Beat the Market Like Zacks: Talen Energy, CBRE, 3M in Focus

Abhinab Dasgupta

Mon, Sep 30, 2024, 5:13 AM8 min read

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Last Friday, the three most widely followed indexes closed out their third straight winning week. The tech-focused Nasdaq Composite, the S&P 500 and the Dow Jones Industrial Average advanced 1%, 0.6% and 0.6%, respectively.

With PCE inflation coming in line with expectations, investor mood remains upbeat about the Fed having won the war against inflation. Market participants are already pricing in further rate cuts for the year and probably beyond.

Also, economic data released through the week assured investors of the reslilience of the U.S. economy. Jobless claims fell more than expected in the latest week, suggesting a strong labor market, while the revised reading of second-quarter gross domestic product came in considerably higher.

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:

Talen Energy and Powell Industries Surge Following Zacks Rank Upgrade

Shares of Talen Energy Corporation TLN have surged 50.5% (versus the S&P 500’s 5.1% increase) since it was upgraded to a Zacks Rank #1 (Strong Buy) on August 2.

Another stock, Powell Industries, Inc. POWL, was upgraded to a Zacks Rank #1 on August 1 and has returned 19.3% (versus the S&P 500’s 3.8% 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.

A hypothetical portfolio of Zacks Rank #1 (Strong Buy) stocks returned +20.63% in the year-to-date period through April 1st, 2024, vs. +11.3% for the S&P 500 index and +7.7% for the equal-weight S&P 500 index. This hypothetical portfolio returned +20.63% in 2023 vs. +24.83% for the S&P 500 index and +15% 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 concentrated performance of mega-cap stocks since October 2022.

The Zacks Model Portfolio - consisting of Zacks Rank #1 stocks – has outperformed the S&P index by more than 16 percentage points since 1988 (Through April 1st, 2024, the Zacks # 1 Rank stocks generated an annualized return of +27.6% since 1988 vs. +11.1% for the S&P 500 index).You can see the complete list of today’s Zacks Rank #1 stocks here >>>

Check Talen’s historical EPS and Sales here>>>

Check Powell’s historical EPS and Sales here>>>

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Zacks Recommendation Upgrades Heritage Insurance and Bioventus Higher

Shares of Heritage Insurance Holdings, Inc. HRTG and Bioventus Inc. BVS have advanced 90.1% (versus the S&P 500’s 7.6% rise) and 56% (versus the S&P 500’s 10.1% rise), since their Zacks Recommendation was upgraded to Outperform on August 9 and August 8, 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 CBRE, Virtu Shoot Up

Shares of CBRE Group, Inc. CBRE, which belongs to the Zacks Focus List, have gained 41.2% over the past 12 weeks. The stock was added to the Focus List on March 13,2017. Another Focus-List holding, Virtu Financial, Inc. VIRT, which was added to the portfolio on July 31, 2023, has returned 39.6% over the past 12 weeks. The S&P 500 has advanced 4.7% over this period.

The Focus List portfolio returned +10.23% in 2024 Q1 vs. +10.56% for the S&P 500 index and +7.9% for the equal-weight S&P 500 index.

The 50-stock Zacks Focus List model portfolio returned +31.44% in 2023 vs. +26.28% for the S&P 500 index and +13.61% 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 +11.91% (through March 31st, 2024). This compares to a +10.25% annualized return for the S&P 500 index in the same time period.

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 Fair Isaac and Clorox Make Significant Gains

Fair Isaac Corporation FICO, a component of our Earnings Certain Admiral Portfolio (ECAP), has jumped 23.7% over the past 12 weeks. The Clorox Company CLX has followed Fair Isaac with 22.7% returns.

The Zacks Earnings Certain Admiral Portfolio (ECAP), which consists of 30 concentrated, ultra-defensive, long-term Buy-and-Hold stocks, returned +9.08% in the year-to-date period (through March 31st, 2024) vs. +10.42%. In 2023, the portfolio returned +12.17% vs. +26.28% for the S&P 500 index. The portfolio returned -4.7% in 2022 vs. 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 3M and Starbucks Outshine Peers

3M Company MMM, which is part of our Earnings Certain Dividend Portfolio (ECDP), has returned 35.5% over the past 12 weeks. Another ECDP stock, Starbucks Corporation SBUX, has climbed 28% 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 3M’s dividend history here>>>

Check Starbucks’ 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.

The Zacks Earnings Certain Dividend Portfolio (ECDP) returned +4.47% in the year-to-date period (through March 31st, 2024) vs. +10.42% for the S&P 500 index (IVV) and +6.9% for the Dividend Aristocrats ETF (NOBL).

The portfolio returned -0.9% in 2023 vs. +26.28% for the S&P 500 index and +8.11% for NOBL. The portfolio returned -2.3% in 2022 vs. -17.96% for the S&P 500 index and -8.34% for NOBL.

Click here to access this portfolio on Zacks Advisor Tools.

Zacks Top 10 Stocks — Goldman Sachs Delivers Solid Returns

The Goldman Sachs Group, Inc. GS, from the Zacks Top 10 Stocks for 2024, has jumped 29.2% year to date compared with an 20.2% increase for the S&P 500 Index.

The Top 10 portfolio returned +19.56% in 2024 Q1 vs. +10.56% for the S&P 500 index and +7.9% for the equal-weight version of the index.

The Top 10 portfolio returned +25.15% in 2023 vs. +26.28% for the S&P 500 index. Since 2012, the Top 10 portfolio has produced a cumulative return of +1,060.9% through the end of 2023 vs. +360.1% for the S&P 500 index.

Since 2012, the Zacks Top 10 portfolio has produced an annualized return of +25.02% through the end of 2024 Q1 vs. +14.1% for the S&P 500 index and +12.7% for the equal-weight version of the index. The portfolio has produced a cumulative return of +1,442.3% vs. +403.03% for the S&P 500 index and +331.29% for the equal-weight 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

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