The

Zacks Rank Guide

Harnessing the Power of Earnings Estimate Revisions
Table of Contents
Introduction

Zacks and the Zacks Rank

The Creation of the Zacks Rank

The Influence of Institutional Investors

How Institutional Investors Use Earnings Estimate Revisions

Where Do Earnings Estimates Come From?

Consensus Estimates
Earnings Estimate Revisions

Zacks Rank Performance

Four Factors Behind the Zacks Rank

Examples of the Zacks Rank in Action

Anatomy of Success: Short-term, Example 1
Anatomy of Success: Short-term, Example 2
Anatomy of Success: Long-term, Example 3
How to Hold On to the Winningest Stocks for Even Bigger Gains

Integrating the Zacks Rank Into Your Investment Strategies

Momentum Investing
Aggressive Growth Investing
Value Investing
Growth & Income Investing

Putting the Zacks Rank to Work for You

Zacks Free Portfolio Tracker
Be Alerted to a New Strong Buy Every Day
 Introduction

“Earnings estimate revisions are the most

powerful force impacting stock prices.”

Read that sentence again.

It’s why we call this The Zacks Rank Guide: Harnessing

the Power of Earnings Estimate Revisions and it can
transform your portfolio.

Stocks with rising earnings estimates have significantly

outperformed the S&P 500 year after year. While
stocks with falling earnings estimates have
underperformed the S&P 500 year after year.

This means the stocks most likely to

outperform are the ones whose earnings
estimates are being raised. And the
stocks most likely to underperform are
the ones whose earnings estimates
are being lowered. The Zacks Rank has
made the process
of identifying stocks
with changing earnings
estimates easy and very
profitable.
Beat the Market on Your Very Next Trade
Through good markets In the following pages, you’ll discover
why earnings estimate revisions can lead
and bad, the Zacks to dramatic stock gains, and how you can
Rank has been immediately apply this to your own trading.
helping investors
achieve their
financial goals.
Since 1988 the Zacks Rank #1 Strong Buy has...

Generated a Turned $10,000 into Beaten the S&P 500

+24.3% +$22.5mil 29 of 35
average annual vs. the S&P 500’s years it has been
return +$385,000 used

The Zacks Rank +24.3%

S&P 500 +10.8%

Average Annual Returns over 35 years

Read on to learn how you can put the Zacks Rank to work for you
and how it can help you achieve your own financial goals.
 “I can honestly
say that I have never
felt as confident in my
trading. Nor have I been as
profitable as I have by using
Zacks.”

Kurt Petrich
Norfolk, VA

Zacks and the

Zacks Rank
In 1978, Zacks Investment Research was formed to compile
and analyze brokerage research for both institutional and
individual investors.

Today, Zacks processes this information from roughly 3,000

analysts at over 150 different brokerage firms. At any given
point in time, we’re monitoring well over 200,000 earnings
estimates and other related data looking for any change. Our
ability to gather, analyze and distribute this information on
a timely basis makes Zacks’ research among the most widely
used investment research on the web.

The Creation of the Zacks Rank

The Zacks Rank was created by the Founder and CEO of Zacks
Investment Research who has a PhD from MIT and spent
many years on Wall Street testing statistical models to help
uncover ways to beat the market. This research led to the
breakthrough discovery:

“Earnings estimate revisions are the most

powerful force impacting stock prices.”
- Founder and CEO
His findings were first published in 1979 in the Financial
Analysts Journal and entitled “EPS Forecasts -- Accuracy Is Not
Enough”. From this seminal work emerged the now famous
Zacks Rank stock-picking system, which harnesses the power
of earnings estimate revisions. And so began a long tradition of
innovation by his renowned firm Zacks Investment Research.

The Zacks Rank uses four factors related

to earnings estimates to classify
stocks into five groups, ranging
from “Strong Buy” to “Strong
Sell”. More importantly, it
allows individual investors to “I don’t buy a stock
take advantage of trends in unless Zacks says it’s a
earnings estimate revisions, Strong Buy.”
and benefit from the power of
institutional investors. Tim Mally
Madison, WI

The Influence of
Institutional Investors
People who trade stocks are broadly defined into one
of two groups: institutional investors and individual
investors. Institutional investors are the professionals
who manage the trillions of dollars invested in mutual
funds, investment banks, hedge funds, etc. Individual
investors, also referred to as “retail investors,” are
people who independently invest for their own private
accounts.

