Take the Zacks Approach to Beat the Markets: Drilling Tools, Alcoa & Starbucks in Focus

Major U.S. indexes like the Nasdaq Composite, the S&P 500 and the Dow Jones Industrial Average rallied 2.4%, 1.8%, and 1.3%, respectively, during holiday-shortened trading last week. While market performance still reflects resilience, escalating geopolitical tensions and macroeconomic uncertainty are tempering investor sentiment.

Markets began the week with high-stakes geopolitical drama, in which President Donald Trump gave fresh tariff threats to countries opposing his acquisition of Greenland. Geopolitical uncertainty has caused the steepest selloff in nearly three months. However, optimism grew following Trump’s remarks, which suggested a collaborative framework for Greenland during the World Economic Forum at the Davos summit.

Encouraging economic data and easing inflation pressures have also contributed to positive momentum. The U.S. economic momentum accelerated in late 2025, with GDP growth hitting 4.4% in Q3, up from 3.8% in Q2. Inflation remained stable, as the Personal Consumption Expenditures index increased by 0.2% on a monthly basis through November. While the annual rate reached 2.8%, slightly above the Federal Reserve's target, it showed no signs of rapid acceleration. Personal income grew by 0.3% in November, and disposable income rose by $63.7 billion. However, the personal savings rate edged down from 3.7% to 3.5%.

Regardless of market conditions, we, here at Zacks, provide investors with unbiased guidance on how to beat the market. 

As usual, Zacks Research guided investors over the past three months with its time-tested methodologies. Given the prevailing market uncertainty, you may want to look at our forecasts to better prepare for your next action.

Here are some of our key achievements:

Drilling Tools International and Ooma Following Zacks Rank Upgrade

Shares of Drilling Tools International Corporation DTI have gained 56.7% (versus the S&P 500’s 0.9% increase) since it was upgraded to a Zacks Rank #1 (Strong Buy)  on November 12.

Another stock, Ooma, Inc. OOMA, which was upgraded to a Zacks Rank #2 (Buy) on November 17, has returned 6.3% (versus the S&P 500’s 2.5% increase) since then.

An equal-weight portfolio of Zacks Rank # 1 stocks outperformed the equal-weight S&P 500 index by 7 percentage points (+17.81% for the Zacks Rank #1 stocks vs. +10.85% for the index).

This hypothetical equal-weight portfolio returned +22.4% in 2024 vs. +13.7% for the equal-weight S&P 500 index. Over the preceding 10-year period (2016 through 2025), this portfolio of qual-weight Zacks Rank #1 stocks has outperformed the equal-weight S&P 500 index by more than 7 percentage points (+18.55% vs. +11.65%).

You can see the complete list of today’s Zacks Rank #1 stocks here >>>

Check Drilling Tools International's historical EPS and Sales here>>>

Check Ooma’s historical EPS and Sales here>>>

Zacks Recommendation Upgrades Alcoa & Teradata

Shares of Alcoa Corporation AA and Teradata Corporation TDC have advanced 60.7% (versus the S&P 500’s 3% increase) and 10.4% (versus the S&P 500’s 4% increase), respectively, since their Zacks Recommendation was upgraded to Outperform on November 25and November 20, respectively.

While the Zacks Rank is our short-term rating system that is most effective over the one- to three-month holding horizon, the Zacks Recommendation aims to predict performance over the next 6 to 12 months. However, just like the Zacks Rank, the foundation for the Zacks Recommendation is trends in earnings estimate revisions.

The Zacks Recommendation classifies stocks into three groups — Outperform, Neutral and Underperform. While these recommendations are determined quantitatively, our analysts have the flexibility to override them for the 1100+ stocks they closely follow based on their better judgment of factors such as valuation, industry conditions and management effectiveness than the quantitative model.

To access our research reports with Zacks Recommendations for the 1100+ stocks we cover, click here>>>

Zacks Focus List Stocks Huntington Ingalls, Ulta Beauty Shoot Up

Shares of Huntington Ingalls Industries, Inc. HII, which belongs to the Zacks Focus List, have gained 39.6% over the past 12 weeks. The stock was added to the Focus List on May 9, 2016. Another Focus-List holding, Ulta Beauty, Inc. ULTA, which was added to the portfolio on March 25, 2020, has returned 32.5% over the past 12 weeks. The S&P 500 has advanced by 1.7% over this period.

The 50-stock Focus List portfolio returned +22.1% in 2025 vs. +17.9% for the S&P 500 index and +11.4% for the equal-weight version of the index.

