This Top Finance Stock is a #1 (Strong Buy): Why It Should Be on Your Radar

Building a successful investment portfolio takes skill and hard work, no matter if you're a growth, value, income, or momentum-focused investor.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?A unique, proprietary stock-rating model, the Zacks Rank uses earnings estimate revisions, or changes to a company's earnings expectations, to help investors create a winning portfolio.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.These four factors are assigned a raw score that's recalculated every night, which is then compiled into the ranking system. Stocks are classified into five groups using this data, 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 responsible for managing the trillions of dollars invested in mutual funds, hedge funds, and investment banks. Research has shown that these investors can and do move the market due to the large amount of money they deal with, and thus, the market tends to move in the same direction as them.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.Because it can take a long time for an institutional investor to build a position -- sometimes weeks, if not months -- retail investors who get in at the first sign of upward revisions have a distinct advantage over these larger investors, and can benefit from the expected institutional buying that will 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 Robinhood Markets, Inc. (HOOD), which was added to the Zacks Rank #1 list on January 2, 2025.Headquartered in Menlo Park, CA, Robinhood Markets Inc. is a financial services company that offers trading services in crypto, stocks, options and ETFs, cash management, margin and securities lending, and Robinhood Gold. The company aims to democratize finance through its commission-free trading model, which was launched in 2013, with no account minimums. The company serves in the United States, U.K., and selected European Union (EU) jurisdictions through its apps and subsidiaries.Four analysts revised their earnings estimate higher in the last 60 days for fiscal 2024, while the Zacks Consensus Estimate has increased $0.17 to $0.91 per share. HOOD also boasts an average earnings surprise of 173.6%.Earnings are forecasted to see growth of 249.2% for the current fiscal year, and sales are expected to increase 53.6%.HOOD has been moving higher over the past four weeks as well, up 25.6% compared to the S&P 500's loss of 0.4%.Bottom LineWith a #1 (Strong Buy) ranking, positive trend in earnings estimate revisions, and strong market momentum, Robinhood Markets, Inc. 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 >>5 Stocks Set to DoubleEach was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2024. While not all picks can be winners, previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>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 Robinhood Markets, Inc. (HOOD): 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