Why TMDX is a Leading Momentum Stock for the Long Term

Understanding Zacks Premium and Its Benefits for Investors

For both new and experienced investors, the goal of maximizing returns in the stock market while building confidence is a common aspiration. One powerful tool that helps achieve this is Zacks Premium, a comprehensive research service designed to provide valuable insights and resources to enhance investment decisions.

Zacks Premium offers a wide range of features, including daily updates on the Zacks Rank and Zacks Industry Rank. It also provides full access to the Zacks #1 Rank List, Equity Research reports, and Premium stock screens. These tools are essential for making informed decisions and becoming a more confident investor. Additionally, Zacks Premium includes the Zacks Style Scores, which play a crucial role in evaluating stocks based on specific investing methodologies.

What Are the Zacks Style Scores?

The Zacks Style Scores were developed alongside the Zacks Rank to serve as complementary indicators. They evaluate stocks based on three widely followed investing strategies: value, growth, and momentum. These scores help investors identify stocks with the highest potential to outperform the market over the next 30 days.

Each stock receives a rating from A to F, with A being the best and F the worst. This grading system mirrors academic standards, where an A is better than a B, and so on. The higher the score, the greater the likelihood that the stock will outperform.

The Style Scores are divided into four categories:

Value Score

Value investors focus on finding undervalued stocks before the broader market recognizes their true worth. The Value Style Score uses financial ratios such as P/E, PEG, Price/Sales, and Price/Cash Flow to identify attractive and discounted stocks.

Growth Score

Growth investors prioritize a company's future prospects and financial health. The Growth Style Score analyzes factors like earnings, sales, and cash flow to find stocks with sustainable growth potential.

Momentum Score

Momentum investors rely on trends in stock prices or earnings outlooks. The Momentum Style Score considers elements like one-week price changes and monthly percentage changes in earnings estimates to determine favorable times to invest in high-momentum stocks.

VGM Score

For investors who prefer a combination of all three strategies, the VGM Score integrates the Value, Growth, and Momentum Style Scores. This comprehensive indicator helps identify companies with strong value, promising growth forecasts, and positive momentum.

How Style Scores Work with the Zacks Rank

The Zacks Rank is a proprietary stock-rating model that leverages earnings estimate revisions to help investors build successful portfolios. Since 1988, #1 (Strong Buy) stocks have delivered an impressive average annual return of +23.75%, significantly outperforming the S&P 500.

However, with over 200 companies rated #1 and another 600 rated #2 on any given day, it can be challenging to choose the best stocks for your portfolio. This is where the Style Scores come into play.

To maximize returns, investors should look for stocks with a Zacks Rank of #1 or #2 that also have Style Scores of A or B. Even if a stock has a #3 (Hold) rank, it’s wise to ensure it has A or B scores to capture upside potential. Stocks with a #4 (Sell) or #5 (Strong Sell) rank, even with high Style Scores, still carry a risk of declining earnings and falling share prices.

Stock to Watch: TransMedics (TMDX)

TransMedics Group, based in Andover, MA, is a medical technology company focused on transforming organ transplant therapy for patients with end-stage organ failure. TMDX currently holds a Zacks Rank of #3 (Hold) and a VGM Score of A.

Momentum investors should pay attention to TMDX, as it has a Momentum Style Score of A. Over the past four weeks, shares have risen by 0.8%. In the last 60 days, four analysts have raised their earnings estimates for fiscal 2025, increasing the Zacks Consensus Estimate to $2.32 per share. TMDX also boasts an average earnings surprise of +45.4%.

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