The Zacks Focus List portfolio returned +18.41% in 2024 vs. +25.04% for the S&P 500 index and +13% for the equal-weight S&P 500 index. The portfolio had returned +29.54% in 2023 vs. +26.28% for the S&P 500 index and +13.61% for the equal-weight S&P 500 index. In 2022, the portfolio returned -15.2% vs. the S&P 500 index’s -17.96%.

The portfolio has outperformed on a rolling one-year (+22.1% vs. +17.9%) period, for three years (+23.3% vs. +23.01%) and 10 years (+15.5% vs. +14.8%), and since 2004 (+12.1% vs. +10.7%).

Unlock all of our powerful research, tools and analysis, including the Focus List, Zacks #1 Rank List, Equity Research Reports, Zacks Earnings ESP Filter, Premium Screener and more, as part of Zacks Premium. Gain full access now >>

Zacks ECAP Stocks Colgate-Palmolive & Walmart Make Significant Gains

Colgate-Palmolive Company CL, a component of our Earnings Certain Admiral Portfolio (ECAP), has jumped 11.1% over the past 12 weeks. Walmart Inc. WMT has followed Colgate-Palmolive with 10.9% returns.

The Zacks Earnings Certain Admiral Portfolio (ECAP), which consists of 30 concentrated, ultra-defensive, long-term Buy-and-Hold stocks, returned -2.3% in the fourth quarter of 2025 vs. the S&P 500 index’s +2.7% gain (SPY ETF). For 2025 as a whole, the portfolio returned -1.67% vs. +17.9% gain for the S&P 500 index.

For the year 2024, the portfolio returned +16.26% vs. +24.89% for the S&P 500 index (SPY ETF).

In 2023, the portfolio returned +12.17% vs. +26.28% for the S&P 500 index. The portfolio returned -4.7% in 2022 vs. the S&P 500 index’s -17.96%.

With little to no turnover and annual rebalance periodicity, ECAP seeks to minimize capital loss by holding shares of companies whose earnings streams exhibit a proven 20+ year track record of surviving recessionary periods with minimal impact on aggregate earnings growth relative to the overall S&P 500.

The ECAP and many other model portfolios are available as part of Zacks Advisor Tools, a cloud-based solution to access Zacks award-winning stock, mutual fund and ETF research. Click here to schedule a demo.

Zacks ECDP Stocks Starbucks and Johnson & Johnson Outperform Peers

Starbucks Corporation SBUX, which is part of our Earnings Certain Dividend Portfolio (ECDP), has returned 15.6% over the past 12 weeks. Another ECDP stock, Johnson & Johnson JNJ, has increased 13.4% over the same time frame. Of course, the inclination of investors toward quality dividend stocks to secure an income stream amid heightened market volatility contributed to this performance.

Check Starbucks' dividend history here>>>

Check Johnson & Johnson’s dividend history here>>>

With an extremely low beta and a history of minimum earnings variability over the last 20+ years, this 25-stock portfolio helps to significantly mitigate risk.

The Zacks Earnings Certain Dividend Portfolio (ECDP) returned -2.1% in 2025 Q4 vs. the S&P 500 index’s +2.7% gain and the Dividend Aristocrats ETF’s (NOBL) +1.6% return. For 2025, the portfolio returned -0.6% vs. +6.8% gain for the Dividend Aristocrat ETF.

For the full year 2024, the portfolio returned +6.95% vs. +24.89% for the S&P 500 index and +6.72% for NOBL.

The portfolio returned -0.9% in 2023 vs. +26.28% for the S&P 500 index and +8.11% for NOBL. The portfolio returned -2.3% in 2022 vs. -17.96% for the S&P 500 index and -8.34% for NOBL.

Click here to access this portfolio on Zacks Advisor Tools.  

Zacks Top 10 Stock Monolithic Power Systems Delivers Solid Returns

Monolithic Power Systems, Inc. MPWR, from the Zacks Top 10 Stocks for 2026, has jumped 13.6% since the list was released on January 5, 2026, compared with the S&P 500 index’s 0.9% increase during this period.

The Top 10 portfolio returned +22.6% in 2025 vs. +17.9% for the S&P 500 index and +11.4% for the equal-weight version of the index.

The Top 10 portfolio returned +62.98% in 2024, vs. +25.04% for the S&P 500 index and +13% for the equal-weight version of the index. The portfolio had returned +25.15% in 2023 vs. +26.28% for the S&P 500 index.

Since 2012, the Top 10 portfolio has produced a cumulative return of +2,472.7%vs. +561.6% for the S&P 500 index and +403.3% for the equal-weight version of the index. The portfolio has produced an average annual return of +25.8% in the period 2012 through year-end 2025, vs. +13.1% for the S&P 500 index and +10.5% for the equal-weight version of the index.

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This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research