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Zacks Review 2021 – Is It Worth It?

Zacks Investment Research Review

In this Zacks Review, I am going to tell you exactly what you want to know about the various Zacks services:

  • What is Zacks?
  • Is Zacks worth it?
  • How can I get their popular list of “5 Stocks Set to Double” for free?
  • How have Zacks stock picks performed over the years?

My Experience with Zacks

I have been using Zacks stock research tools since my dad started taking me to the library in the 1980s to show me how to research stocks.

Zacks was the first company to aggregate stock earnings forecasts from all the major Wall Street firms and then share the collective data.  So instead of just looking to see what one analyst at Merrill Lynch was forecasting for a particular stock, Zacks can show you ALL of the analysts’ recommendations and how many were rating a stock as a Strong Buy, a Buy, Hold, Sell, or Strong Sell.  And most importantly, you could see what the changes or trends were over the recent quarters.  My dad told me only to buy stocks that were rated Strong Buys by Zacks.

A Brief History of Zacks Research

What neither my dad nor I realized back then was that the Zacks CEO and founder, a researcher with a Ph.D. from MIT, had spent years analyzing Wall Street analysts’ earnings forecasts and discovered what he called ‘the most powerful force impacting stock prices.’  This ‘powerful force’ was NOT earnings forecasts but rather earnings forecasts revisions.

So if a lot of stock research analysts start increasing their earnings estimates and revising them upward, then those stocks were the ones that tended to outperform other stocks.

And conversely, if analysts were downgrading stocks from Buy to Sell or Strong Sell, then those stocks tended to underperform the market.

Zacks Investment Research was founded in 1978.  They have expanded their stock research tools and continue to refine their initial tool.

Zacks Performance vs. the S&P500

Take a look at this graph below that covers the last 33 years of data.  (Their usual footnote on this chart indicates it is based on rebalancing monthly and paying $0 commissions.)

That chart is quite impressive.

But make sure you understand what that chart is saying!  See that blue bar?  That is the S&P500 performance.  So over the last 33 years, the SP has averaged 11.2%, and the stocks that Zacks ranks as #1 Strong Buy are up 25.6%.  So they BEAT THE S&P 500 BY 14.4% on average each year.

Conversely, stocks that Zacks rates as a #5 Strong Sell are only up 3.2%, so they UNDERPERFORMED the market by 8% on average for the last 33 years.

WOW!  Think about that.  Zacks is not quite a crystal ball, but that chart is exactly what you want to see.  Find the stocks that are rated #1, and avoid the stocks rated #5.

Just like my dad said when he was showing me how to pick stocks back in the late 1980s, ‘only buy stocks that Zacks rates as a Strong Buy!’

Is Zacks Worth It?

Yes, absolutely. Zacks is worth it.  Given that the stocks they rate as a #1 Strong Buy have beat the SP500 by over 14% on average for the last 33 years, their system works.  And the fact that the stocks they rate as a #5 Strong Sell have underperformed the market by 8% all but proves their system.

How To Get Started With Zacks?

Right now, a great way to get started with Zacks is to get a copy of their most recent report of  “5 Stocks Set to Double.”  These are their analysts' picks of the best of the best #1 rated stocks.

You don’t have to give them a credit card. If you follow this link, you can get their report for free.

What is Zacks Investment Research?

Zacks Investment Research was founded in 1978. Zacks believes that the most powerful factor driving stock prices is earnings estimate revisions. In other words, when financial analysts make changes to the amount that they predict companies will earn in a given quarter, that change affects stock prices more than anything else. The company's goal is to provide objective financial research to be used by analysts to inform their clients and be used by retail investors as well.

Given that Zacks founding principle is that earnings estimate revisions are the biggest mover of stock prices, it is no surprise that the company is well known for its large earnings per share (EPS) estimates. However, it has branched out into other areas as well. The Zacks home page contains the headings: Stocks, Funds, Earnings, Screening, Finance, Portfolio, Education, Video, Podcasts, and Services. You can find everything from stock rankings and articles on personal finance to a portfolio creation tool and educational podcasts within these headings.

