Are You a Momentum Investor? This Stock Could Be Your Top Pick

Understanding Zacks Premium and Its Role in Smart Investing

Investing in the stock market can be both exciting and challenging, especially for new investors. The goal of many is to make informed decisions that lead to long-term growth and profitability. Zacks Premium offers a comprehensive suite of tools and resources designed to help investors achieve this goal. With daily updates on key metrics like the Zacks Rank and Zacks Industry Rank, along with access to Equity Research reports and premium stock screens, Zacks Premium empowers users to make smarter, more confident investment choices.

One of the standout features of Zacks Premium is the inclusion of the Zacks Style Scores. These scores are an essential part of the Zacks investment framework, providing investors with additional insights into potential stock performance.

What Are the Zacks Style Scores?

The Zacks Style Scores were developed alongside the Zacks Rank to offer a more nuanced approach to stock selection. These scores serve as complementary indicators that help investors identify stocks with the best chances of outperforming the market over the next 30 days. Each stock is assigned a rating from A to F based on its value, growth, and momentum characteristics. The higher the score, the better the likelihood of the stock outperforming the market.

There are four distinct categories within the Zacks Style Scores:

Value Score

Value investors focus on finding undervalued stocks that have strong fundamentals but may not yet be recognized by the broader market. The Value Score uses financial ratios such as P/E, PEG, Price/Sales, and Price/Cash Flow to determine which stocks are most attractive and potentially discounted.

Growth Score

Growth investors look for companies with strong future prospects and solid financial health. The Growth Score evaluates factors like projected and historical earnings, sales, and cash flow to identify stocks that are likely to experience sustainable growth over time.

Momentum Score

Momentum investing revolves around capitalizing on trends in stock prices or earnings outlooks. The Momentum Score helps investors pinpoint optimal times to enter a position by analyzing factors like one-week price changes and monthly shifts in earnings estimates.

VGM Score

For investors who want to combine all three approaches—value, growth, and momentum—the VGM Score offers a comprehensive evaluation. It combines the weighted results of the Value, Growth, and Momentum Scores to provide a well-rounded assessment of a stock’s potential.

How Style Scores Work with the Zacks Rank

The Zacks Rank is a proprietary stock-rating model that uses earnings estimate revisions to guide investors in building a winning portfolio. Since 1988, stocks ranked #1 (Strong Buy) have delivered an impressive average annual return of +23.75%, significantly outperforming the S&P 500. However, with over 800 top-rated stocks available, it can be overwhelming to choose the right ones.

This is where the Zacks Style Scores come into play. By combining the Zacks Rank with the Style Scores, investors can narrow down their options to those with the highest probability of success. Stocks with a Zacks Rank of #1 or #2 and Style Scores of A or B are typically the best choices. Even if a stock has a lower rank, such as #3 (Hold), it's still important to check its Style Scores to ensure there is enough upside potential.

It’s also crucial to consider the direction of a stock’s earnings estimate revisions. A stock with a #4 (Sell) or #5 (Strong Sell) rating, even if it has high Style Scores, may still face declining earnings forecasts and lower share prices.

Stock to Watch: Palantir Technologies Inc. (PLTR)

Palantir Technologies Inc. (PLTR), a Denver-based company founded in 2003, develops software platforms for the intelligence community, aiding in counterterrorism investigations and operations. PLTR currently holds a Zacks Rank of #3 (Hold) and a VGM Score of B.

Despite its mid-tier rank, PLTR has an impressive Momentum Style Score of A, with shares rising 24% over the past four weeks. For fiscal 2025, two analysts have recently revised their earnings estimates upward, increasing the Zacks Consensus Estimate to $0.60 per share. Additionally, PLTR has an average earnings surprise of +13.2%.

With a solid Zacks Rank and top-tier Momentum and VGM Style Scores, PLTR is a compelling option for investors looking to build a diversified and profitable portfolio.