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Take the Zacks Approach to Beat the Market: NVIDIA, Fastenal, HORIBA in Focus

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Last week, two of the three widely followed indexes closed in the red, while one remained virtually unchanged. The S&P 500 and the Nasdaq Composite declined 0.1% and 0.7%, respectively, while the Dow Jones Industrial Average slid less than 0.1%.

Producer-side inflation numbers came in much higher than anticipated and weighed on the tech sector. Semiconductor stocks, in particular, were heavily affected and closed their worst week since early January. Even as market participants remain confident that there will be interest cuts made by the Fed this year, the possibility of it being in June has taken a hit. In manufacturing, numbers from January were severely revised down, with the sector reeling under yet-high interest rates.

Investors will be keenly watching the developments from the GTC developer conference early this week to get an insight into the outlook for artificial intelligence.

Regardless of market conditions, we, here at Zacks, provide investors with unbiased guidance on how to beat the market. 

As usual, Zacks Research guided investors over the past three months with its time-tested methodologies. Given the prevailing market uncertainty, you may want to look at our feats to prepare better for your next action.

Here are some of our key achievements:

Powell Industries and Bellway Surge Following Zacks Rank Upgrade

Shares of Powell Industries, Inc. (POWL - Free Report) have gained 97% (versus the S&P 500’s 6.7% increase) since it was upgraded to a Zacks Rank #1 (Strong Buy) on January 19.

Another stock, Bellway p.l.c. (BLWYY - Free Report) was upgraded to a Zacks Rank #2 (Buy) on January 18 and has returned 55.9% (versus the S&P 500’s 7.6% increase) since then.

Zacks Rank, our short-term rating system, has earnings estimate revisions at its core. Empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements. 

A hypothetical portfolio of Zacks Rank #1 (Strong Buy) stocks returned +20.63% in 2023 vs. +24.83% for the S&P 500 index and +15% for the equal-weight S&P 500 index. The portfolio of Zacks Rank #1 stocks is an equal-weight portfolio, while the S&P 500 index is a market-cap-weighted index that has been notably distorted by the concentrated performance of mega-cap stocks in 2023.

We are not trying to cherry-pick here. But since this Zacks Model portfolio, consisting of Zacks Rank #1 stocks, is an equal-weight portfolio, the equal-weight S&P 500 index is the appropriate benchmark for comparison. Looked at this way, this portfolio has handily outperformed the index.

The Zacks Model Portfolio - consisting of Zacks Rank #1 stocks – has outperformed the S&P index by more than 13 percentage points since 1988 (Through January 1st, 2024, the Zacks # 1 Rank stocks generated an annualized return of +24.18% since 1988 vs. +10.88% for the S&P 500 index).You can see the complete list of today’s Zacks Rank #1 stocks here >>>

Check Powell’s historical EPS and Sales here>>>

Check Bellway’s historical EPS and Sales here>>>

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Zacks Recommendation Upgrades HORIBA and Universal Technical Institute Higher 

Shares of HORIBA, Ltd. (HRIBF - Free Report) and Universal Technical Institute, Inc. (UTI - Free Report) have advanced 39.2% (versus the S&P 500’s 6.7% rise) and 11.3% (versus the S&P 500’s 6.6% rise) since their Zacks Recommendation was upgraded to Outperform on January 19 and January 15, respectively.

While the Zacks Rank is our short-term rating system that is most effective over the one- to three-month holding horizon, the Zacks Recommendation aims to predict performance over the next 6 to 12 months. However, just like the Zacks Rank, the foundation for the Zacks Recommendation is trends in earnings estimate revisions.

The Zacks Recommendation classifies stocks into three groups — Outperform, Neutral and Underperform. While these recommendations are determined quantitatively, our analysts have the flexibility to override them for the 1100+ stocks they closely follow based on their better judgment of factors such as valuation, industry conditions and management effectiveness than the quantitative model.

To access our research reports with Zacks Recommendations for the 1100+ stocks we cover, click here>>>

Zacks Focus List Stocks NVIDIA, Uber Shoot Up

Shares of NVIDIA Corporation (NVDA - Free Report) , which belongs to the Zacks Focus List, have gained 79.9% over the past 12 weeks. The stock was added to the Focus List on May 20, 2019. Another Focus-List holding, Uber Technologies, Inc. (UBER - Free Report) , which was added to the portfolio on August 16, 2019, has returned 23.3% over the past 12 weeks. The S&P 500 has advanced 8.8% over this period. 

