Zacks Elite Targeted Value Stocks
I’m currently enjoying a free trial to Zacks Elite and Research Wizard. I remember seeing Zacks being advertised all over the place in the mid-90s, but I hadn’t really looked at the service for quite some time until I was recently contacted by them to try out their premium services. You too can try out Zacks Elite for free by visiting this link. I’m hoping some of you also try this service out with me so you can share your thoughts with me on this service while I explore it.
The main feature of ZacksElite is their Zacks Rank, which is based on consensus earnings per share (EPS) estimates from brokers. I’m not a big fan of these so called Sell-Side analyst estimates, so I am coming into my review of ZacksElite with a bias. The Zacks Rank is calculated from four primary inputs: agreement, magnitude, upside, and surprise. This means that much of the rank is based on relative changes in brokerage analysts EPS estimates, which might make this metric a bit more robust. However, humans and especially professionals tend to seek consensus based on the herd mentality of most mammals. Therefore, you tend to find estimates all cluster around each other regardless if they are all wrong.
Leaving the Zacks Rank aside, I did notice that there is also Zacks Recommendation based on both a qualitative model to predict prices and analyst recommendations from the Zacks Equity Research division. I believe that Zacks Recommendation is used to develop the Zacks Focus list, which is a diverse portfolio of stocks from different industries and market caps expected to outperform the market over the next 12 months. This list is then broken down further each week into Targeted Recommendations. Tuesdays, ZacksElite issues targeted recommendations for “Value Stocks”.
I thought you might be interested in looking at this week’s Value Stocks Targeted Recommendations list. I’m having a lot of trouble finding value opportunities, so I was interested to see what ZackElite has come up with. This week they targeted U.S. Steel (X) and Wellpoint (WLP). I’m not particularly interested in commodity companies like U.S. Steel but Wellpoint is a health insurer that could be promising. It was even featured in this past weekend’s Barron’s. Listed below are all the other stocks within the Focus List with the cheapest valuations:
Zacks Featured Target: Value Stocks
What are your thoughts on these stocks? Please share your thoughts below on this Focus List and on the ZacksElite service in general.
Full Disclosure: I do not own any of the stock mentioned in this post. I am receiving a free trial to ZacksElite and Research Wizard, but I am not receiving an compensation for this review.
There are a lot of insurers there. Coming off of a good quarter for insurance, and with PEs reasonable, I can see why there are a lot of them there. That said, P/B multiples are getting stretched. Watch out for mean reversion of ROEs.
Anyone have a copy of the table I posted here last week with the ZacksElite Focus List? It appears my blog ate the one I originally posted, and I don’t have easy access to that list to fix this post right now.
Did they have the Zacks Filtered Rank 2 when you did your trial? How is that different than the original?
The Research Wizard, which Zacks sells for $2-4k/yr., is positioned as a tool to improve on the predictive ability of the lone Zacks Rank by adding filtering criteria to a query then backtesting those criteria over 6 years (2 years with the trial version) of historical data. Inevitably the first criteria added to the filtering screen is the Zacks Rank, which according to Zacks promo material is based on analysts’ earnings estimates, analysts ratings, earnings growth, earnings surprises, etc. The other screening criteria which can be added to the screen definition are very similar to factors already included in the Zacks Rank. It therefore seems unlikely that one could very easily improve on the predictive ability of the Zacks Rank, especially considering that it was supposedly developed over the past 20 years. Hence, subscriber-developed models which perform better in backtesting than the lone Zacks Rank would seem to be the result of nothing more than random happenstance in the crunching of historical data. I asked Zacks to comment on this suggestion – no response yet.
I suspect that they are straddling the line between offering as many products as possible to target different needs of as many different customers as possible while at the same time upholding the “integrity” of the Zacks name.
I used and experimented with a few of their services for about a year and lost a good chunk of money, but it was right as the recession was hitting, so it’s hard to say how good or bad the service is. I believe that they actually have a good service, although I was bothered a bit by all the new products they were rolling out after I had subscribed to one of their premium services.
Anybody else have any thoughts?
i was tempted to buy the membership and here is what i found out from my research. You decide what you want to do.
Who else do a better job of picking a stock out of the screener? One of the insider gurus of the system- right ? Watch this video on youtube from Apr 28/2009 – this was when market was almost a month in to Bull run.
http://www.youtube.com/watch?v=Yhv_DMIh6mU&feature=related
In that video Kevin Matras picked 5 stocks from the screener – HANS,IXYS,NTRI,SNWL,STRL. Look at where they were in Apr 2009 and where they are right now. 2 have doubled, i could not locate one, 2 have stayed the same. Now, if at max the screener could do in BIG bull run is to just double your money and you cannot beat that then go ahead and subscribe. I dont need a crappy screener like this.