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Take the Zacks Approach to Beat the Market: Shopify, Caterpillar, Amgen in Focus

Two of the three widely followed indexes closed a losing week last Friday, while one closed almost flat. The Dow Jones Industrial Average and the S&P 500 declined 1.3% and 0.7%, respectively. Meanwhile, the Nasdaq Composite gained less than 0.1%.

Concerns about high treasury yields, the possibility of a further rate hike by the Fed in 2023 and the strengthening U.S. dollar influenced trade last week. A stronger dollar makes U.S. exports costlier, impacting international trade. Consumer confidence for the month came in much lower than expected, and investors continued to worry about the direction the Fed would be taking the economy toward with its monetary policy decisions. Currently, an interest rate cut is not expected before September 2024.

For the quarter, the S&P 500 dropped about 3.6%, the Dow lost 2.6% and the Nasdaq fell 4.1%. For the month, the S&P 500, the Dow and the Nasdaq declined 4.9%, 3.5%, and 5.8%, respectively. For all the indexes, this was their first quarterly decline for the year.

Regardless of market conditions, we, here at Zacks, provide investors with unbiased guidance on how to beat the market.

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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:

Weir Group and McKesson Surge Following Zacks Rank Upgrade

Shares of The Weir Group PLC WEGRY have gained 5.2% (versus the S&P 500’s 2.1% decrease) since it was upgraded to a Zacks Rank #2 (Buy) on July 11.

Another stock, McKesson Corporation MCK, which was also upgraded to a Zacks Rank #2 on July 10, has returned 4.8% (versus the S&P 500’s 2% fall) 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 set 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 Weir Group’s historical EPS and Sales here>>>

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

Zacks Investment Research
Zacks Investment Research


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Zacks Recommendation Upgrade Drives Camtek and Teekay Tankers Higher

Shares of Camtek Ltd. CAMT and Teekay Tankers Ltd. TNK have advanced 52.2% (versus the S&P 500’s 4.4% fall) and 10.6% (versus the S&P 500’s 5.5% fall) since their Zacks Recommendation was upgraded to Outperform on July 17 and July 20, 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, Celanese Shoot Up

Shares of Caterpillar Inc. CAT, which belongs to the Zacks Focus List, have risen 13.5% over the past 12 weeks. The stock was added to the Focus List on April 18, 2017. Another Focus-List holding, Celanese Corporation CE, which was added to the portfolio on December 5, 2016, has returned 11.9% over the past 12 weeks. The S&P 500 has lost 2% 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 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 Intuit and FactSet Research Make Significant Gains

Intuit Inc. INTU, a component of our Earnings Certain Admiral Portfolio (ECAP), has jumped 13.2% over the past 12 weeks. FactSet Research Systems Inc. FDS has followed Intuit with 11.8% 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 Automatic Data Processing Outperform Peers

Amgen Inc. AMGN, which is part of our Earnings Certain Dividend Portfolio (ECDP), has returned 20.5% over the past 12 weeks. Another ECDP stock, Automatic Data Processing, Inc. ADP, has climbed 8.5% 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 Automatic Data Processing’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 57.2% year to date compared with a 13.1% rise 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 through May 31, 2023, the Zacks Top 10 Stocks produced a cumulative return of +827.6% through the end of 2022 vs. +265% 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

Caterpillar Inc. (CAT) : Free Stock Analysis Report

Automatic Data Processing, Inc. (ADP) : Free Stock Analysis Report

Amgen Inc. (AMGN) : Free Stock Analysis Report

McKesson Corporation (MCK) : Free Stock Analysis Report

Intuit Inc. (INTU) : Free Stock Analysis Report

FactSet Research Systems Inc. (FDS) : Free Stock Analysis Report

Camtek Ltd. (CAMT) : Free Stock Analysis Report

Celanese Corporation (CE) : Free Stock Analysis Report

Teekay Tankers Ltd. (TNK) : Free Stock Analysis Report

Shopify Inc. (SHOP) : Free Stock Analysis Report

ProShares S&P 500 Dividend Aristocrats ETF (NOBL): ETF Research Reports

Weir Group (WEGRY) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research