Southern Copper (SCCO): A Look at Its Momentum Stock Potential

Investors, both experienced and new, often seek ways to navigate the stock market with confidence. One tool that can assist in this journey is the Zacks Premium research service, which offers various features to improve your investment strategy.

This service provides access to daily updates on the Zacks Rank and Zacks Industry Rank, along with a list of top-ranked stocks, extensive equity research reports, and specialized stock screens.

Among the valuable features included in Zacks Premium are the Zacks Style Scores.

Understanding the Zacks Style Scores

The Zacks Style Scores were developed to complement the Zacks Rank, providing additional insights into stock performance. These scores focus on three widely recognized investment strategies: value, growth, and momentum. They are designed to help investors identify stocks that are likely to outperform the market within a 30-day timeframe.

Each stock is rated from A to F based on its characteristics in these three styles. An 'A' is a strong indicator, while an 'F' suggests poor performance potential—essentially, the higher the score, the better the chances a stock has for outperforming its peers.

The Zacks Style Scores consist of four distinct categories:

Value Score

Value investors focus on acquiring stocks at attractive prices, identifying companies trading below their intrinsic worth. The Value Score analyzes financial ratios, such as price-to-earnings (P/E), price-to-sales, and price-to-cash flow, among others, to pinpoint the most appealing investment opportunities.

Growth Score

For growth investors, the focus shifts towards a company's future potential and its overall financial stability. The Growth Score assesses various factors, including historical and projected earnings, sales growth, and cash flow, to identify stocks likely to achieve sustainable growth over time.

Momentum Score

Momentum investors aim to capitalize on existing trends, believing that the direction of a stock’s price or earnings will continue. The Momentum Score employs metrics like short-term price changes and variations in earnings estimates to signal opportune moments to invest in stocks showing upward momentum.

VGM Score

If you prefer a comprehensive strategy that combines all three investment styles, the VGM Score (Value, Growth, Momentum) serves as a valuable tool. It weighs each style score to highlight stocks that present the best opportunities across these different metrics.

How Style Scores Enhance the Zacks Rank

The Zacks Rank itself is a proprietary rating system that uses earnings estimate revisions—changes to a company's earnings outlook—to aid investors in building a successful portfolio. This model has a proven track record; stocks rated as #1 (Strong Buy) have historically returned an average of +25.41% annually since 1988, vastly outperforming the S&P 500.

However, the large number of stocks assessed can make it overwhelming to select the right ones. There are typically over 800 stocks rated #1 or #2 (Buy) available at any time, which can complicate investment decisions.

This is where the Style Scores become a difference maker.

To ensure you make selections with the highest likelihood of success, it's wise to choose stocks that carry a Zacks Rank of #1 or #2, complemented by Style Scores of A or B. If you come across a stock rated #3 (Hold), it should also possess favorable Scores to maximize upside potential.

Particularly, pay close attention to the direction of earnings estimate revisions when deciding which stocks to invest in. Stocks rated #4 (Sell) or #5 (Strong Sell) will be at a disadvantage, even if they hold good Style Scores, as their earnings forecasts are on the decline, increasing the chances that their stock prices may fall.

Thus, building a portfolio with a focus on stocks rated #1 or #2 along with Style Scores of A or B enhances your investment strategy.

Spotlight on Southern Copper (SCCO)

Southern Copper Corporation operates primarily in the mining sector and is based in Phoenix, AZ. The company is involved in the exploration, extraction, smelting, and refining of copper and other minerals, with operations across Argentina, Chile, Ecuador, Mexico, and Peru.

Currently, SCCO holds a Zacks Rank of #3 (Hold) and has a VGM Score of B.

For momentum investors, this stock stands out. It has received an A for its Momentum Style Score, with shares rising by 7% in the past month. In recent months, two analysts raised their earnings estimates for fiscal 2025, pushing the Zacks Consensus Estimate up by $0.08 to $4.63 per share. Additionally, SCCO has shown a commendable average earnings surprise of 7.9%.

With a respectable Zacks Rank, along with impressive Momentum and VGM Style Scores, Southern Copper (SCCO) deserves consideration from investors looking for strong stocks.

stocks, investing, momentum