The 50-stock Zacks Focus List model portfolio returned +21.72% in 2023 (through November 30) vs. +20.79% for the S&P 500 index and +6.32% for the equal-weight S&P 500 index. In 2022, the portfolio produced -15.2% vs. the S&P 500 index’s -17.96%.

Since 2004, the Focus List portfolio has produced an annualized return of +11.07% through November 30, 2023. This compares to a +9.49% annualized return for the S&P 500 index in the same time period.

On a rolling one-, three- and five-year annualized basis, the Zacks Focus List returned +13.49%, +9.21%, and +14.05% vs. +13.82%, +9.74% and +12.51% for the S&P 500 index, respectively.

Unlock all of our powerful research, tools and analysis, including the Focus List, Zacks #1 Rank List, Equity Research Reports, Zacks Earnings ESP Filter, Premium Screener and more, as part of Zacks Premium. Gain full access now >>

Zacks ECAP Stocks Novo Nordisk and Tractor Supply Make Significant Gains

Novo Nordisk A/S (NVO - Free Report) , a component of our Earnings Certain Admiral Portfolio (ECAP), has jumped 28.9% over the past 12 weeks. Tractor Supply Company (TSCO - Free Report) has followed Novo Nordisk with 21.3% returns.

The Zacks Earnings Certain Admiral Portfolio (ECAP), which consists of 30 concentrated, ultra-defensive, long-term Buy and Hold stocks, returned +12.17% in 2023 vs. +26.28% for the S&P 500 index. The portfolio returned -4.7% in 2022 vs. the S&P 500 index’s -17.96%.

With little to no turnover and annual rebalance periodicity, the ECAP seeks to minimize capital loss by holding shares of companies whose earnings streams exhibit a proven 20+ year track record of surviving recessionary periods with minimal impact on aggregate earnings growth relative to the overall S&P 500.

The ECAP and many other model portfolios are available as part of Zacks Advisor Tools, a cloud-based solution to access Zacks award-winning stock, mutual fund and ETF research. Click here to schedule a demo.

Zacks ECDP Stocks Fastenal and Hormel Foods Outshine Peers

Fastenal Company (FAST - Free Report) , which is part of our Earnings Certain Dividend Portfolio (ECDP), has returned 14.8% over the past 12 weeks. Another ECDP stock, Hormel Foods Corporation (HRL - Free Report) , has climbed 7.5% over the same time frame. Of course, the inclination of investors toward quality dividend stocks to secure an income stream amid heightened market volatility contributed to this performance.

Check Fastenal’s dividend history here>>>

Check Hormel Foods’ dividend history here>>>

With an extremely low Beta and a history of minimum earnings variability over the last 20+ years, this 25-stock portfolio helps significantly mitigate risk.

The Zacks Earnings Certain Dividend Portfolio (ECDP) returned -0.9% in 2023 vs. +26.28% for the S&P 500 index) and +8.11% for the Dividend Aristocrats ETF (NOBL). The portfolio returned -2.3% in 2022 vs. -17.96% for the S&P 500 index and -8.34% for NOBL.

Click here to access this portfolio on Zacks Advisor Tools

Zacks Top 10 Stocks — Eaton Corporation Delivers Solid Returns

Eaton Corporation plc (ETN - Free Report) , from the Zacks Top 10 Stocks for 2024, has jumped 23.7% year to date compared to a 7.5% increase for the S&P 500 Index.

The Top 10 portfolio returned +25.15% in 2023 vs. +26.28% for the S&P 500 index. Since 2012, the Top 10 portfolio has produced a cumulative return of +1060.9% through the end of 2023 vs. +360.1% for the S&P 500 index.

On a rolling one-, three- and five-year annualized basis, the Zacks Top 10 portfolio returned +25.15%, +14.13%, and +29.3% vs. +26.28%, +10.23% and +15.61% for the S&P 500 index, respectively.

Since 2012, the Zacks Top 10 portfolio has returned an annualized return of +22.67% through the end of 2023 vs. +13.56% for the S&P 500 index.

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