Take the Zacks Approach to Beat the Markets: Celsius, Adobe, Curtiss-Wright in Focus
Two of the three most widely followed indexes closed last week in the red. The Nasdaq Composite and the S&P 500 declined 1.9% and 0.3%, respectively, whereas the Dow Jones Industrial Average gained 0.6%.
Moody’s, on August 7, downgraded 10 small and medium-sized lenders and put six banks on review for potential downgrade due to funding risks and weaker profitability. This triggered panic selling in the stock market as investors began to fear about the health of the U.S. banking system and the economy.
The most-awaited consumer price index reading rose 3.2% year over year in July compared to a 3% gain in June. Inflation has cooled off significantly from the June 2022 peak of 9.1% and is moving toward the Federal Reserve’s 2% target. Investors expect the Fed to stop its aggressive rate hike cycle or pause for the time being but remain cautious as another CPI reading and jobs data are due before the Fed’s September FOMC.
On the international front, China, which is the world’s second-largest economy, has witnessed a slowdown in growth due to sluggish demand. Economic data released on August 8 for July showed weaker-than-expected exports for July. Exports declined 14.5% and imports fell 12.4% in U.S. dollar terms from a year ago.
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:
Curtiss-Wright and Builders FirstSource Surges Following Zacks Rank Upgrade
Shares of Curtiss-Wright Corporation CW have gained 25.7% (versus the S&P 500’s 6.5% rise) since it was upgraded to a Zacks Rank #2 (Buy) on May 23.
Another stock, Builders FirstSource, Inc. BLDR, which was also upgraded to a Zacks Rank #1 (Strong Buy) on May 23, has returned 23.1% (versus the S&P 500’s 6.5% 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.
This stock-rating system, which uses four factors related to earnings estimates to classify stocks into five groups, ranging from Zacks Rank #1 (Strong Buy) to Zacks Rank #5 (Strong Sell), has an impressive externally audited track record, with Zacks Rank #1 stocks generating an average annual return of +24.8% since 1988. You can see the complete list of today’s Zacks Rank #1 stocks here >>>
A hypothetical portfolio of Zacks Rank #1 stocks has returned +10.8% this year (through July 3) versus +16.1% for the S&P 500 Index and +7.7% 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 strong recent performance of mega-cap stocks.
We are not trying to cherrypick 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.
Check Curtiss-Wright’s historical EPS and Sales here>>>
Check Builders FirstSource’ historical EPS and Sales here>>>
Image Source: Zacks Investment Research
Zacks Recommendation Upgrade Drives Amphastar Pharmaceuticals and James Hardie Higher
Shares of Amphastar Pharmaceuticals, Inc. AMPH and James Hardie Industries plc JHX have advanced 23.9% (versus the S&P 500’s 6.2% rise) and 20.9% (versus the S&P 500’s 7.5% rise) since their Zacks Recommendation was upgraded to Outperform on May 30 and May 18, 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 Adobe, Deere & Company Shoot Up
Shares of Adobe Inc. ADBE, which belongs to the Zacks Focus List, have gained 37% over the past 12 weeks. The stock was added to the Focus List on March 13, 2020. Another Focus-List holding, Deere & Company DE, which was added to the portfolio on July 25,2017, has returned 19.7% over the past 12 weeks. The S&P 500 has gained 6.2% over this period.
The Zacks Focus List is a model portfolio of 50 hand-picked stocks that possess the right fundamental ingredients to outperform the market over the next 12 months. These 50 stocks are picked from a long list of stocks with the highest Zacks Rank.
The 50-stock Zacks Focus List model portfolio has returned +17.15% in 2023 (through June 30) versus +16.90% for the S&P 500 Index. In 2022, the portfolio produced -15.2% versus the S&P 500 Index’s -17.96%.
Since 2004, the Focus List portfolio has produced an annualized return of +11.10% through June 30, 2023. This compares to a +9.52% annualized return for the S&P 500 Index in the same time period.
On rolling one-, three- and five-year bases, the Zacks Focus List returned +29.36%, +16.74%, and +12.45% versus +19.57%, +14.59% and +12.30% 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 Amgen and MSCI Make Significant Gains
Amgen Inc. AMGN, a component of our Earnings Certain Admiral Portfolio (ECAP), has jumped 17.5% over the past 12 weeks. MSCI Inc. MSCI has followed Amgen with 16.9% returns.
ECAP, which consists of 30 concentrated, ultra-defensive, long-term Buy and Hold stocks, has returned +6.67% in 2023 (through June 30) versus +16.90% for the S&P 500 Index. The portfolio returned -4.7% in 2022 versus 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 Automatic Data Processing and Paychex Outperform Peers
Automatic Data Processing, Inc. ADP, which is part of our Earnings Certain Dividend Portfolio (ECDP), has returned 17% over the past 12 weeks. Another ECDP stock, Paychex, Inc. PAYX, has climbed 16.1% 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 Automatic Data Processing’s dividend history here>>>
Check Paychex’s 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.
ECDP has returned +0.18% in 2023 (through June 30) versus +16.90% for the S&P 500 Index. The portfolio returned -2.3% in 2022 versus -17.96% for the S&P 500 Index and -8.34% for the ProShares S&P 500 Dividend Aristocrats ETF NOBL.
Click here to access this portfolio on Zacks Advisor Tools.
Zacks Top 10 Stocks — Celsius Holdings Delivers Solid Returns
Celsius Holdings, Inc. CELH, from the Zacks Top 10 Stocks for 2023, has gained 68.3% year to date, which compares to a 17.4% gain for the S&P 500 Index.
The portfolio returned +15.9% through the end of June 2023 versus +16.9% for the S&P 500 (the equal-weighted index, a more appropriate benchmark, returned +7% in the same period). The portfolio returned -15.8% in 2022 versus -18.1% for the S&P 500 Index. Since 2012, the Top 10 portfolio has generated an annualized return of +22.4% versus +12.5% for the S&P 500 Index.
Since the start of 2012 through May 31, 2023, the Zacks Top 10 Stocks delivered a cumulative return of 827.6% through the end of 2022 versus a 265% cumulative return for the S&P 500 Index.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Paychex, Inc. (PAYX) : Free Stock Analysis Report
Automatic Data Processing, Inc. (ADP) : Free Stock Analysis Report
Amgen Inc. (AMGN) : Free Stock Analysis Report
Deere & Company (DE) : Free Stock Analysis Report
Amphastar Pharmaceuticals, Inc. (AMPH) : Free Stock Analysis Report
Adobe Inc. (ADBE) : Free Stock Analysis Report
Builders FirstSource, Inc. (BLDR) : Free Stock Analysis Report
MSCI Inc (MSCI) : Free Stock Analysis Report
Curtiss-Wright Corporation (CW) : Free Stock Analysis Report
James Hardie Industries PLC. (JHX) : Free Stock Analysis Report
ProShares S&P 500 Dividend Aristocrats ETF (NOBL): ETF Research Reports
Celsius Holdings Inc. (CELH) : Free Stock Analysis Report
