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Zacks'
Free Investing Tools
Sometimes useful investing sites have been around
so long that I take them for granted and neglect to mention them here.
That is certainly the case for the site run by
Zacks Investment Research (www.zacks.com).
Zacks’ main business is compiling analysts’ buy/sell ratings and
earnings forecasts. Zacks has been compiling analyst info since 1978 and
supplies much of the analyst data that you see on other financial sites.
Much of the site requires a paid subscription, but
Zacks also offers plenty of free information.
Zacks Rank
One feature worth checking is “Zacks
Rank,” a stock grading system based on tracking revisions in
analysts’ earnings forecasts. Zacks uses the grades to predict which
stocks are likely to outperform, or underperform the market over the
next one- to three-months. According to Zacks, since 1998, its top rated
Zacks Rank stocks have averaged a 32% annual
return compared to 12% for the overall market,
at least as measured by the S&P 500 Index.
You’ll have to fork over $24.95 per month to see
the entire list of 200 or so top-ranked stocks. But Zacks shows you free
picks from the list on a daily basis, one each from Zacks’ four
investment categories; aggressive growth, value, growth and income, and
momentum.
When I looked last Tuesday, the four picks (in the
same order of categories) were Baker Hughes (ticker BHI), The Andersons
(ANDE), Administaff (ASF), and Encore Acquisition (EAC).
Also, on a weekly basis, Zacks gives you a rundown
on the five best performing top-ranked stocks from the previous week.
The
report includes a rundown of recent earnings forecast changes, among
other factors, affecting each stock. If Zacks mentions any recent
positive changes in earnings forecasts, it’s a good bet that the stock
is going to remain on the top-ranked list for some time.
The best performers for the week ending October 5
were Conexant Systems (CNXT), Turkcell (TKC), Greenhill & Company (GHL),
Sotheby’s (BID), and Fresh Del Monte Produce (FDP). Judging from the
accompanying comments, I would guess that all five were still on the
top-ranked list last week.
Although Zacks isn’t going to tell you its exact
formula for calculating the Zacks Rank, the
Zacks Rank
Guide, which you can download for free, describes the calculation in
considerable detail.
Star Analysts
Every year, Zacks analyzes the results of following the buy/sell
recommendations of each analyst that it tracks. The top 20 percent of
analysts, in terms of profitable calls are the “All
Stars.” Zacks compiles stocks rated “strong buy” by at least four
All Stars into its “All
Star Analyst Portfolio.”
Surprisingly, Zacks makes the portfolio available
at no charge. On the other hand, Zacks doesn’t say how you would have
done following those recommendations in the past. When I looked, the
portfolio contained 15 stocks. Here’s another surprise; almost all were
either in the hotel or energy services industries.
Zacks’ All Star Analyst section includes a couple
of other interesting features. You can select an industry and see the
Zacks’ star rating for each analyst (analyst name and broker) covering
that industry. Also, you can select a brokerage firm and see a list of
analysts working for that firm, each analysts’ rating, and the
industries that they cover.
Screening
As you probably know, screeners are programs for finding stocks
that meet your selection criteria. Zacks provides two free
stock screeners.
You can use its
Custom Screener to search for stocks based on analyst ratings and
forecasts, insider trading, and other fundamental data. Using the Custom
Screener looks daunting at first. However, I found the screener easy to
use after I clicked on the “Custom
Help” link and followed the included step-by-step instructions.
That said, I found Zack’s
Predefined Screener the most useful. It’s easy to use. Simply click
on one of 12 predefined screen names, and the screener lists 50 or so
stocks meeting the screening requirements. You can screen based on
valuation, dividend yields, recent share price movement, changes in
analyst buy/sell ratings, or changes in analysts’ earnings forecasts.
I’ve had good results using the screen at the
bottom of the list with the undecipherable name: “% Change F2
Estimate". It searches for stocks with the
greatest percentage change in analysts’ next fiscal year’s earnings
forecasts over the past four weeks.
In my view, it works so well because earnings
forecast changes usually move share prices in the same direction as the
forecast revision, and revision trends tend to persist for some time.
You can also use the screen labeled “% Change F1 Estimate” to
search based on changes in current fiscal year earnings estimates.
Interestingly, you can’t use Zacks’ Custom Screener to search based on
estimate revisions.
Please keep in mind that the stocks listed by any
screen, no matter how good, are research candidates, not a “buy list.”
The Zacks Rank and screening features can be
accessed from links on Zacks’ homepage. Click on
Brokerage Research to find the All Star Analysts information.
Zacks offers several additional useful and free
features that I don’t have room to describe here. I’m sure that you will
find it worthwhile to take some time to explore the site.
published 10/14/07 |
