Here’s why Air Transport Services (ATSG) is a high-growth stock
JTaking full advantage of the stock market and investing with confidence are common goals for new and old investors, and Zacks Premium offers many different ways to do both.
The popular research service can help you become a smarter, more confident investor, giving you access to daily updates from the Zacks Ranking and Zacks Industry Ranking, Zacks #1 Ranking List, stock research and premium stock screens.
Zacks Premium also includes access to Zacks Style Scores.
What are Zacks style scores?
Zacks Style Scores are a unique set of guidelines that rate stocks based on three popular investment types and were developed as complementary indicators for the Zacks Ranking. This combination helps investors choose the stocks most likely to beat the market over the next 30 days.
Each stock is assigned a rating of A, B, C, D or F based on its value, growth and momentum characteristics. Just like in school, an A is better than a B, a B is better than a C, etc. This means that the higher the score, the more likely the stock is to outperform.
Style Scores are divided into four categories:
Value investors love finding good stocks at good prices, especially before the broader market realizes a stock’s true value. Using ratios such as P/E, PEG, Price/Sales, Price/Cash Flow and many other multiples, the Value Style Score identifies the most attractive and discounted stocks.
While good value is important, growth-oriented investors focus more on a company’s financial strength and health, as well as its future prospects. The Growth Style Score considers forecasted and historical earnings, sales and cash flow to uncover stocks that will experience sustainable long-term growth.
Aggressive investors, who live by the saying “the trend is your friend”, are more interested in taking advantage of rising or falling trends in a stock’s price or earnings prospects. Using the week-to-week price change and monthly percentage change in earnings estimates, among other factors, the Momentum Style Score can help determine favorable times to buy high-momentum stocks.
If you want a combination of all three style scores, then the VGM score will be your friend. It rates each stock based on their combined weighted styles, helping you find the companies with the most attractive value, the best growth forecasts, and the most promising momentum. It is also one of the best indicators to use with Zacks Rank.
How Style Scores Work with Zacks Ranking
A proprietary stock rating model, Zacks Rank uses the power of earnings estimate revisions, or changes to a company’s earnings outlook, to help investors create a performing portfolio.
Investors can count on the success of Zacks Rank, with #1 stocks (Strong Buy) producing an unmatched average annual return of +25.41% since 1988, more than double the performance of the S&P 500. But the model values a large number of stocks, and there are over 200 companies with a strong buy rank, plus another 600 with a #2 (buy) rank, every day.
But it can seem overwhelming to choose the right stocks for you and your investment goals with over 800 top-rated stocks to choose from.
This is where Style Scores come in.
To have the best chance of big returns, you’ll always want to consider stocks with a Zacks #1 or #2 ranking that also have A or B style scores, which will give you the greatest likelihood of success. If you are looking for stocks with a #3 (Hold) rank, it is important that they also have scores of A or B to ensure the most upside potential.
As mentioned above, the scores are designed to work with the Zacks ranking, so any changes in a company’s earnings outlook should be a deciding factor when deciding which stocks to buy.
Here’s an example: a stock with a rating of #4 (sell) or #5 (strong sell), even one with style scores of A and B, still has a downward earnings outlook, and a higher chance that its share price will also decline.
So the more stocks you have with a rank of #1 or #2 and scores of A or B, the better.
Stock to Watch: Air Transport Services (ATSG)
Air Transport Services Group is one of the world’s leading providers of aircraft leasing, air cargo transportation and related services. Additionally, this Wilmington, OH-based company is the largest cargo aircraft lessor in the world and operates through numerous subsidiaries.
ATSG is a #3 (Hold) on the Zacks rank, with a VGM score of A.
Additionally, the company could be a top pick for growth investors. ATSG has a growth style score of A, forecasting year-over-year earnings growth of 19.3% for the current fiscal year.
For fiscal 2022, two analysts have revised their earnings estimate higher in the past 60 days, and Zacks’ consensus estimate has risen $0.01 to $1.98 per share. The ATSG shows an average surprise profit of 29.8%.
With a strong Zacks ranking and top VGM growth and style scores, ATSG should be on the investor shortlist.
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Air Transport Services Group, Inc (ATSG): Free Inventory Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.