Why PWR is a Momentum Stock to Watch

Enhancing Investment Strategies with Zacks Premium

For both new and experienced investors, the goal of maximizing returns in the stock market is a common aspiration. Zacks Premium offers a comprehensive suite of tools to help achieve this objective. This research service equips investors with the knowledge and resources needed to make informed decisions and build confidence in their investment choices.

Zacks Premium provides daily updates on key metrics such as the Zacks Rank and Zacks Industry Rank, along with the Zacks #1 Rank List, Equity Research reports, and Premium stock screens. Additionally, it includes the Zacks Style Scores, which serve as valuable indicators for evaluating stocks.

Understanding the Zacks Style Scores

The Zacks Style Scores are designed to complement the Zacks Rank by offering an in-depth analysis of stocks based on three widely recognized investing methodologies: value, growth, and momentum. These scores help investors identify stocks that have the best potential to outperform the market over the next 30 days.

Each stock receives an alphabetic rating ranging from A to F, with A being the highest and F the lowest. This system ensures that investors can quickly assess the likelihood of a stock's performance based on its value, growth, and momentum characteristics.

Breakdown of the Style Scores

Value Score

Value investors focus on identifying undervalued stocks that offer good prices relative to their intrinsic value. The Value Style Score evaluates financial ratios such as P/E, PEG, Price/Sales, and Price/Cash Flow to determine which companies are trading below their true worth.

Growth Score

Growth investors prioritize companies with strong financial health and positive future outlooks. The Growth Style Score considers factors like projected and historical earnings, sales, and cash flow to uncover stocks with long-term growth potential.

Momentum Score

Momentum traders rely on trends in stock prices and earnings forecasts. The Momentum Style Score uses metrics such as one-week price changes and monthly percentage changes in earnings estimates to identify favorable times to invest in high-momentum stocks.

VGM Score

For investors who prefer a balanced approach, the VGM Score combines all three styles—value, growth, and momentum. This score helps narrow down the most attractive stocks by evaluating their overall strengths in each category.

How Style Scores Work with the Zacks Rank

The Zacks Rank is a proprietary stock-rating model that leverages earnings estimate revisions to guide investors in building a successful portfolio. It has a proven track record, with #1 (Strong Buy) stocks delivering an average annual return of +23.75% since 1988—more than double the S&P 500.

However, with over 800 top-rated stocks available, selecting the right ones can be overwhelming. This is where the Style Scores come into play. To maximize returns, investors should focus on stocks with a Zacks Rank of #1 or #2 and Style Scores of A or B. Even for stocks with a #3 (Hold) rank, ensuring they have A or B scores can enhance upside potential.

The direction of a stock's earnings estimate revisions is a critical factor when making investment decisions. For example, a stock with a #4 (Sell) or #5 (Strong Sell) rating, even if it has high Style Scores, may still face downward trends in earnings and share prices.

Stock to Watch: Quanta Services (PWR)

Quanta Services, Inc. is a leading provider of specialty contracting services, particularly in the transmission and distribution sector of the North American electric utility industry. Its operations span across the United States, Canada, Australia, and other international markets.

Currently, PWR holds a Zacks Rank of #3 (Hold) and a VGM Score of B. However, it has a Momentum Style Score of A, and its shares have risen by 3.1% over the past four weeks. Analysts have recently revised their earnings estimates upward, with the Zacks Consensus Estimate increasing to $10.35 per share. PWR also boasts an average earnings surprise of +5.7%.

With a solid Zacks Rank and strong Momentum and VGM Style Scores, PWR is a stock worth considering for investors looking to diversify their portfolios.