Studies have shown that institutional investors can

and do move the market due to the large amounts of
money they invest with. Because of this, the market
has a tendency to move in the same direction as these
institutional investors.
 Here at Zacks, we have always known about the power
of the institutional investor. Through the Zacks Rank
you can benefit by getting into the stocks that are highly
sought after by these large professionals, due to their
focus on earnings estimate revisions.

How Institutional Investors Use

Earnings Estimate Revisions
Most institutional investors attended prestigious business
schools where they were taught a number of classical
financial models, many of which were designed to calculate
the fair value of a company and of its shares. Almost without
exception, these valuation models focus on earnings and
earnings estimates. Very simply, if you raise the earnings
estimates used in the model, then it will create a higher fair
value for the company and its stock price.

Example:
If an analyst believes a stock is worth 20 times next year’s earnings (P/E of 20), with
an earnings estimate of $1.00 per share ($1.00 Estimated EPS), then it would be un-
der its fair value at any price below $20. (20 P/E x $1.00 Est. EPS = $20).

If the analyst changes his forecast and believes the company will instead earn $1.10
per share, the fair value would then be $22. (20 P/E x $1.10 Est. EPS = $22.)

Institutional investors then act on these changes in earnings

estimates, typically buying those with rising earnings estimates
and selling those with falling earnings estimates. As you can
see, an increase in the earnings estimates can translate into
a higher price for the stock and bigger gains for the investor.

And since it can often take weeks, if not months, for an

institutional investor to build a position (given their size), the
individual investor who can get in at the first sign of upward
earnings estimate revisions (e.g., new Zacks Rank #1s), has
a distinct advantage over these larger investors, and can
benefit by the expected institutional buying that will follow.
“The Zacks #1 Rank leads
me to stronger stocks.”

Clarence Feinour
Reading, PA

Where Do Earnings
Estimates Come From?
The best and most widely used source of earnings
estimates comes from the brokerage analysts who track
these publicly traded firms. These analysts work hand in
hand with company management, and independently,
to analyze every aspect that may affect future earnings.

Analysts are paid in aggregate, over $1 billion a year to

analyze stocks. They must know something - and they do.
The typical analyst at a brokerage firm will work 80 hour
weeks, devoting all his or her time to, at most, maybe 20
companies. And many companies are followed by 5 to
10 analysts or more (30 or 40 for the biggest ones). One
of their main tasks is to determine what a company’s
earnings will be. This is where they excel; not in their
ratings, but in their earnings estimates (also known as
earnings per share or EPS estimates).
Consensus Estimates

From these individual analyst estimates, Zacks creates a

consensus EPS estimate, which is the average of all estimates
made within the last 120 days (older estimates are not
included).

Zacks calculates this consensus estimate for each of the next

four quarters, each of the next three years, and as a growth
rate over the next five years. These consensus estimates are
the benchmark by which the company will be judged by the
investment community.

Earnings Estimate Revisions

When trying to determine the future direction of a stock’s
price move, you need to look at what a company will earn
in the future. This is why earnings expectations or earnings
estimates are so important. And it’s the change in the earnings
estimates (earnings estimate revisions) that have proven to
be the most important.

This is because stocks that receive upward earnings estimate

revisions are more likely to receive even more upward
earnings estimate revisions in the future. This is true because
many analysts will revise their earnings estimate slowly and
incrementally.

For example, if an analyst raised his earnings estimates last

month, he’s more likely to do it again this
month, and the other analysts are likely to
do the same. Since stock prices respond
to earnings estimate revisions, it’s
very profitable to buy stocks whose “I have bought
earnings estimates are being raised. many stocks over the
And by getting into stocks whose past three years based
earnings estimates are being on Zacks Rank and made
raised, you’re likely getting into money. Too many to mention
companies whose future earnings names.”
estimates will be raised as well,
potentially influencing stock prices Lowell Womack
even more. Birmingham, AL
Zacks Rank Performance
Given the sheer number of earnings estimate revisions
made on a daily basis, it can be very difficult to determine
which stocks to buy and which ones to avoid. The Zacks
Rank solves this problem by helping investors harness
the power of earnings estimate revisions to invest more
successfully.

