All of the three widely followed indexes closed out last week with losses. The tech-heavy Nasdaq Composite, the S&P 500 and the Dow Jones Industrial Average slid 2.6%, 2.5% and 2.1%, respectively.
Throughout the week, mixed earnings numbers from big-tech companies and robust economic data kept investors worried about further interest rate hikes coming in from the Fed. The S&P 500, which is now more than 10% lower than its July high, is moving into correction territory. Market participants remain concerned that interest rates staying higher for longer might entail the economy entering a phase of gradual slowdown.
An advance estimate of third-quarter GDP for the United States, however, paints a different picture. Nonetheless, investors would keep a vigilant eye on further signals from the Fed to gauge where the economy might land.
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:
AN2 Therapeutics and SK Telecom Surge Following Zacks Rank Upgrade
Shares of AN2Therapeutics, Inc. ANTX have gained 72.4% (versus the S&P 500’s 7.8% decrease) since it was upgraded to a Zacks Rank #2 (Buy) on August 14.
Another stock, SK Telecom Co., Ltd. SKM, which was also upgraded to a Zacks Rank #2 on August 9, has returned 2.3% (versus the S&P 500’s 8.5% decrease) 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.
A hypothetical portfolio of Zacks Rank #1 (Strong Buy) stocks returned +12.02% this year (through September 4th) vs. +18.2% for the S&P 500 index and +7.6% 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. Looked at this way, this portfolio has outperformed the index this year.
The Zacks Model Portfolio - consisting of Zacks Rank #1 stocks – has outperformed the S&P index by more than 13 percentage points since 1988 (Through September 4th, 2023, the Zacks # 1 Rank stocks has generated an annualized return of +24.17% since 1988 vs. +10.82% for the S&P 500 index).You can see the complete list of today’s Zacks Rank #1 stocks here >>>
Check AN2 Therapeutics’ historical EPS and Sales here>>>
Check SK Telecom’s historical EPS and Sales here>>>
Zacks Investment Research
Image Source: Zacks Investment Research
Zacks Recommendation Upgrades Lifeway Foods and Cadre Higher
Shares of Lifeway Foods, Inc. LWAY and Cadre Holdings, Inc. CDRE have advanced 35.7% (versus the S&P 500’s 5.9% fall) and 9.7% (versus the S&P 500’s 7.8% fall) since their Zacks Recommendation was upgraded to Outperform on August 18 and August 14, 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 Axon, Casey’s General Stores Shoot Up
Shares of Axon Enterprise, Inc. AXON, which belongs to the Zacks Focus List, have gained 13.4% over the past 12 weeks. The stock was added to the Focus List on June 3, 2020. Another Focus-List holding, Casey's General Stores, Inc. CASY, which was added to the portfolio on August 20, 2019, has returned 9.6% over the past 12 weeks. The S&P 500 has declined 8% over this period.
The 50-stock Zacks Focus List model portfolio returned +22.3% in 2023 (through July 31st) vs. +20.6% for the S&P 500 index and +10.5% for the equal-weight S&P 500 index. In 2022, the portfolio produced -15.2% vs. the S&P 500 index’s -17.96%.
Since 2004, the Focus List portfolio has produced an annualized return of +11.27% through July 31st, 2023. This compares to a +9.65% annualized return for the S&P 500 index in the same time period.
On a rolling one-, three- and five-year bases, the Zacks Focus List returned +21.76%, +16.33%, and +12.54% vs. +12.99%, +13.71% and +12.19% 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 Novo Nordisk and Walmart Make Significant Gains
Novo Nordisk A/S NVO, a component of our Earnings Certain Admiral Portfolio (ECAP), has jumped 18.7% over the past 12 weeks. Walmart Inc. WMT has followed Novo Nordisk with 1.2% 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 UnitedHealth Outperform Peers
Amgen Inc. AMGN, which is part of our Earnings Certain Dividend Portfolio (ECDP), has returned 13.4% over the past 12 weeks. Another ECDP stock, UnitedHealthGroup Incorporated UNH, has climbed 3.9% 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 UnitedHealth’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 — FirstCash Delivers Solid Returns
FirstCash Holdings, Inc. FCFS, from the Zacks Top 10 Stocks for 2023, has gained 23.2% year to date, which compares to an 8.7% gain for the S&P 500 Index.
The portfolio returned +16.16% through the end of July 2023 vs. +20.64% for the S&P 500 index and +10.73% for the equal-weighted version of the index. The portfolio returned -15.8% in 2022 vs. -18.1% for the S&P 500 index. Since 2012, the Top 10 portfolio has generated an annualized return of +22.78% vs. +13.65% for the S&P 500 index.
Since the start of 2012 through July 31, 2023, the Zacks Top 10 Stocks have produced a cumulative return of +977.47% vs. +340.35% 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
