The Power of Momentum Investing: Why Adding a Momentum Stock Could Enhance Your Portfolio

Investing smartly and confidently are objectives shared by both novice and veteran investors aiming to maximize their gains in the stock market. While there are various approaches to stock selection, momentum investing has become a strategy many turn to for strong returns.

Understanding Zacks Style Scores

Zacks Style Scores assist investors in identifying stocks that have a high probability of outperforming the market over the next month. These scores rate stocks based on value, growth, and momentum characteristics, assigning them grades from A to F, with A being the highest. They serve as a complement to the Zacks Rank, a model centered around earnings estimate revisions.

Investors are keen on stocks that score well in value, looking for quality investments at great prices. Growth scores, on the other hand, focus on a company's financial robustness and prospects. Momentum scores cater to trends in stock prices and earnings outlooks, helping to pinpoint opportune moments for investment.

The amalgamation of these styles results in the VGM Score, which provides a comprehensive view by considering value, growth, and momentum simultaneously.

Why Pairing Zacks Rank with Style Scores Makes Sense

When stocks are rated as Zacks Rank #1 (Strong Buy) or #2 (Buy), they are already highly regarded for their earnings potential. The addition of a high Style Score, such as A or B, further signifies an elevated likelihood of success.

However, even stocks with solid Style Scores should be reconsidered if they fall to a Zacks Rank of #4 (Sell) or #5 (Strong Sell), as their earnings projections might be in decline.

Spotlight on a Momentum Stock: Seagate

Seagate, based in Dublin, Ireland, stands out as a key player in data storage technology and infrastructure. Their flagship product is hard disk drives (HDDs), an essential for digital data storage. This company has recently captured the attention of momentum investors.

Currently, Seagate holds a Zacks Rank #2 (Buy) with a VGM Score of A. It also boasts an excellent Momentum Style Score of A. Over the last four weeks, its shares have seen a 4.1% increase. Furthermore, with consistent upward revisions in earnings estimates by analysts and a track record of positive earnings surprises, Seagate presents as an attractive stock for momentum-focused portfolios.

Investing, Stocks, Momentum