The Zacks Rank is a proprietary stock-rating

model that uses trends in earnings estimate
revisions and EPS surprises to classify stocks
into five groups:

24.3%

Strong Buy
5%

1
The top 5% of stocks get this coveted rating. A Strong Buy
15%

should outperform the market more than any other rank.

2 Buy 18.0%
The next 15% of stocks are rated as “Buy”. These stocks
should also outperform the market.

3 Hold
60%

9.3%
Most stocks (60%) fall into this category. These stocks
should perform in-line with the market.

4 Sell
Average Annual Return

5.0%

Stocks with this rating (15%) will most likely

underperform compared to the market.

5 Strong Sell
15%

2.3%

The bottom 5% of all stocks get this rating. These stocks

5%

should perform dramatically worse than the market.

 A portfolio of Zacks Rank #1 (Strong Buy) stocks has beaten the market in 29 of the last 35
years with an average annual return of +24.3% a year; more than double that of the
S&P 500’s +10.8%. These returns cover a period from 1988 to 2023 YTD.
Year #1 Rank #2 Rank #3 Rank #4 Rank #5 Rank S&P 500
1988 +39.18% +29.69% +20.79% +19.13% +18.39% +16.20%
1989 +39.58% +26.84% +15.85% +9.55% -5.10% +31.70%
1990 -2.64% -13.69% -21.32% -23.85% -34.71% -3.10%
1991 +81.36% +56.80% +45.98% +36.60% +34.35% +30.40%
1992 +40.97% +29.63% +18.04% +12.24% +17.31% +7.51%
1993 +45.26% +26.86% +14.78% +8.59% +9.54% +10.07%
1994 +12.73% +5.15% -3.56% -11.14% -10.90% +0.59%
1995 +52.56% +46.84% +30.63% +17.35% +9.11% +36.31%
1996 +40.93% +28.60% +16.07% +7.71% +8.02% +22.36%
1997 +43.91% +33.87% +22.93% +10.17% +3.05% +33.25%
1998 +19.52% +12.92% -3.47% -8.77% -14.84% +28.57%
1999 +45.92% +35.53% +31.02% +18.46% +17.69% +21.03%
2000 +14.31% -1.47% -17.75% -19.52% -3.95% -9.10%
2001 +24.27% +11.70% +14.09% +17.93% +20.20% -11.88%
2002 +1.22% -13.50% -17.75% -24.03% -15.85% -22.10%
2003 +67.03% +69.52% +64.91% +54.96% +54.38% +28.69%
2004 +28.71% +23.74% +15.75% +11.47% +14.58% +10.87%
2005 +18.80% +12.57% +6.75% -0.51% -5.95% +4.90%
2006 +27.31% +26.26% +16.85% +15.01% +18.18% +15.80%
2007 +19.71% +5.37% -4.31% -13.07% -24.04% +5.49%
2008 -40.41% -43.48% -48.70% -45.75% -50.95% -37.00%
2009 +65.85% +84.19% +78.79% +60.36% +49.41% +26.46%
2010 +28.98% +35.17% +27.87% +29.28% +27.22% +15.06%
2011 -3.79% -4.89% -13.47% -18.58% -21.37% +2.11%
2012 +24.95% +19.06% +16.42% +6.53% +8.08% +16.00%
2013 +47.48% +37.24% +30.56% +23.89% +17.99% +32.39%
2014 +14.95% +10.26% 1.20% -3.97% -14.36% +12.88%
2015 0.00% -0.94% -11.01% -13.78% -19.01% +0.23%
2016 +27.43% +27.15% +27.17% +21.00% +39.44% +14.78%
2017 +28.31% +23.17% +15.11% +16.28% +13.00% +21.44%
2018 -7.40% -6.68% -10.23% -14.19% -15.94% -3.83%
2019 +23.82% +27.13% +17.43% +20.07% +17.11% +29.36%

