A Zacks Rank 1 stock, also known as a "Strong Buy," represents a stock that Zacks Investment Research believes has the strongest probability of outperforming the overall market over the next one to three months. This coveted ranking is assigned to the top 5% of stocks in the Zacks Rank universe.
Zacks Rank 1 stocks are identified through a proprietary quantitative model that primarily focuses on earnings estimate revisions. When analysts collectively raise their earnings estimates for a company, it suggests improving business fundamentals and positive future prospects, often leading to a higher Zacks Rank.
Understanding the Significance of Zacks Rank 1
Historically, Zacks Rank 1 "Strong Buy" stocks have significantly outperformed the S&P 500. This outperformance is attributed to the powerful effect of positive earnings estimate revisions on stock prices. Companies experiencing such revisions tend to see increased investor interest and upward price momentum.
Recent Examples of Zacks Rank 1 Top Movers
As of December 20, 2024, several stocks were highlighted as top movers with a Zacks #1 Rank, demonstrating substantial daily percentage changes. These examples illustrate the dynamic nature of top-ranked stocks and their potential for significant gains.
| Company | Symbol | % Change (Dec 20, 2024) |
|---|---|---|
| Vince Holding Corp. | VNCE | +73.38% |
| BBVA Banco Frances | BBAR | +8.41% |
| Paramount Group, Inc. | PARAA | +3.85% |
| MasTec, Inc. | MTZ | +3.40% |
Note: Stock performance is highly volatile, and past performance is not indicative of future results.
How the Zacks Rank System Works
The Zacks Rank system evaluates individual stocks and assigns one of five ranks:
- Strong Buy: Top 5% of stocks, expected to outperform.
- Buy: Next 15% of stocks, expected to outperform.
- Hold: Middle 60% of stocks, expected to perform in line with the market.
- Sell: Next 15% of stocks, expected to underperform.
- Strong Sell: Bottom 5% of stocks, expected to significantly underperform.
The core principle behind the Zacks Rank is that earnings estimate revisions are the most powerful force impacting stock prices. Investors often use the Zacks Rank as a tool to identify potential investment opportunities, focusing on those companies receiving positive earnings estimate revisions from analysts.
