Beat the Market Like Zacks: JD.com, Sprouts Farmers Market, 3M in Focus

Abhinab Dasgupta

Mon, Oct 14, 2024, 5:01 AM8 min read

In this article:

Last Friday, the three most widely followed indexes closed out their fifth straight winning week. The tech-focused Nasdaq Composite, the S&P 500 and the Dow Jones Industrial Average advanced 1.1%, 1.1% and 1.2%, respectively.

Throughout the week, the pressure on oil prices due to the conflict in the Middle East kept market participants on tenterhooks. All eyes were set on consumer-side inflation numbers for September, which came in higher than expectations, as did jobless claims from the last week. Fed minutes signaled an overwhelming number of Fed officials opining in favor of larger rate cuts, even if they were not ready to decide on a timeline.

As of today, per CME’s FedWatch Tool, a whopping 87% of survey participants expect a 25 basis point rate cut at the Fed’s November meeting.

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

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:

Alpha Teknova and Latham group Surge Following Zacks Rank Upgrade

Shares of Alpha Teknova, Inc. TKNO have surged 37.3% (versus the S&P 500’s 6.9% increase) since it was upgraded to a Zacks Rank #2 (Buy) on August 14.

Another stock, Latham Group, Inc. SWIM, was upgraded to a Zacks Rank #1 (Strong Buy) on August 14 and has returned 26.4% 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.

A hypothetical portfolio of Zacks Rank #1 (Strong Buy) stocks returned +20.63% in the year-to-date period through April 1st, 2024, vs. +11.3% for the S&P 500 index and +7.7% for the equal-weight S&P 500 index. This hypothetical portfolio returned +20.63% in 2023 vs. +24.83% for the S&P 500 index and +15% for the equal-weight S&P 500 index. The portfolio 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 concentrated performance of mega-cap stocks since October 2022.

The Zacks Model Portfolio - consisting of Zacks Rank #1 stocks – has outperformed the S&P index by more than 16 percentage points since 1988 (Through April 1st, 2024, the Zacks # 1 Rank stocks generated an annualized return of +27.6% since 1988 vs. +11.1% for the S&P 500 index).You can see the complete list of today’s Zacks Rank #1 stocks here >>>

Check Alpha Teknova’s historical EPS and Sales here>>>

Check Latham Group’s historical EPS and Sales here>>>

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Zacks Recommendation Upgrades JD.com and Qifu Higher

Shares of JD.com, Inc. JD and Qifu Technology, Inc. QFIN have advanced 62.2% (versus the S&P 500’s 3.3% rise) and 35.1% (versus the S&P 500’s 3.7% rise), since their Zacks Recommendation was upgraded to Outperform on August 22 and August 21, 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 Palantir, Shopify Shoot Up

Shares of Palantir Technologies Inc. PLTR, which belongs to the Zacks Focus List, have gained 52.2% over the past 12 weeks. The stock was added to the Focus List on March 26,2024. Another Focus-List holding, Shopify Inc. SHOP, which was added to the portfolio on September 6, 2022, has returned 31.8% over the past 12 weeks. The S&P 500 has advanced 3.1% over this period.

The Focus List portfolio returned +10.23% in 2024 Q1 vs. +10.56% for the S&P 500 index and +7.9% for the equal-weight S&P 500 index.

The 50-stock Zacks Focus List model portfolio returned +31.44% in 2023 vs. +26.28% for the S&P 500 index and +13.61% for the equal-weight S&P 500 index. In 2022, the portfolio produced -15.2% vs. the S&P 500 index’s -17.96%.

Since 2004, the Focus List portfolio has produced an annualized return of +11.91% (through March 31st, 2024). This compares to a +10.25% annualized return for the S&P 500 index in the same time period.

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 Fair Isaac and Oracle Make Significant Gains

Fair Isaac Corporation FICO, a component of our Earnings Certain Admiral Portfolio (ECAP), has jumped 27.7% over the past 12 weeks. Oracle Corporation ORCL has followed Fair Isaac with 26.9% returns.

The Zacks Earnings Certain Admiral Portfolio (ECAP), which consists of 30 concentrated, ultra-defensive, long-term Buy-and-Hold stocks, returned +9.08% in the year-to-date period (through March 31st, 2024) vs. +10.42%. In 2023, the portfolio returned +12.17% vs. +26.28% for the S&P 500 index. The portfolio returned -4.7% in 2022 vs. 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 3M and Starbucks Outshine Peers

3M Company MMM, which is part of our Earnings Certain Dividend Portfolio (ECDP), has returned 29.7% over the past 12 weeks. Another ECDP stock, Starbucks Corporation SBUX, has climbed 20.5% 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 3M’s dividend history here>>>

Check Starbucks’ 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.

The Zacks Earnings Certain Dividend Portfolio (ECDP) returned +4.47% in the year-to-date period (through March 31st, 2024) vs. +10.42% for the S&P 500 index (IVV) and +6.9% for the Dividend Aristocrats ETF (NOBL).

The portfolio returned -0.9% in 2023 vs. +26.28% for the S&P 500 index and +8.11% for NOBL. The portfolio returned -2.3% in 2022 vs. -17.96% for the S&P 500 index and -8.34% for NOBL.

Click here to access this portfolio on Zacks Advisor Tools.

Zacks Top 10 Stocks — Sprouts Farmers Market Delivers Solid Returns

Sprouts Farmers Market, Inc. SFM, from the Zacks Top 10 Stocks for 2024, has jumped 141.4% year to date compared with a 21.9% increase for the S&P 500 Index.

The Top 10 portfolio returned +19.56% in 2024 Q1 vs. +10.56% for the S&P 500 index and +7.9% for the equal-weight version of the index.

The Top 10 portfolio returned +25.15% in 2023 vs. +26.28% for the S&P 500 index. Since 2012, the Top 10 portfolio has produced a cumulative return of +1,060.9% through the end of 2023 vs. +360.1% for the S&P 500 index.

Since 2012, the Zacks Top 10 portfolio has produced an annualized return of +25.02% through the end of 2024 Q1 vs. +14.1% for the S&P 500 index and +12.7% for the equal-weight version of the index. The portfolio has produced a cumulative return of +1,442.3% vs. +403.03% for the S&P 500 index and +331.29% for the equal-weight 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

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