2020 +33.86% +39.71% +34.35% +30.43% +19.77% +19.27%

2021 +41.10% +30.90% +16.00% +8.90% +10.30% +28.70%
2022 -7.62% -13.32% -25.24% -25.42% -20.13% -17.96%
2023 YTD +10.81% +13.06% +7.13% +3.65% +7.50% +16.14%

Annual Average* +24.26% +17.96% +9.26% +5.04% +2.34% +10.82%

*Results measured from 1/1/1988 to 7/3/2023.

For more information on how the Zacks Rank performance is calculated, go to: www.zacks.com/performance_disclosure.
 Over time, this kind of outperformance can add up to
a lot more than just doubling the S&P, as this chart
+$22.5
illustrates.
million
An investment of $10,000 back in 1988, using just
the Zacks #1 Ranked stocks would’ve compounded
into $22,521,235 for a +225,112% increase, while
the S&P increased by only +3,750%, compounding
into only $385,006. That’s a big difference.

Take a look at the equity curve of the Zacks #1

Ranked stocks and notice how the Zacks Rank
has completely erased the pullback of the
financial crisis that started in 2007 (Q4 of
2007 through Q1 of 2009) and has made
new highs, soaring above the pre-crisis
peak. It took the S&P 500 a full two years
later to finally make new post-crisis highs.

Zacks #1 Ranked Stocks

S&P 500

Initial
Investment:
.............

$10,000

+$385,000

1988 2008 2023 YTD

Implementing ways to consistently

beat the market can quickly
add up, helping investors
“I bought several transform their portfolios.
stocks that appeared in
the Number 1 listing that
I continue to hold as ‘core
holdings.’”

Robert Taylor
Edisto Island, SC
Four Factors Behind
the Zacks Rank
So how does Zacks use earnings estimates and earnings
estimate revisions in the Zacks Rank? The Zacks Rank
is calculated from four primary inputs: Agreement,
Magnitude, Upside and Surprise.

This is the extent to which all brokerage analysts are revising

their earnings estimates in the same direction. The greater the
Agreement

percentage of analysts that are revising their estimates higher, the

better the score will be for this component.

If 40% of the analysts are increasing their earnings estimates for

a stock, whereas only 10% are increasing it for another stock,
the higher the percentage of analysts making upward estimate
revisions the better.
Magnitude

This is the size of the recent change in the current consensus

estimate for the fiscal year and the next fiscal year.

A 5% increase in the earnings estimate revision is better than a

2% increase in the earnings estimate revision and will thus get a
better score for this component.

This is the difference between the most accurate estimate as

Upside

calculated by Zacks and the consensus estimate.

A bigger difference between the most accurate estimate and the

consensus estimate is better.

The Zacks Rank factors in the last few quarters’ earnings per share
Surprise

(EPS) surprise as well.

Companies with a positive earnings surprise are more likely to

surprise again in the future.
13
 Each one of these components is given a raw score and it is
recalculated every night. These raw scores are then compiled
into the Zacks Rank and is made available to
investors every day.

This has made the process of

identifying stocks with changing
“Recommendations earnings estimates easy and very
have been spot on. Nine profitable, helping investors beat
winners... +35% already.” the market no matter what the
market is doing.
Don T.
Sisters, OR

Examples of the Zacks

Rank in Action
Let’s take a look at some practical examples of how the
Zacks Rank can get you in and keep you in on some of
the most profitable stocks.

