Why Southwest Airlines (LUV) is a Top Momentum Stock for the Long-Term

Core Insights - Zacks Premium offers various tools to help investors make informed decisions and invest confidently in the stock market [1] - The Zacks Style Scores provide a unique rating system for stocks based on value, growth, and momentum, enhancing the Zacks Rank [2] Zacks Style Scores - Stocks are rated from A to F based on their value, growth, and momentum qualities, with A being the highest score indicating a better chance of outperforming the market [3] - The Value Score focuses on identifying undervalued stocks using financial ratios like P/E, PEG, and Price/Cash Flow [4] - The Growth Score emphasizes a company's financial strength and future outlook, analyzing projected and historical earnings, sales, and cash flow [5] - The Momentum Score helps investors capitalize on price trends by assessing recent price changes and earnings estimate revisions [6] - The VGM Score combines all three Style Scores, providing a comprehensive indicator for selecting stocks with attractive value, growth potential, and momentum [6] Zacks Rank - The Zacks Rank is a proprietary model that utilizes earnings estimate revisions to assist investors in building successful portfolios [7] - Stocks rated 1 (Strong Buy) have historically produced an average annual return of +25.41% since 1988, significantly outperforming the S&P 500 [8] - There are over 800 top-rated stocks available, making it essential for investors to utilize Style Scores to narrow down their choices [9] Investment Strategy - For optimal returns, investors should focus on stocks with a Zacks Rank of 1 or 2 and Style Scores of A or B [10] - Stocks with a 3 (Hold) rank should also have Style Scores of A or B to maximize upside potential [10] - The direction of earnings estimate revisions is crucial when selecting stocks, as a declining forecast can negatively impact share prices [11] Company Spotlight: Southwest Airlines (LUV) - Southwest Airlines, based in Dallas, TX, is a passenger airline operating in the U.S. and ten near-international markets, incorporated in 1967 [12] - LUV currently holds a 3 (Hold) rating on the Zacks Rank, with a VGM Score of A [12] - The stock has a Momentum Style Score of B, with shares increasing by 3.6% over the past four weeks [13] - Analysts have revised LUV's earnings estimate upwards, with the Zacks Consensus Estimate rising by $0.05 to$1.63 per share, and the company has an average earnings surprise of 58.6% [13]