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Understanding Zacks Premium and Its Investment Tools
Investing in the stock market can be both exciting and challenging, especially for new and experienced investors alike. One of the most effective ways to navigate this complex landscape is by leveraging advanced research tools and strategies. Zacks Premium offers a comprehensive suite of resources designed to help investors make informed decisions and build confidence in their portfolios.
Zacks Premium provides daily updates on key metrics such as the Zacks Rank and Zacks Industry Rank, along with access to the Zacks #1 Rank List, Equity Research reports, and Premium stock screens. These features allow investors to stay ahead of market trends and identify high-potential opportunities. Additionally, the service includes access to the Zacks Style Scores, which are an essential component of the investment strategy.
What Are the Zacks Style Scores?
The Zacks Style Scores were developed in conjunction with the Zacks Rank to give investors a more nuanced view of stock performance. These scores serve as complementary indicators that assess a stock’s potential to outperform the market over the next 30 days. Each stock receives an alphabetic rating—A, B, C, D, or F—based on its value, growth, and momentum qualities. An A rating is the highest, indicating a stronger likelihood of outperformance compared to lower ratings.
The Style Scores are divided into four distinct categories:
Value Score
Value investors focus on identifying stocks that are trading below their intrinsic value. The Value Score evaluates financial ratios such as the price-to-earnings (P/E), price-to-earnings growth (PEG), price-to-sales, and price-to-cash flow. This helps pinpoint companies that may be undervalued and offer attractive investment opportunities.
Growth Score
Growth investors prioritize a company’s future prospects and long-term financial health. The Growth Score analyzes factors like historical and projected earnings, sales, and cash flow to determine which stocks are likely to experience sustainable growth over time.
Momentum Score
Momentum investing involves capitalizing on existing trends in a stock’s price or earnings outlook. The Momentum Score identifies favorable entry points by examining metrics such as one-week price changes and monthly shifts in earnings estimates. This score is particularly useful for investors who follow trends closely.
VGM Score
For investors seeking a balanced approach, the VGM Score combines the insights from the Value, Growth, and Momentum Scores. It assigns a weighted rating to each stock, helping investors find companies that offer a mix of strong value, solid growth forecasts, and promising momentum. The VGM Score is often used alongside the Zacks Rank to enhance decision-making.
How Style Scores Work with the Zacks Rank
The Zacks Rank is a proprietary stock-rating model that uses earnings estimate revisions to predict a stock’s performance. Since 1988, stocks ranked #1 (Strong Buy) have delivered an impressive average annual return of 25.41%, significantly outperforming the S&P 500. However, with over 800 top-rated stocks at any given time, it can be overwhelming to select the best options for a portfolio.
This is where the Zacks Style Scores come into play. Investors should look for stocks with a Zacks Rank of #1 or #2 that also have Style Scores of A or B. These combinations provide the highest probability of achieving strong returns. Even for stocks with a #3 (Hold) rank, having A or B Style Scores can enhance upside potential.
It’s important to note that the direction of earnings estimate revisions plays a crucial role in determining a stock’s trajectory. For example, a stock with a #4 (Sell) or #5 (Strong Sell) rating, even if it has A or B Style Scores, still carries a higher risk of declining in value due to negative earnings outlooks.
Stock to Watch: Salesforce.com (CRM)
Salesforce.com (CRM) is a leading provider of on-demand Customer Relationship Management (CRM) software, enabling businesses to manage critical operations such as sales automation, customer support, marketing, and analytics.
Currently, CRM holds a Zacks Rank of #3 (Hold) and a VGM Score of B. Despite this, the stock has a Momentum Style Score of B, and shares have risen by 1.4% over the past four weeks. Recent analyst activity shows that 18 analysts have raised their earnings estimates for fiscal 2026, with the Zacks Consensus Estimate increasing to $11.30 per share. CRM also has an average earnings surprise of 4.2%.
With a solid Zacks Rank and strong Momentum and VGM Scores, CRM presents a compelling opportunity for investors looking to build a well-rounded portfolio.