Whether it’s a widely known large-cap stock, little

known small-cap stock, or somewhere in between, the
Zacks Rank works and the steps to success are the same.
1 Anatomy of Success
Short-Term Trading

On July 20th, 2012, LXU, which had been in LSB Industries, Inc. (LXU) is a mid-
a trading range for months, got the signal cap blend (growth and value)
that alerted investors that it was finally stock in the Diversified Operations
ready to breakout. That signal was the industry. They manufacture and
Zacks Rank #1 Strong Buy, which forecast sell chemical products for a wide
that it would outperform the market over range of industries including
the next 1-3 months. the agricultural, industrial, and
automotive industries. Even
At that time, it was trading at $32.03 with though it’s a 25 year old company,
a 12 Month Forward Earnings Estimate it’s not one of those names most
of $3.75. Two and a half months later, investors are familiar with, but
and a series of upward earnings estimate it’s definitely a name Zacks
revisions, LXU had retained its Zacks Rank customers are familiar with now
of 1, and gained for its investors a 36.97% after embarking on a 36% gain in
return (at the time of this writing) vs. the less than 2 ½ months.
S&P 500’s only 5.73%.

EPS Estimate ($) LXU (%) S&P 500 (%)

Symbol: LXU
$4.25 45% Return: 36.97%
Time frame: 2 1⁄2 Months

$4.00 22.5%

36.97%
LXU’s Return
$3.75 0% while listed as a
Zacks Rank #1
7/20 9/28

Simply put, when earning estimates are 5.73%

going up, the stock should go up as well. S&P 500’s Return
And your best first alert that a company’s during the same
outlook is improving, is a Zacks Rank of 1. time period
15
2 Anatomy of Success
Short-Term Trading

On June 29, 2012, CAL received a Zacks Caleres, Inc. (CAL), formerly the
Rank of 1, distinguishing itself as a stock Brown Shoe Company (BWS) is
poised to outperform. Between 6/29/12 a small-cap value stock in the
when it was trading at $12.91 and 9/21/12 Shoes & Related Apparel industry
when it closed at $16.11, CAL rewarded that markets footwear in the
investors with a 24.79% gain in just under United States, Canada, and China
3 short months compared to the market’s through their retail stores such
7.19%. as Famous Footwear, Naturalizer,
and Dr. Scholls to name a few.
During that time, their 12 Month Forward This popular brand-name shoe
Earnings Estimates continuously climbed company quickly became a top-
higher from $1.02 to $1.11, producing a performing stock as it more than
spectacular 433% positive EPS surprise, tripled the market’s return with
and marking a path for higher prices to a 24% gain within three short
follow.

EPS Estimate ($) CAL (%) S&P 500 (%) Symbol: CAL
$1.12 28% Return: 24.79%
Time frame: 3 Months

$1.06 13%

24.79%
CAL’s Return
$1.01 0% while listed as a
Zacks Rank #1
6/29 9/21

7.19%
Rising earnings estimates and rising prices S&P 500’s Return
go hand in hand. And the Zacks Rank during the same
makes these stocks easy to find. time period

16
3 Anatomy of Success
Long-Term Investing

On December 9, 2011, TCBI was singled Texas Capital Bancshares, Inc.

out as a top stock when it received a Zacks (TCBI) is one of those stocks that
Rank of 1. Between 12/9/11 when it was looked set to outperform over a
trading at $31.77 and 9/28/12 when it 1-3 month time frame, but then
closed at $49.71, TCBI rewarded investors turned into a longer-term position
with a 71.71% gain in just 9 months resulting in even more impressive
compared to the market’s 20.12%, for gains. TCBI is a mid-cap blend
more than a 51% excess return! (growth and value) stock in the
Financial industry, operating as a
During that time, their 12 Month Forward regional bank headquartered in
Earnings Estimates climbed from $2.20 to Texas.
$3.16, which was a 43.64% increase and
the clear catalyst for TCBI ‘s stellar gains.

EPS Estimate ($) TCBI (%) S&P 500 (%)

$3.20 78% Symbol: TCBI

Return: 71.71%
Time frame: 9 Months
$2.70 38%

$2.20 0%

12/09/2011 9/28/2012
71.71%
TCBI’s Return
while listed as a
Once you’re in a stock destined for
Zacks Rank #1
greatness it’s important to not get bucked
off. But if earnings estimates continue
to rise, that will give investors plenty of 20.12%
S&P 500’s Return
reason to push the stock higher, and keep
during the same
you on board the entire time. time period

