Zacks Investment Research reports that its model portfolios have delivered varied returns amid a volatile U.S. market characterized by mixed economic signals and shifting interest rate expectations. The firm highlights specific holdings that have outperformed the S&P 500 index during recent periods, citing its rating systems and selection methodologies as the drivers of these results.
The broader economic backdrop presented by Zacks shows consumer prices rising 0.6% in September, with annual headline inflation reaching 3.7% and core inflation at 2.6%. Producer prices increased by 1.3%, while Brent crude prices climbed above $106 per barrel due to Middle East tensions. Despite these pressures, initial jobless claims remained low at 199,000, and retail sales rose 0.8% in September. The Nasdaq Composite fell 4.1% and the S&P 500 dropped 1.9%, whereas the Dow Jones Industrial Average gained 0.29%, indicating a rotation toward traditional blue-chip stocks.
Within this environment, shares of Valero Energy Corporation gained 29.7% since an upgrade to a Zacks Rank #1 (Strong Buy) on August 14, compared to a 1.9% decrease for the S&P 500 over the same period. Paylocity Holding Corporation returned 14.2% following an upgrade to a Zacks Rank #2 (Buy) on August 11. The Zacks #1 Rank portfolio returned 16.9% through October 5, outperforming the S&P 500's 13% gain and the equal-weight index's 8.1% gain.
Zacks also points to its Recommendation system, which targets performance over six to 12 months. Hagerty, Inc. advanced 20% and Talos Energy Inc. gained 14% since their upgrades to Outperform on August 13 and August 11, respectively. The Outperform-rated stocks produced a +14.2% return through October 5, slightly ahead of the S&P 500's +13% return.
In its Focus List portfolio, Palantir Technologies Inc. gained 40.5% over the past 12 weeks after being added to the list on March 26, 2024. Shopify Inc., added in September 2022, returned 37.2% over the same timeframe. The Focus List portfolio returned +13.78% year-to-date through September 30, compared to +12.75% for the S&P 500 index.
Other model portfolios showed different trajectories. Thermo Fisher Scientific Inc., part of the Earnings Certain Admiral Portfolio (ECAP), jumped 29.6% in 12 weeks, though the ECAP portfolio returned -4.7% year-to-date versus the S&P 500's +12.75%. The Earnings Certain Dividend Portfolio (ECDP), which includes Amgen Inc. and The Coca-Cola Company, returned +2.01% year-to-date, lagging the broader market but maintaining a low-beta profile designed to mitigate risk.