At Zacks, we provide our members with many different opportunities to take full advantage of the stock market, as well as how to invest in a way that leads to long-term success.
Zacks Premium service makes this easier. It offers daily updates of Zacks Rank and Zacks Industry Rank; full access to the Zacks # 1 ranking list; stock research reports; and Premium stock screens like the ESP Earnings Filter. All of these can help you quickly identify which stocks to buy, what to sell, and which industries are hottest today.
The service also includes the Focus List, which is a long-term portfolio of the best stocks offering a winning and better-than-market combination of growth qualities and dynamism.
Break down Zacks’ focus list
If you could have access to an organized list of stocks to jumpstart your investment portfolio, wouldn’t you jump at the chance to take a look?
This is what the Zacks Focus List, a portfolio of 50 stocks, offers investors. Not only does this serve as a starting point for long-term investors, but all of the stocks included in the list are poised to outperform the market over the next 12 months.
One thing that makes the Focus List even more beneficial is that each pick comes with a full Zacks Analyst Report. It helps explain why each stock was picked and why we think it’s a good choice in the long run.
The portfolio’s past performance only reinforces why investors should take it as a starting point. For 2020, the Focus List gained 13.85% on an annualized basis versus the S&P 500’s return of 9.38%. Cumulatively, the portfolio returned 2,519.23% while the S&P returned 854.95%. The declarations cover the period from February 1, 1996 to March 31, 2021.
Focus List Methodology
When stocks are selected for the Focus list, it reflects our continued confidence in the power of earnings estimate revisions.
Brokerage analysts are responsible for determining a company’s growth and profitability expectations, or earnings estimates. These analysts work in conjunction with company management to assess all factors that may affect future earnings, such as interest rates, economics, and industry and industry optimism.
Investors should also consider what a business will earn in the future. This is why revisions to earnings estimates are so important.
Stocks that receive upward revisions to earnings estimates are more likely to receive even more upward changes in the future. For example, if an analyst raised their estimates last month, they are more likely to do so again this month, and other analysts are likely to do the same.
Harnessing the power of earnings estimate revisions is where Zacks Ranking comes in. Zacks Ranking is a proprietary stock rating model that uses changes to a company’s quarterly earnings expectations to help investors to build a winning portfolio.
Rank Zacks consists of four main pillars: Accord, Magnitude, Upside, and Surprise. Each receives a raw score, which is recalculated each night and compiled into the leaderboard. Then stocks are categorized into five groups, ranging from “Strong Buy” to “Strong Sell”, using this data.
The Focus List is made up of stocks handpicked from a long list of companies ranked # 1 (strong buy) or # 2 (buy), meaning that every new addition enjoys a bullish earnings consensus among analysts.
Since stock prices react to revisions, buying stocks with rising earnings estimates can be very profitable. Focus List stocks provide an excellent opportunity for investors to enter companies with higher future earnings estimates, which could lead to price momentum.
Focus on Priority List: Alibaba (BABA – Free report)
Alibaba Group Holding is one of the major e-commerce giants in China. In recent years, the company has grown from a traditional e-commerce business to a conglomerate with businesses ranging from logistics and food delivery to cloud computing.
BABA, a # 3 (hold) share, was added to the Focus list on March 26, 2020 at $ 188.56 per share. Since then, shares have risen 13% to $ 213.07.
For fiscal 2022, an analyst revised his profit estimate upward over the past 60 days, and Zacks’ consensus estimate rose $ 0.24 to $ 11.24. BABA enjoys an average earnings surprise of 7.5%.
BABA’s profits are also expected to grow 13.1% for the current year.
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