17
 How to Hold Onto the Winningest
Stocks for Even Bigger Gains

The previous trading examples illustrate how the Zacks Rank

can get you in on some of the most profitable opportunities
over the short term (1-3 month period). The Zacks Rank has
proven to be an excellent timing indicator. Short-
term gains like these are taking place all the
time and illustrate how the Zacks Rank #1
stocks have produced a +24.3% annual
return.
“I cannot tell you But it’s also great for getting into
how happy I am with stocks that develop into longer-
this service and would term trades and core holdings. By
recommend it to anyone...“ following the Zacks Rank and the
trajectory of earnings estimate
Paul B. revisions, not only will you know
Tulsa, OK when to buy, but also learn how to
ride your best stocks for bigger gains.
And when the time comes, know when
to sell.

Integrating the Zacks

Rank Into Your Investment
Strategies
The Zacks Rank works well with all investment strategies
and styles and can help improve performance. Here are
suggestions on how to use the Zacks Rank with the four
main investment styles: Momentum, Aggressive Growth,
Value, and Growth & Income.
Momentum Traders and Investors look to take advantage
of upward trends (or downward trends) in a stock’s price
or earnings. Momentum traders believe that these stocks
will continue to head in the same direction because of the
momentum that is already behind them. We’ve all heard the
old adage, “the trend is your friend.” And who doesn’t like
riding a trend? In fact, studies have shown that stocks making
new highs have a tendency of making even higher highs.

The Zacks Rank #1 stocks are ideally suited for folks who rely
on momentum or technical analysis because it can tip them
off before most other systems. Rather than simply looking
for price trends, the Zacks Rank
is about “cause and effect”. The Zacks Rank #1 stocks are
cause of the move is positive
revisions in earnings estimates. ideally suited for those
This upward shift in earnings who rely on momentum or
estimates prompts more and technical analysis because
more investors to take an interest it can tip them off before
in the company with the effect
being that the shares in the most other indicators.
company start on a bull run.
Volume increases, as does the stock price.

But simply relying on price movement alone often doesn’t

alert investors until after the move has already begun, costing
active traders opportunities to maximize profits. Conversely,
by focusing on earnings estimate revisions, the Zacks Rank can
identify stocks that are likely to move upward in the future –
before the breakout has occurred! In other words, the Zacks
Rank helps traders get in ahead of the action.

Aggressive Growth Traders are primarily focused on stocks

with aggressive earnings growth (or at least the potential
for aggressive growth), which should propel their stock price
higher in the future. You’ll often find smaller-cap stocks in
this category because these are typically newer companies
that are in the early part of their growth cycle. But you’ll also
find plenty of mid-caps and large-caps too.
 By concentrating on Zacks Rank #1 stocks, growth investors
can easily screen for companies exhibiting these stellar
growth rates with a likelihood of
it continuing. The best part of the Aggressive growth
Zacks Rank is its ability to alert
investors will find plenty
investors, at the earliest stages,
that a company’s prospects are of stocks exhibiting stellar
looking very bright. And getting growth rates by quickly
in early on an emerging growth scanning the list of Zacks
story generally leads to strong
Rank #1 stocks.
investment returns.

Many growth investors, however, make the mistake of

looking for those with the highest growth rates possible.
Unfortunately, many such companies underperform in spite of
their outsized growth rates. A company with a 500% growth
rate, that just received a downward estimate revision and
now ‘only’ has a 400% growth rate, may still look good on the
surface, but the growth rate was just reduced by a significant
amount and therefore could see a price correction. The Zacks
Rank, which focuses on earnings estimate revisions, notifies
investors at the first sign of weakness (Zacks Rank of #4 or
#5), providing the opportunity to lock-in profits and avoid
unnecessary losses.

