Zacks Rank Anatomy of Success: BWS

Zacks

Stocks with a Zacks #1 Rank (Strong Buy) have a high probability of outperforming the market over the next 1-3 months. In fact, since 1986, a portfolio of Zacks #1 Ranks, have shown an average annual return of 26% per year, which is nearly triple that of the S&P 500.

This series is meant to 'show' you how the Zacks Rank can get you in and keep you in on the most profitable ones.

Hint: it's all about earnings estimates revisions. (See below.)


Short-Term Trading Example: Brown Shoe Company

Brown Shoe Company (BWS) is a small-cap value stock in the Shoes & Related Apparel industry that markets footwear in the United States, Canada and China through their retail stores named Famous Footwear, Naturalizer and Dr. Scholls, to name a few.

This popular brand-name shoe company quickly became a top performing stock as it more than tripled the market's return with a 24% gain within three short months.



On June 29, 2012, BWS received a Zacks #1 Rank, distinguishing itself as a stock poised to outperform. Between 6/29/12 when it was trading at $12.91 and 9/21/12 when it closed at $16.11, BWS rewarded investors with a 24.79% gain in just under 3 short months compared to the market's 7.19%.

During that time, their 12 Month Forward Earnings Estimates continuously climbed higher from $1.02 to $1.11, producing a spectacular 433% positive EPS surprise, and marking a path for higher prices to follow.

In fact, during that entire time, the earnings estimates didn't go down once, making for a worry free return. As you can see, rising earnings estimates and rising prices go hand in hand.

And the Zacks Rank makes these stocks easy to find.


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