Is Zacks Investment Research Any Good?
Review of Zacks stock picking service
ZACKS
TLDR
They make a ton of recommendations. Many products underperform the market
Their annual Top 10 list did great in 2021 but not 2022, but you pay for it at $3600 per year. You can get a base subscription for $249/yr for just the stock screeners which is reasonable, though many are baked into Fidelity’s platform for free.
Their stock screeners are great for finding stocks, especially the VGM and Zacks Rank #1 screener. But to do it right, you need to spend 5hrs a week on it seeing what’s new.
Zacks offers a couple dozen different lines of stock picking services plus a few dozen different stock screens. It’s quite overwhelming actually, but also a bit addictive to pour through them to find some good stocks. I found most of their services don’t outperform the market or have so many stocks in them it would be a full-time job to buy and manage them.
For most of the screeners, the time it takes to vet them and look at each of the 50 plus stocks in each is too much of a time commitment, but looking at the first few in the list gives some ideas of what is working.I started just looking at the recent additions to see if there were secular trends and that helped.
I tried out some of their healthcare picks with mild success: SGMO, ORBC, ORGO, SAVA, AHCO. SAVA was an interesting one I made a lot of money on as they reported positive results from their Alzheimer’s trials. I made 600%. The stock came back down to what I paid for it the subsequent month but I had already sold it for a 6X gain which was awesome.
SGMO followed a similar pattern, with a short pop after the recommendation followed by a steep drop of 50% from there I lost money on. ORBC got bought out for +40% more than I paid for it, which was nice. And ORGO was up 100% before falling about -70%. I held it because their advanced wound care solutions seem cutting edge, and it seems only a matter of time before they find a way into a huge contract. Plus, unlike most small biotechs, they grow revenue steadily and make money. Will see. For now I’m losing money on it.
I did OK using the value, growth, and momentum stock screener but I really had to spend a lot of time separating out the good ones and figuring out what was recently added, which they don’t tell you. If you get them too late, the move has already occurred and you will likely see the stock correct quickly.
A few gems I traded from their list around March of 2021 included SEM (health clinics), DAC (container shipping), BERY (financial), and MT (steel). My target was +100% for each and I made that within a year of buying for each. I bought options. HOLX was an exception. I lost -15% on that pick, though it was mostly due to the fact it soared high from COVID revenues and then sold off quickly as the vaccines rolled out. It’s since back to slightly above the purchase price.
Zacks Top 10 Stocks (2021 - a very bullish year)
their premium offering and associated returns. I did not buy all of these - only SPSC and PWR. But I did track them all in a watchlist.
Percent Winner Rate: 90%
Avg return: 48%
SPY Return: 30%
AIMC (transmissions)
2021 Return: -6%
Return To date: - 23%
SPSC (supply chain mgmt solutions)
2021 Return: +31%
Return to Date: +15%
APTV (vehicle parts)
2021 Return: +28%
Return to Date: -15%
PWR (energy generation consulting services)
2021 Return: +64%
Return to Date: +107%
IAA(online vehicle sales)
2021 Return: +46%
Return to Date: -41%
WSC (storage units)
2021 Return: +72%
Return to Date: +84%
Macy’s (clothing retailer)
2021 Return: +144%
Return to Date: +76%
GDDY (domain registration)
2021 Return: +3%
Return to Date: 0%
ZBRA (tech, sensors)
2021 Return: +54%
Return to Date: -7%
ULTA (beauty stores)
2021 Return: +46%
Return to Date: +38%
For 2022’s top 10 stocks, the advice has not been quite so good, but the year isn’t over yet. I didn’t buy any this year because I was short on the market, but I have been tracking the performance to see if they can match what they did last year. So far, not so good.
Percent Up Since Rec: 20%
Avg Return of Rec: -8.8%
SPY Return: -10.3%