Value Investors are looking for good stocks at great prices. This
does not mean they have to be cheap stocks in price however.
The key is the belief that they are undervalued. That they are
trading under their true value, i.e., ‘fair value’, or potential.
And the value investor hopes to
get in before the market corrects Zacks Rank #1s and #2s
in the price, or in other words,
signal that earnings
goes higher. Many institutional
investors focus on this very thing. estimates are on the rise,
prompting investors to
Typical value investors will look view the stock as being
at valuations like P/E ratios, PEG
undervalued relative to its
ratios, Price to Book ratios, etc.
Too many ‘value’ stocks, however, future earnings prospects,
have low valuations because they and in turn, drive prices
don’t have compelling enough even higher.
earnings or growth rates to speak
of. The key for value investors is
 really earnings, which is the basis of most valuation models.
When the Zacks Rank signals a “Strong Buy” or “Buy” (Zacks
Rank #1 or #2), that means earnings estimates for a stock are
rising. Given this new information, other investors will likely
view the stock as being undervalued relative to its future
prospects. So, they jump in, which in turn drives the price of
the stock higher.

The beauty of the Zacks Rank is that it is also a timeliness

indicator, meaning that value investors can use it to identify
precisely when a company’s prospects are beginning to
improve as opposed to waiting and waiting for business
conditions to improve. And nothing can make an investor
sit up and take notice of a stock faster than rising earnings
estimates. Although, one should plan on holding onto these
value gems a little longer than a typical Growth or Momentum
investor, and consider keeping it as long as it remains a
Zacks Rank #3 or better, and its other characteristics remain
attractive, to maximize the upside returns.

Growth and Income Investors are generally looking for

companies with solid revenue and that pay a good dividend.
Oftentimes, these companies are more mature, larger-cap
companies that pass along a portion of their earnings to their
shareholders in the form of a dividend.

Some of these companies may not have the kinds of spectacular

growth rates like some of the younger or smaller companies
have (or like they themselves
had when they were younger
There will be fewer Zacks
and earlier in their growth cycle).
But many of these companies Rank #1 stocks in this
are generating huge amounts group, but there will be
of cash, but because of their plenty of #2s, and you can
size, may not have the growth
include #3s for the larger-
opportunities they once had. The
key ingredients, however, for a cap companies.
growth & income investor, are the
fundamentals such as earnings growth, strong management/
leadership, excellent products and a competitive strategy.
 The most tangible proof that a company is worth holding for
the long term is earnings and earnings growth. Not necessarily
explosive growth, but steady and consistent growth. A
company that has strong management and excellent products
should be producing a steady stream of positive earnings
estimate revisions. Here again earnings estimate revisions are
the cornerstone of the Zacks Rank. Whenever you find positive
earnings revisions, you will generally find a company moving
in the right direction, and that is a candidate for
long-term ownership. There may be fewer of
these stocks in the Zacks Rank #1 group,
but there will be plenty of #2s, and
you might even consider some #3s
for the larger-cap companies. But a
“Your portfolio is hands decline to a Zacks Rank #4 or #5 can
down better than any be an early warning that business
other I have tried.” conditions are worsening and
therefore that it is time to take
Christopher M. profits and get out.
York, ME

Putting the Zacks

Rank to Work for You
The more top-ranked stocks you own, the better your
performance will be. The +24.3% annual return of the
Zacks Ranked #1 stocks provides a strong testament to
this fact.

Moreover, stocks with a new Zacks Rank #1 have some

of the biggest profit potential, while those losing their
Zacks Rank #1 (e.g. #4 or #5) have the worst. So it pays
to stay on top of the Zacks Rank for your stocks.
Zacks Free Portfolio Tracker
The easiest way to see the current Zacks Rank for your stocks is
by setting up a free portfolio tracker on Zacks.com. If you don’t
already have one established, then follow these easy steps:

1 Go to My Portfolio page at:

https://www.zacks.com/portfolios/my-stock-portfolio/

2 Sign up or Sign in.

3 Name it, insert your stocks

...and you’re done!

You have just setup one of the most powerful Zacks Rank moni-
toring systems available. When finished, you will see an online
display like the one below.
Once you have a portfolio established on Zacks.com, you will
receive Daily Portfolio Update emails on the weekdays of your
choice. There you will see all the vital news and information
affecting your stocks, including:

Daily Zacks Rank Changes

Earnings Estimate Revisions

Earnings Surprises

Broker Recommendation Changes

Latest Company News

So much more...

Pick and choose from the different portfolio views so you

can see all of your favorite information, including a Sector/
Industry view so you can also stay on top of which groups
have the best Zacks Rank.

