisions, it can be very profitable to buy stocks with rising earnings estimates. By buying Focus List stocks, then, you're likely getting into companies whose future earnings estimates will be raised, potentially leading to price momentum.
Focus List Spotlight: Deere ( DE Quick Quote DE - Free Report)
Illinois-based Deere is the world’s largest producer of agricultural equipment, manufacturing agricultural machinery since 1837 under the iconic John Deere brand with its signature green and yellow color scheme. It is the 82nd-largest company in the S&P 500 Index with a market capitalization of around $110 billion. It has an advantage in most farm machinery categories as its machines come with advanced features and are better constructed than its competitors. Deere is currently the world leader in precision agriculture and remains focused on revolutionizing agriculture with technology, in an effort to make farming automated, easier and more precise across the production process.
On July 25, 2017, DE was added to the Focus List at $126.55 per share. Shares have increased 207.77% to $389.48 since then, and the company is a #2 (Buy) on the Zacks Rank.
For fiscal 2022, nine analysts revised their earnings estimate upwards in the last 60 days, and the Zacks Consensus Estimate has increased $0.49 to $22.67. DE boasts an average earnings surprise of 20.6%.
Additionally, DE's earnings are expected to grow 19.4% for the current fiscal year.
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