Yahoo Finance Beat the Market the Zacks Way: Caterpillar, Amgen, Broadridge Financial Solutions in Focus
The S&P 500, the Nasdaq Composite and the Dow Jones Industrial Average lost 2.1%, 2.6% and 2.2%, respectively, last week. The rise in long-dated treasury yield coupled with China’s economic woes dampened investors’ sentiment.
The U.S. 10-year Treasury yield rose to 4.33%, the highest since 2007, suggesting risks to the equity market. With inflation coming down but remaining higher than the Federal Reserves' expectation of 2%, further rate hikes are likely. Minutes published from the Fed’s July meeting indicated that Fed officials expect a significant risk of inflation. Strong retail sales data advocates the need for additional monetary tightening measures.
On Aug 15, the Commerce Department reported that retail sales increased 0.7% month over month in July, its best monthly gain since January.
On the international front, Europe and China are showing signs of weakness. Investors are deeply concerned over default risk after Chinese property developer Evergrande sought Chapter 15 protection in a U.S. bankruptcy court.
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:
NetEase and Applied Industrial Technologies Surge Following Zacks Rank Upgrade
Shares of NetEase, Inc. NTES have gained 13.5% (versus the S&P 500’s 2.1% increase) since it was upgraded to a Zacks Rank #1 (Strong Buy) on June 5.
Another stock, Applied Industrial Technologies, Inc. AIT, which was also upgraded to a Zacks Rank #2 (Buy) on June 8, has returned 8.9% (versus the S&P 500’s 2.6% 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 cherry-pick 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 NetEase’s historical EPS and Sales here>>>
Check Applied Industrial Technologies’ historical EPS and Sales here>>>
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Zacks Recommendation Upgrades Consolidated Water and Urban Outfitters
Shares of Consolidated Water Co. Ltd. CWCO and Urban Outfitters, Inc. URBN have advanced 18% (versus the S&P 500’s 0.2% rise) and 13.2% (versus the S&P 500’s 2% rise) since their Zacks Recommendation was upgraded to Outperform on June 14 and June 7, 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 Caterpillar, Broadridge Financial Solutions Shoot Up
Shares of Caterpillar Inc. CAT, which belongs to the Zacks Focus List, have gained 29.3% over the past 12 weeks. The stock was added to the Focus List on April 18, 2017. Another Focus-List holding, Broadridge Financial Solutions, Inc. BR, which was added to the portfolio on August 29,2017, has returned 19.7% over the past 12 weeks. The S&P 500 has gained 4% 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 Automatic Data Processing and Intuit Make Significant Gains
Automatic Data Processing, Inc. ADP, a component of our Earnings Certain Admiral Portfolio (ECAP), has jumped 18.2% over the past 12 weeks. Intuit Inc. INTU has followed Automatic Data Processing with 16.1% 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 Amgen and The Home Depot Outperform Peers
Amgen Inc. AMGN, which is part of our Earnings Certain Dividend Portfolio (ECDP), has returned 20.7% over the past 12 weeks. Another ECDP stock, The Home Depot, Inc. HD, has climbed 11.8% 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 Amgen’s dividend history here>>>
Check The Home Depot’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 — Shopify Delivers Solid Returns
Shopify Inc. SHOP, from the Zacks Top 10 Stocks for 2023, has gained 53.1% year to date, which compares to a 15% 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, 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
Broadridge Financial Solutions, Inc. (BR) : Free Stock Analysis Report
Caterpillar Inc. (CAT) : Free Stock Analysis Report
Automatic Data Processing, Inc. (ADP) : Free Stock Analysis Report
Amgen Inc. (AMGN) : Free Stock Analysis Report
The Home Depot, Inc. (HD) : Free Stock Analysis Report
Applied Industrial Technologies, Inc. (AIT) : Free Stock Analysis Report
Urban Outfitters, Inc. (URBN) : Free Stock Analysis Report
Intuit Inc. (INTU) : Free Stock Analysis Report
NetEase, Inc. (NTES) : Free Stock Analysis Report
Consolidated Water Co. Ltd. (CWCO) : Free Stock Analysis Report
Shopify Inc. (SHOP) : Free Stock Analysis Report
ProShares S&P 500 Dividend Aristocrats ETF (NOBL): ETF Research Reports
