HAt Zacks, we provide our members with many different opportunities to take full advantage of the stock market, as well as how to invest in a way that leads to long-term success.

The Zacks Premium service makes this easy. It offers daily updates of Zacks Ranking and Zacks Industry Ranking; full access to the Zacks #1 ranking list; Equity Research Reports; and premium action screens like the ESP filter on gains. All of these can help you quickly identify which stocks to buy, which to sell, and which industries are the hottest today.

The focus list is also included in Zacks Premium. It’s a long-term portfolio of leading stocks that have all the characteristics to beat the market.

Breaking down Zacks focus list

If you could have access to a curated list of stocks to launch your investment portfolio, wouldn’t you jump at the chance to check it out?

Enter Zacks focus list. It’s a portfolio of 50 stocks that are expected to beat the market over the next 12 months; each selected company serves as a foundation for long-term investors looking to build an individual portfolio.

Plus, each pick comes with a full Zacks analyst report, making the focus list even more valuable. The report explains in detail why each stock was selected and why we believe it is good for the long term.

The portfolio’s past performance only reinforces why investors should take it as a starting point. For 2020, the Focus List gained 13.85% on an annualized basis compared to the S&P 500 return of 9.38%. Cumulatively, the portfolio returned 2,519.23% while the S&P returned 854.95%. Returns are for the period from February 1, 1996 to March 31, 2021.

Focus List Methodology

When stocks are selected for the Focus list, it reflects our enduring reliance on the power of earnings estimate revisions.

Earnings estimates, or growth and profitability expectations, come from brokerage analysts who track publicly traded companies; these analysts work with company management to analyze all aspects that could affect future earnings, such as interest rates, the economy, and sector and industry optimism.

Revisions to earnings estimates are very important, as investors must also consider what a company will earn in the future.

Stocks that receive upward revisions to earnings estimates are more likely to receive even more upward changes in the future. For example, if an analyst increased their estimates last month, they are more likely to do so again this month, and other analysts are likely to do the same.

Harnessing the power of earnings estimate revisions is where the Zacks Ranking comes in. The Zacks Ranking is a unique and proprietary stock rating model that uses changes to a company’s quarterly earnings expectations to help investors to build a winning portfolio.

There are four main factors behind the Zacks rank: Accord, Magnitude, Upside, and Surprise. Each of these features then receives a raw score which is recalculated each night and compiled into the rank. Using this data, stocks are classified into five groups, ranging from “Strong Buy” to “Strong Sell”.

The Focus list is made up of stocks hand-picked from a long list of companies ranked #1 (Strong Buy) or #2 (Buy), meaning each new addition benefits from a bullish consensus on earnings among analysts.

It can be very profitable to buy stocks with rising earnings estimates as stock prices react to revisions. By adding stocks from the targeted list, there is a high chance that you will enter companies whose future earnings estimates will be increased, which can lead to price momentum.

Discussion List Spotlight: UnitedHealth Group (UNH)

UnitedHealth Group, Inc. provides a wide range of healthcare products and services, such as Health Maintenance Organizations (HMOs), Point-of-Service (POS) Plans, Preferred Provider Organizations (PPOs) and managed fee-for-service programs.

On June 22, 2015, UNH was added to the Focus listing at $120.33 per share. Shares are up 313.79% to $497.91 since then, and the company is No. 3 (Hold) on the Zacks ranking.

Two analysts upgraded their earnings estimate in the past 60 days for fiscal 2022. Zacks’ consensus estimate rose $0 to $21.70. UNH boasts an average earnings surprise of 8.4%.

Additionally, analysts expect UNH’s earnings to rise 14.1% for the current fiscal year.

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UnitedHealth Group Incorporated (UNH): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.