Through these daily updates, you can quickly discover which

of your current stocks to hold, and which stocks need to be
sold.

The free Zacks portfolio tracker is the only way to stay up to

date on your stocks’ Zacks Rank. Begin the habit of starting
your trading day by checking on your stocks’ Zacks Rank every
morning.

And don’t just stop at your current portfolio. Create a watch

list as well and see how those stocks you’re considering are
shaping up. When they become a Zacks Rank #1, jump on
them. If they drop to a Zacks Rank #4 or #5, save yourself
the heartache and skip those. Regardless of how much you
may like them, stay out and focus on those with the highest
probability of success. And confidently buy stocks that go up
when you do.
In addition to monitoring your current stocks’ Zacks
Rank, we’ll also alert you to a fresh Zacks Rank #1 stock to
consider each weekday. You can access this stock on the
Zacks.com home page and in your daily “Profit from the Pros”
email newsletter.

Some of these stocks may be names you recognize. Others

may be brand new to you. Either way, you’re going to want to
know about them.

One of the reasons why so many people do not get the kinds
of returns they want from their investments is because they
don’t know of new stocks to get into. They find themselves
in mediocre stocks because they don’t know of anything
better instead. For some, it’s because their knowledge or
‘universe’ of familiar stocks is relatively small and this limits
their opportunity of getting into better ones.

By checking out the new Zacks Rank #1 Strong Buy each day,
you’ll never be in the dark again. And the next time you read
or hear about a stock that has skyrocketed in price; instead of
thinking: “I could have been in that had I known about it”, this
time, you just might be in it!

Set up your free portfolio tracker today,

and put the Zacks Rank to work for
you.
“I would say, joining
From all of us at Zacks, thank you Zacks is the best of the
and good investing! investment decisions I ever
made.”

Venugopal V. Nair
Singapore

End.
Copyright 2023 Zacks Investment Research

This Special Report has not been authorized, sponsored, or otherwise approved
or endorsed by the companies represented herein. Each of the company names
represented herein are trademarks of LSB Industries, Inc.; Caleres Inc.; Texas Capital
Bancshares, Inc.

Zacks.com provides investment resources and informs you of these resources,

which you may choose to use in making your own investment decisions. Zacks is
providing information on this resource to you subject to the Zacks “Terms of Service”.
www.zacks.com/terms_of_service

*Past performance is no guarantee of future results. Inherent in any investment

is the potential for loss. This material is being provided for informational purposes
only and nothing herein constitutes investment, legal, accounting or tax advice, or
a recommendation to buy, sell or hold a security. No recommendation or advice is
being given as to whether any investment is suitable for a particular investor. It should
not be assumed that any investments in securities, companies, sectors or markets
identified and described were or will be profitable. All information is current as of
the date of herein and is subject to change without notice. Any views or opinions
expressed may not reflect those of the firm as a whole. Zacks Investment Research is
not a licensed securities dealer, broker or US investment adviser or investment bank.
The Zacks #1 Rank Performance covers a period beginning on January 1, 1988 through
July 3, 2023. These returns are from hypothetical portfolios consisting of stocks
with Zacks Rank #1 that were rebalanced monthly (see additional details regarding
rebalancing below) with zero transaction costs. These are not the returns of actual
portfolios of stocks. Zacks Rank #1 stock-rating system returns are computed monthly
based on the beginning of the month and end of the month Zacks Rank #1 stock
prices plus any dividends received during that particular month. A simple, equally-
weighted average return of all Zacks Rank #1 stocks is calculated to determine the
monthly return. The monthly returns are then compounded to arrive at the annual
return. Only Zacks Rank #1 stocks included in Zacks hypothetical portfolios at the
beginning of each month are included in the return calculations. Zack Rank #1 stocks
can, and often do, change throughout the month. Certain Zacks Rank #1 stocks for
which no month-end price was available, pricing information was not collected, or
for certain other reasons have been excluded from these return calculations. The
S&P 500 is an unmanaged index. Visit www.zacks.com/performance_disclosure for
information about the performance numbers displayed above.