The Zacks Rank model is offering investors a systematic way to identify high-potential stocks within the computer and technology sector, according to a recent review of the latest reports. The proprietary Zacks Rank system evaluates equities based on trends in earnings estimate revisions, aiming to spotlight companies that are currently drawing strong attention from institutional investors and could deliver strong portfolio returns.
One company highlighted in the recent research is Amphenol Corporation (NYSE: APH), a manufacturer and marketer of electronic and fiber optic interconnect sensors, products, and coaxial and specialty cables. In recent days, APH was upgraded to the Zacks list, following eight analyst earnings estimate revisions that trended higher for the current fiscal year. The company has posted average positive earnings surprises, and its stock price has gained value over the past four weeks, outperforming the broader market. Industry analysts expect APH’s earnings and revenue growth to continue strengthening through the fiscal year, indicating its potential as an attractive addition to investment portfolios.
The Zacks Rank model classifies stocks into five tiers, ranging from "Strong Buy" to "Strong Sell," based on four key factors: analyst agreement, magnitude of estimate changes, upward potential against consensus, and historical surprises. Investors use this ranking as tools for portfolio building, whether saving for retirement, college, or other goals.
Further examples of stocks benefiting from Zacks Rank upgrades include Nutanix (NTNX) and Zoom Video Communications (ZM). As of November 27, 2024, Nutanix received a Zacks Rank #1 (Strong Buy) after analysts increased their fiscal 2025 earnings estimate by $0.03 to $1.44 per share. Nutanix has recorded an average earnings surprise of 48.5%, and its stock rose 7.4% in the last four weeks — more than double the S&P 500’s 3.1% gain over the same period.
On November 30, 2024, Zoom Video Communications was added to the Zacks Rank #1 list. Analysts increased their earnings estimate for the company’s fiscal 2025 by $0.08 to $5.42 per share. Zoom also has a strong history, with an average earnings surprise of 14.3%, and its stock price climbed 5.4% over four weeks, again outperforming the S&P 500’s 1.3% gain.
To enhance investment decisions further, Zacks also provides the Earnings ESP (Expected Surprise Prediction) tool. This instrument compares the Most Accurate Estimate with the Zacks Consensus Estimate to help investors anticipate which companies may deliver positive earnings surprises. Historically, combining a positive Earnings ESP with a Zacks Rank #3 (Hold) or better has led to a positive earnings surprise in about 70% of cases, yielding an average annual return of 28.3% over 10 years.
These systematic and data-driven approaches underscore why the Zacks Rank remains a go-to resource for many investors seeking to identify strong buy opportunities in the modern technology sector. By leveraging tools like the Zacks Rank and Earnings ESP, investors may gain an edge in achieving superior returns compared to broader market benchmarks.