Zack's Ratings

Investment Analysis Clubs Saul’s Investing Discussions
1

I just discovered Zack’s ratings. While Schwab’s ratings seem to bear no relation to reality, I found that I like Zack’s ratings! (They are based on rising or falling analyst estimates). I’ve had a portfolio with Zacks for a long time, for news and stuff, but I never systematically looked at their ratings until today. Here they are on the stocks that I had in my portfolio with them:

Rated 1 (the best, strongly rising analyst estimates)
SWKS
SKX
BOFI
SEDG

These were all the #1 ratings, and by an amazing coincidence, they were my top three, over-weighted, positions! And one additonal. How nice!

Rated 2 (good)
JCOM - I sold out for cash.
ABMD - I have a medium sized position
INFN - I have a medium sized position
SNCR - I have a small position
PAYC - I recently started a position.

Rated 3 (neutral)
Stocks I’m in: AMBA, ANET, CRTO, EPAM (but have reduced positions in CRTO and EPAM)
Stocks I sold out of: FB, SYNA, WAB, XPO, UBNT, SZYM

Rated 4 (poor, usually means declining estimates)
CELG
CGNX
PFIE
SCTY
All stocks I’m out of.

Rated 5 (terrible)
POL
PSIX
I had sold out of both of them.

In summary
Of the four they rated 1, three are my top three positions.
Of the five rated 2, I was out of one, and in four.
Of the nine rated 3 (or neutral), I was in four, but reducing positions in two of them, and I was out of five.
I’m out of ALL the ones they rated 4.
I’m out of ALL the ones they rated 5.

A reasonable correlation.

Saul

For Knowledgebase for this board
please go to Post #9939.

A link to the Knowledgebase is also at the top of the Announcements column
on the right side of every page on this board

26 Likes
2

While Schwab’s ratings seem to bear no relation to reality,

I think Schwab ratings might be inversely proportional to reality!

Chris

3

I 100% agree with the statements about Schwab’s ratings. Schwab is reactive in that they downgrade stocks after a big drop and upgrade stocks after a rise in price. It is completely backwards.

I use ratings from thestreet.com for my research.

Wise guy

2 Likes
4

Saul - I started using Zacks after you mentioned a couple of times before. It does seem like a bit more useful resource compared to millions of them out there. I certainly avoid buying of stock rated 4 or 5 by Zack.

Another useful resource is Morningstar. Most interesting to me is that they provide income statement, balance sheet and cash flow statement for 10 quarters and 10 Years (for premium members).

This allows me a consistent data source for this information and calculate my own adjusted PEG (which is somewhat modified version of what Saul advocates and most people on this board use). I like to account for expected dilution (for heavy users of stock based compensation) and acquisition cost (for M&A driven companies like XPO or Zillow) when I evaluate them.

7 Likes