Stocks with a Zacks Rank #1 (Strong Buy) have a high probability of outperforming the market over the next 1-3 months. In fact, since 1986, a portfolio of Zacks Rank 1's has shown an average annual return of 26% per year, which is nearly triple that of the S&P 500.

The example below perfectly illustrates how to trade a Zacks Rank #1 stock, and how to ride the wave of earnings estimate revisions for market beating gains.

Brown Shoe Co. (BWS)

Brown Shoe Company is a small-cap value stock in the Shoes & Related Apparel industry that markets footwear in the United States, Canada and China through their retail stores named Famous Footwear, Naturalizer and Dr. Scholls, to name a few.

On June 29, 2012, BWS received a Zacks Rank #1, distinguishing itself as a stock poised to outperform. Between 6/29/12, when it was trading at $12.91, and 9/21/12, when it closed at $16.11, BWS rewarded investors with a 24.79% gain in less than 3 short months compared to the market's 7.19%.

During that time, their 12 Month Forward Earnings Estimates continuously climbed higher from $1.02 to $1.11, producing a spectacular 433% positive EPS surprise and marking a path for higher prices to follow. In fact, during that entire time, earnings estimates didn't go down once, making for a worry free return.

Rising earnings estimates and rising prices go hand in hand. Simply put, when earnings estimates are going up, the stock should go up as well.

The Zacks Rank makes these stocks easy to find, helping you beat the market quickly and consistently. And your best first alert that a company's outlook is improving is a Zacks #1 Rank.

Click here to find more Zacks Rank #1 stocks.

Disclosure: Performance information for Zacks' portfolios and strategies are available at: http://www.zacks.com/performance.

BROWN SHOE CO (BWS): Free Stock Analysis Report


Zacks Investment Research