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Welcome to Episode #228 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, she’s going solo to discuss how you can use the Zacks Rank system to find hidden gems during this coronavirus crisis.
Many companies have withdrawn their full year earnings guidance. Many also reported much lower earnings in the first quarter due to the coronavirus shutdowns.
For that reason, earnings seem to be up in the air with many companies. Companies are taking it day-to-day. It has led to many earnings cuts in 2020.
The Zacks Rank is a Powerful Tool
The Zacks Rank is a short-term stock recommendation of 1-3 months that is based on analyst earnings estimate revisions. It is designed to weed out the companies with rising earnings estimates.
Isn’t that what all investors want right now?
Today, screening for only the Zacks Rank #1 (Strong Buy) stocks, which should have rising earnings estimates, there were just 215.
That’s out of over 4,000 stocks that have the Zacks Rank. It’s an elite group of companies.
If you’re an investor trying to find companies that are performing the best during the coronavirus crisis, this list is the place to start.
Remember, the Zacks Rank is generated daily. It can change from one day to the next, as the analysts continually revise their earnings estimates.
Secrets of the Zacks Rank Revealed
But the Zacks Rank also has quirks that you should know if you’re going to deploy it. Here are some of its “secrets.”
1. Agreement is important. If a dozen analysts all revise their earnings estimates higher at the same time, and none cut, something pretty good is probably going on at that company. Such is the scenario with Activision Blizzard and Dollar General (DG - Free Report) , both Zacks Rank #1 (Strong Buys) and rising earnings estimates for 2020.
2. Most stocks are Zacks Rank #3 (Holds). JPMorgan Chase (JPM - Free Report) is now a Zacks Rank #3, despite 8 estimates being revised lower after it reported earnings in April. Second quarter earnings are fast approaching so JPM’s Rank will likely be changing again in the next few weeks.
3. The Zacks Rank can get volatile before an earnings report. Korn Ferry (KFY - Free Report) reports next week. It has dropped to a Zacks Rank #4 (Sell) even though there has been no change in its earnings estimates for the last 60 days. The older estimates are being ignored by the Rank. Look for the Zacks Rank to change after the earnings report.
4. Sometimes there really IS disagreement among the analysts. Darden (DRI - Free Report) is a Zacks Rank #3 (Hold) because 6 estimates have been revised higher, but 3 have been cut, in the last month. As many companies keep saying, they are taking the business day-by-day. The analysts are too.
What else do you need to know to use the Zacks Rank to find hidden gems?
Listen to this week’s podcast to find out.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
Image: Bigstock
How to Use the Zacks Rank to Find Top Stocks
Welcome to Episode #228 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, she’s going solo to discuss how you can use the Zacks Rank system to find hidden gems during this coronavirus crisis.
Many companies have withdrawn their full year earnings guidance. Many also reported much lower earnings in the first quarter due to the coronavirus shutdowns.
For that reason, earnings seem to be up in the air with many companies. Companies are taking it day-to-day. It has led to many earnings cuts in 2020.
The Zacks Rank is a Powerful Tool
The Zacks Rank is a short-term stock recommendation of 1-3 months that is based on analyst earnings estimate revisions. It is designed to weed out the companies with rising earnings estimates.
Isn’t that what all investors want right now?
Today, screening for only the Zacks Rank #1 (Strong Buy) stocks, which should have rising earnings estimates, there were just 215.
That’s out of over 4,000 stocks that have the Zacks Rank. It’s an elite group of companies.
If you’re an investor trying to find companies that are performing the best during the coronavirus crisis, this list is the place to start.
Remember, the Zacks Rank is generated daily. It can change from one day to the next, as the analysts continually revise their earnings estimates.
Secrets of the Zacks Rank Revealed
But the Zacks Rank also has quirks that you should know if you’re going to deploy it. Here are some of its “secrets.”
1. Agreement is important. If a dozen analysts all revise their earnings estimates higher at the same time, and none cut, something pretty good is probably going on at that company. Such is the scenario with Activision Blizzard and Dollar General (DG - Free Report) , both Zacks Rank #1 (Strong Buys) and rising earnings estimates for 2020.
2. Most stocks are Zacks Rank #3 (Holds). JPMorgan Chase (JPM - Free Report) is now a Zacks Rank #3, despite 8 estimates being revised lower after it reported earnings in April. Second quarter earnings are fast approaching so JPM’s Rank will likely be changing again in the next few weeks.
3. The Zacks Rank can get volatile before an earnings report. Korn Ferry (KFY - Free Report) reports next week. It has dropped to a Zacks Rank #4 (Sell) even though there has been no change in its earnings estimates for the last 60 days. The older estimates are being ignored by the Rank. Look for the Zacks Rank to change after the earnings report.
4. Sometimes there really IS disagreement among the analysts. Darden (DRI - Free Report) is a Zacks Rank #3 (Hold) because 6 estimates have been revised higher, but 3 have been cut, in the last month. As many companies keep saying, they are taking the business day-by-day. The analysts are too.
What else do you need to know to use the Zacks Rank to find hidden gems?
Listen to this week’s podcast to find out.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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