Looking for Construction Stocks? The Zacks Rank Can Help You Find Winners

It doesn't matter if you're a growth, value, income, or momentum-focused investor -- building a successful investment portfolio takes skill, research, and a little bit of luck.But what's the best way to find the right combination of stocks? Because funding things like your retirement, your kids' college tuition, or your short- and long-term savings goals will definitely require significant returns.Enter the Zacks Rank.What is the Zacks Rank?The Zacks Rank, which is a unique, proprietary stock-rating model, employs earnings estimate revisions, or changes to a company's earnings expectations, that makes building a winning portfolio easier.There are four main factors behind the Zacks Rank: Agreement, Magnitude, Upside, and Surprise.Agreement is the extent to which all brokerage analysts are revising their earnings estimates in the same direction. The greater the percentage of analysts revising their estimates higher, the better chance the stock will outperform.Magnitude is the size of the recent change in the consensus estimate for the current and next fiscal years.Upside is the difference between the most accurate estimate, which is calculated by Zacks, and the consensus estimate.Surprise is made up of a company's last few quarters' earnings per share surprises; companies with a positive earnings surprise are more likely to beat expectations in the future.Each one of these factors is given a raw score that's recalculated every night, and then compiled into the Zacks Rank. Using this data, stocks are classified into five groups, ranging from "Strong Buy" to "Strong Sell."The Power of Institutional InvestorsThe Zacks Rank also allows individual investors, or retail investors, to benefit from the power of institutional investors.Institutional investors are the professionals who manage the trillions of dollars invested in mutual funds, investment banks, and hedge funds. Studies have shown that these investors can and do move the market due to the large amounts of money they invest with. Because of this, the market tends to move in the same direction as institutional investors.In order to determine the fair value of a company and its shares, institutional investors design valuation models that focus on earnings and earnings estimates. Because if you raise earnings estimates, it then creates a higher fair value for a company and its stock price.Institutional investors will use these changes to help in their decision-making, typically buying stocks with rising estimates and selling those with falling estimates. Higher earnings expectations can translate into a rise in stock price and bigger gains for the investor.Retail investors who get in at the first sign of upward revisions have a distinct advantage over larger investors since it can often take weeks, if not months, for an institutional investor to build a position. They'll also benefit from the expected institutional buying that could follow.Not only can the Zacks Rank help you take advantage of trends in earnings estimate revisions, but it can also provide a way to get into stocks that are highly sought after by professionals.How to Invest with the Zacks RankThe Zacks Rank is known for transforming investment portfolios. In fact, a portfolio of Zacks Rank #1 (Strong Buy) stocks has beaten the market in 26 of the last 32 years, with an average annual return of +25.41%.Moreover, stocks with a new #1 (Strong Buy) ranking have some of the biggest profit potential, while those that fell to a #4 (Sell) or #5 (Strong Sell) have some of the worst.Let's take a look at Louisiana-Pacific (LPX), which was added to the Zacks Rank #1 list on November 9, 2024.Louisiana-Pacific Corporation or LP is a leading manufacturer of sustainable, quality engineered wood building materials, structural framing products as well as exterior siding for use in residential, industrial and light commercial construction.For fiscal 2024, four analysts revised their earnings estimate upwards in the last 60 days, and the Zacks Consensus Estimate has increased $0.50 to $5.54 per share. LPX boasts an average earnings surprise of 30.7%.Earnings are forecasted to see growth of 72.1% for the current fiscal year, and sales are expected to increase 12.7%.Additionally, LPX has climbed higher over the past four weeks, gaining 21.4%. The S&P 500 is up 3.8% in comparison.Bottom LineWith a #1 (Strong Buy) ranking, positive trend in earnings estimate revisions, and strong market momentum, Louisiana-Pacific should be on investors' shortlist.If you want even more information on the Zacks Ranks, or one of our many other investing strategies, check out the Zacks Education home page.Discover Today's Top StocksOur private Zacks #1 Rank List, based on our quantitative Zacks Rank stock-rating system, has more than doubled the S&P 500 since 1988. Applying the Zacks Rank in your own trading can boost your investing returns on your very next trade. See Today's Zacks #1 Rank List >>7 Best Stocks for the Next 30 DaysJust released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."Since 1988, the full list has beaten the market more than 2X over with an average gain of +24.1% per year. So be sure to give these hand picked 7 your immediate attention. See them now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Louisiana-Pacific Corporation (LPX): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks