JTaking full advantage of the stock market and investing with confidence are common goals for new and old investors, and Zacks Premium offers many different ways to do both.
With daily Zacks Ranking and Zacks Industry Ranking updates, full access to the Zacks #1 Ranking List, Stock Research Reports, and Premium Stock Screens, the Research Service can help you become a smarter and more confident investor.
It also includes access to Zacks style sheet music.
What are Zacks style scores?
Zacks Style Scores, developed alongside the Zacks Ranking, are complementary indicators that rate stocks based on three widely followed investment methodologies; they also help investors choose stocks that have the best chance of beating the market over the next 30 days.
Each stock is assigned a rating of A, B, C, D or F based on its value, growth and momentum characteristics. Just like in school, an A is better than a B, a B is better than a C, etc. This means that the higher the score, the more likely the stock is to outperform.
Style Scores are divided into four categories:
Value rating
For value investors, it’s about finding good stocks at good prices and finding out which companies are trading at fair value before the market takes a swing. The Value Style Score uses ratios such as P/E, PEG, Price/Sales, Price/Cash Flow and a host of other multiples to help select the most attractive and discounted stocks.
Growth score
While good value is important, growth-oriented investors focus more on a company’s financial strength and health, as well as its future prospects. The Growth Style Score considers forecasted and historical earnings, sales and cash flow to uncover stocks that will experience sustainable long-term growth.
Momentum Score
Momentum trading is all about taking advantage of upward or downward trends in a stock’s price or earnings outlook, and these investors live by the saying “the trend is your friend.” The Momentum Style Score can identify good times to initiate a position in a security, using factors such as one-week price change and monthly percentage change in earnings estimates.
VGM score
What if you like to use all three types of investment? The VGM Score is a combination of all Style Scores, making it one of the most comprehensive metrics to use with the Zacks Ranking. It rates each stock based on their combined weighted styles, helping to target the companies with the most attractive value, the best growth forecasts and the most promising momentum.
How Style Scores Work with Zacks Ranking
A proprietary stock rating model, Zacks Rank uses the power of earnings estimate revisions, or changes to a company’s earnings outlook, to help investors create a performing portfolio.
It’s been a big hit, with #1 stocks (Strong Buy) producing the highest average annual return of +25.41% since 1988. That’s more than double the S&P 500. But due to the large number of stocks that we assess, there are over 200 companies with a strong Buy Rank, plus another 600 with a #2 (Buy) Rank, on any given day.
But it can seem overwhelming to choose the right stocks for you and your investment goals with over 800 top-rated stocks to choose from.
This is where Style Scores come in.
You want to make sure you’re buying stocks with the highest probability of success, and to do that you’ll need to choose stocks with a Zacks #1 or #2 rating that also have A or B style scores. you like a security that is only ranked #3 (Hold), it should also have scores of A or B to ensure as much upside potential as possible.
The direction of a stock’s earnings estimate revisions should always be a key factor when deciding which stocks to buy, since the scores were created to work with the Zacks Ranking.
For example, a stock with a #4 (Sell) or #5 (Strong Sell) rating, even one that displays scores of A and B, still has a downside earnings forecast, and a much greater probability than the its share price falls. as well.
So the more stocks you have with a rank of #1 or #2 and scores of A or B, the better.
Stock to Watch: Cheniere Energy Partners, LP (CQP)
Houston, Texas-based Cheniere Energy Partners, LP owns and operates regasification units at the Sabine Pass LNG terminal, located in Cameron Parish, LA. It provides clean, safe and affordable LNG to multiple entities, including utilities as well as integrated energy companies, around the world. The Sabine Pass LNG terminal is the first large-scale liquefied gas export facility in North America. The publicly traded Delaware Limited Partnership was established in 2006 by Cheniere Energy, Inc.
CQP is a #3 (Hold) on the Zacks rank, with a VGM score of B.
Aggressive investors should take note of this Oils-Energy stock. CQP has a Momentum Style Score of B and the shares are up 5.8% over the past four weeks.
For fiscal 2022, four analysts have revised their earnings estimate higher in the past 60 days, and Zacks’ consensus estimate rose $0.10 to $3.53 per share. The CQP shows an average surprise profit of 9.8%.
With a strong Zacks ranking and top Momentum and VGM style scores, CQP should be on the investor shortlist.
Zacks names ‘only one best choice for doubling up’
From thousands of stocks, 5 Zacks experts have each picked their favorite to skyrocket by +100% or more in the coming months. Of these 5, Research Director Sheraz Mian selects one to have the most explosive advantage of all.
It’s a little-known chemical company that’s up 65% year-on-year, but still very cheap. With relentless demand, rising earnings estimates for 2022 and $1.5 billion for stock buybacks, retail investors could step in at any time.
This company could rival or surpass other recent Zacks stocks that are expected to double, such as Boston Beer Company which jumped +143.0% in just over 9 months and NVIDIA which jumped +175.9% in one. year.
Free: See our best stock and our 4 finalists >>
Click to get this free report
Cheniere Energy Partners, LP (CQP): Free Stock Analysis Report
To read this article on Zacks.com, click here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.