How does the old joke go: if you want a $1 million portfolio,
start with $2 million and then invest in an airline - you'll soon
have just $1 million.
It's a mildly funny joke, and at times, totally accurate. But that
joke couldn't have missed the mark more than with
). In fact, if you had started with $2 million when Zacks gave it a
Zacks Rank #1 (Strong Buy) earlier this year, it would now be worth
$2,515,400 for a sizeable 25.77% return in just 4 ½ short
months...and it's still going.
The best part is that the tell-tale clues that could have gotten
you into LUV are getting investors into similar opportunities all
the time. And these winners are easily found on Zack.com every day.
The Signal to Get In
On January 10th, 2014, LUV was upgraded to a Zacks Rank #1, giving
a clear sign that it was time to get in. (And for those already in,
and making money, it was another confirmation to hang on.)
Even though the market was becoming increasingly volatile, it was
easy to stay in LUV. Between 1/10/14, they received 20 upward
estimate revisions in a row, and two positive EPS surprises,
helping to reassure investors that LUV was the place to be. Week
after week, estimates steadily climbed from $1.26 to $1.56 for a
Not surprisingly, prices followed suit, increasing from $21.03 to
$26.45 for a $25.77% return by the end of May. This compares to the
S&P 500's 4.41% during that same time.
Below is a chart that illustrates the entire move for LUV from
when it became a Zacks Rank #1 (Strong Buy) on 1/10/14 to the end
of May (5/30/14). The black line is the price. The blue dotted line
represents the upward earnings estimate revisions of the consensus.
And the green arrows show the positive surprises. With each item
strengthening the bullish case for LUV, the likelihood was quite
high that LUV was going to be a winner.
Chart courtesy of the Research Wizard.
How to Get Stocks Like These on Your Radar Screen
1) Take a look at the Zacks Rank #1 Additions section each day.
Below is a screen shot of what that table looks like. There you'll
see the company name, its industry, its price, and the date it was
added as a Zacks Rank #1.
2) Then go to the Price and Consensus Chart. You can get there by
clicking on the ticker in the table. That'll take you to the Quote
Overview page. From there you can select the Price and Consensus
The one below is of Southwest Airlines. There you'll see a price
chart, along with the annual consensus numbers layered on top. You
want to see the consensus line(s) going up, and preferably at an
even steeper pace than the consensus that preceded it. And of
course, you should see the price following it. The one below is
picture perfect. And there are hundreds of other just like it. All
you have to do it look.
3) You should also look at the Detailed Estimates page. You'll see
a link to that page on the left margin. There you'll see the four
factors of the Zacks Rank, which includes: Agreement, Magnitude,
Upside, and Surprise.
For example, here's a screenshot of the Magnitude table. You'll see
the trend of the consensus from what it was 90 days ago, to 60 days
ago, to 30 days ago, to 7 days ago, and to the current estimate.
We're still using LUV as an example here. And you can see that for
the current quarter, its estimates went from 47 cents up to 50
cents today (up 6.38%), and the current year went from $1.33 up to
$1.47 (up 10.52%). You can see the same upward trajectory for the
next quarter and next year.
Your New Daily Routine
Consider making this your new daily routine.
One of the reasons why some people underperform in their
investments is because their universe of familiar stocks is small.
And this limits their ability to find new and better stocks. But by
scanning the new Zacks Rank #1 list, and then checking out the
Price and Consensus chart along with the four factors on the
Detailed Estimates page (like the Magnitude we just went over),
you'll be amazed at the new and exciting stocks you're getting to
know. And the few minutes a day you spend checking them out could
transform your portfolio.
Give it try. You'll be glad you did.
Click here to find more Zacks Rank #1 Stocks.
Disclosure: Performance information for Zacks' portfolios and
strategies are available at:
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