The Zacks System

Zacks uses a rather simple rating system. In the areas of value, growth, and momentum, stocks are given a ranking of A through F. Securities are also given a rank of 1 (strong buy) to 5 (strong sell). The Portfolio Tracker allows you to tell Zacks what stocks and funds you are holding and receiving Zacks’ ratings on them 24/7. 

A graph showing how stocks with different Zacks ratings have performed against the S&P 500. Source: Zacks

The system Zacks uses to rate and rank stocks runs on quantitative analysis. If you’re not familiar, quantitative analysis is a form of analysis in which complex mathematical equations and statistical analysis are combined with computer algorithms and high-tech models to help make predictions about the value of a stock. Essentially, Zacks is saying that since they rely on a quantitative analysis algorithm rather than humans to rate financial securities, they are completely objective, unlike human analysts at other firms. This claim by Zacks must have some truth to it because many larger financial companies use the firm’s research to inform their decisions and advise clients.

Zacks is regulated by the U.S. Securities and Exchange Commission (SEC), and all of its filings can be found here.

How Zacks Investment Research Provides Value to Customers

If you choose to sign up for Zacks Premium, you will get access to the Zacks Earnings Expected Surprise Prediction (ESP) Filter, which tells you which stocks are most likely to post higher or lower earnings than expected. You also gain access to premium screens, which fall into categories such as value, growth, momentum, and many more. Zacks claims that their screeners have a list for every type of investor! You can also create your own custom screener to filter the criteria you do or do not want in your portfolio. 

The Zacks #1 Rank List shows you the top 5% of stocks with the most potential each day. The list is broken up into the categories of value, growth, momentum, VGM, and income, so you can look at the stocks that are most relevant to your investing style. The Focus List shows you the best long-term investments based on earnings momentum. The Zacks Industry Group separates securities into over 250 industry groups. The Premium Insight feature gives you daily market research, upgrades, and downgrades. 

An example of the Zacks Industry Rank list. Source: Zacks

Zacks Membership Plans

The following membership plan information comes straight from the Zacks website.

Zacks Premium is the least expensive Zacks service. For $249 per year, the Premium plan gives you access to:

  • Equity Research Reports
  • Focus List Portfolio
  • Premium Screens
  • Zacks #1 Rank List
  • Zacks Rank

Zacks Investor Collection is meant for long-term investors and comes with its own set of tools and strategies. For $59 per month or $495 per year, you’ll get:

  • Zacks Premium
  • ETF Investor
  • Home Run Investor
  • Income Investor
  • Stocks Under $10
  • Value Investor
  • Zacks Confidential
  • Zacks Top 10 Stocks

Zacks Ultimate, the highest membership tier, costs $299 per month or $2995 per year. It is meant to give subscribers access to all of Zacks’ portfolio recommendations and investment strategies so that you can choose which one is best for you. Zacks Ultimate members have access to:

  • Zacks Premium
  • Black Box Trader
  • Blockchain Innovators
  • Commodity Innovators
  • Counterstrike
  • ETF Investor
  • Headline Trader
  • Healthcare Innovators
  • Home Run Investor
  • Income Investor
  • Insider Trader
  • Large-Cap Trader
  • Marijuana Innovators
  • Options Trader
  • Short Sell List
  • Stocks Under $10
  • Surprise Trader
  • Value Investor
  • TAZR
  • Technology Innovators
  • Zacks Confidential
  • Zacks Top 10 Stocks

Final Thoughts

With all of the research, analytical, and educational tools it offers, Zacks has made a name for itself in the investment research space. Make sure to check out what Zacks has to say next time you’re looking into a stock!

As an introduction to Zacks, they invite you to download their most recent report of “5 Stocks Set to Double.” Five experts start with the Zacks quantitative system but add their personal research to seek stocks with potential to gain +100% and more in the coming months.

Previous editions have nailed gains like Chewy +213.0% . . . NVIDIA +243.4% . . . Sea Limited +542.2%

Normally you have to register and give them a credit card, but if you follow this link, you can get their report for free.

Want to use your research from Zacks to construct a paper trading portfolio and invest with virtual money? Check out Wall Street Survivor's Stock Market Game!

Get ZACKS 5 STOCK SET TO DOUBLE when you sign up here! LIMITED TIME ONLY.

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