Momentum Investing Simplified: Scoring Your Next Stock Power Move

Many investors aim to master the art of stock market investment, seeking confidence and prosperity in their financial endeavors. One tool that comes to the aid of investors is a strategic scoring system designed to refine their stock selections. This system categorizes stocks based on three widely recognized investing styles, determining their potential to outdo the market within the coming month.

Understanding the Style Score System

The Style Score system is a unique framework that assesses stocks by assigning scores across different investing types, including value, growth, and momentum. It is intended to complement an already established stock-ranking model. Each stock is rated with a score from A to F, where A signifies the best probability for outperformance.

The Style Scores encompass:

Value Score - Targets stocks that are undervalued compared to their actual worth.

Growth Score - Focuses on companies with robust financial performance and prospects for long-term prosperity.

Momentum Score - Helps in spotting the right time to invest in stocks following a positive trend.

VGM Score - Suits investors employing a combined investment strategy, rating stocks on all three Style Scores.

How Style Scores Enhance Stock Selection

The established stock-rating model that works in tandem with the Style Scores revolves around the evaluation of earnings estimate revisions. It's been proven effective, with top-ranked stocks yielding substantial annual returns since its inception.

However, with a vast array of highly rated stocks to choose from, the Style Scores help investors by recommending those with top Zacks Ranks and excellent Style Scores to maximize success prospects.

Even stocks with lower rankings can have potential if they show great Style Scores, though one should be cautious as their earnings outlook might still trend downwards.

A Top Momentum Stock Example

To illustrate, let's consider a company such as Cimpress plc, an online provider of custom print and graphic design services. This firm has received a top score on the Zacks Rank and showcases impressive Momentum and VGM Style Scores. Momentum investors, in particular, may find this stock aligns well with their strategy, given its positive price trend and upward revisions in earnings estimates.

By leveraging a strong Zacks Rank together with robust Style Scores, investors can sharpen their ability to identify and invest in stocks with rewarding potential.

Investing, Strategy, Momentum