Why This Momentum Stock Could Boost Your Portfolio

Understanding the Zacks Premium and Its Benefits for Investors

For both new and experienced investors, the goal of maximizing returns in the stock market while maintaining confidence is a common aspiration. One tool that can help achieve this is Zacks Premium, a comprehensive research service designed to empower investors with valuable insights and actionable data.

Zacks Premium offers a wide range of resources, including daily updates on the Zacks Rank and Zacks Industry Rank, the Zacks #1 Rank List, Equity Research reports, and Premium stock screens. Additionally, it provides access to the Zacks Style Scores, which serve as complementary indicators to help investors identify stocks with strong potential to outperform the market over the next 30 days.

What Are the Zacks Style Scores?

The Zacks Style Scores are designed to evaluate stocks based on three key investment methodologies: value, growth, and momentum. Each stock receives a rating from A to F, with an A being the highest and an F the lowest. These scores provide investors with a clear indication of a stock's likelihood to beat the market, making them an essential part of the investment decision-making process.

The Style Scores are divided into four categories:

Value Score

Value investors focus on finding stocks that are undervalued relative to their true worth. The Value Style Score takes into account financial metrics such as P/E (price-to-earnings), PEG (price-to-earnings growth), Price/Sales, and Price/Cash Flow ratios. These metrics help identify companies that may be trading below their intrinsic value.

Growth Score

Growth investors prioritize companies with strong future earnings potential and robust financial health. The Growth Style Score analyzes factors like projected and historical earnings, sales, and cash flow to determine which stocks are likely to experience sustainable growth over time.

Momentum Score

Momentum investors follow the principle that "the trend is your friend." The Momentum Style Score evaluates short-term price movements and changes in earnings estimates to identify stocks that are experiencing positive momentum. This helps investors capitalize on upward or downward trends in a stock's performance.

VGM Score

For investors who want a balanced approach, the VGM Score combines the Value, Growth, and Momentum Style Scores into a single metric. It provides a comprehensive assessment of a stock's overall attractiveness by considering its value, growth potential, and momentum characteristics. The VGM Score is particularly useful when used alongside the Zacks Rank.

How Style Scores Work with the Zacks Rank

The Zacks Rank is a proprietary stock-rating model that uses earnings estimate revisions to help investors build successful portfolios. Over the years, the Zacks Rank has proven to be highly effective, with #1 (Strong Buy) stocks delivering an average annual return of +23.75% since 1988—more than double the S&P 500's performance.

However, with over 800 top-rated stocks available at any given time, selecting the right ones can be overwhelming. This is where the Zacks Style Scores come into play. Investors should look for stocks with a Zacks Rank of #1 or #2 and Style Scores of A or B to maximize their chances of success. Even if a stock has a #3 (Hold) rank, it should still have A or B Style Scores to ensure maximum upside potential.

It’s important to note that the direction of a stock’s earnings estimate revisions should guide investment decisions. For example, a stock with a #4 (Sell) or #5 (Strong Sell) rating, even with high Style Scores, may have a negative earnings outlook and could see a decline in share price.

Stock to Watch: T-Mobile (TMUS)

T-Mobile US, Inc., founded in 1994 and headquartered in Bellevue, WA, is a leading wireless service provider offering services under the T-Mobile, Metro by T-Mobile, and Sprint brands. The company serves postpaid, prepaid, and wholesale customers across the United States.

Currently, TMUS holds a Zacks Rank of #3 (Hold) and a VGM Score of B. However, it has a Momentum Style Score of A, and shares have risen by 1.3% over the past four weeks. For fiscal 2025, four analysts have revised their earnings estimates upward in the last 60 days, and the Zacks Consensus Estimate has increased to $10.59 per share. TMUS also has an average earnings surprise of +9.9%.

With a solid Zacks Rank and strong Momentum and VGM Style Scores, T-Mobile is a stock worth considering for investors looking to build a well-rounded portfolio.