Kevin Matras looks at how to find winning stocks in the winningest sectors. Stocks in this week’s article are Kaman Corporation (NASDAQ: KAMN), FPL Group, Inc. (NYSE: FPL), Alliant Techsystems, Inc. (NYSE: ATK) and CIRCOR, International (NYSE: CIR). Click here for the full story exclusively on Zacks.com: http://at.zacks.com/?id=109
Screen of the Week written by Kevin Matras of Zacks Investment Research:
As we’ve mentioned before, nearly half of a stock’s price movement is tied to the performance of its respective group (Sector and Industry). That being said, most great stocks from great groups often have some great peers as well.
If you find yourself in a killer trade (or wish you were in one), take a look at the characteristics of THAT STOCK and then hunt within its group to find OTHER STOCKS that share the same characteristics. Does a certain outstanding stock exhibit great sales growth? I’m sure there are at least a few within its group that are also showing similar numbers. What about increasing margins? If the stock is doing well, it’s likely that the industry itself is experiencing meaningful increases in margins too.
This type of screening is often called ‘modeling’. Figure out the components of what makes something successful and concentrate on that. If you’re in love with a certain stock or sector, but it’s not doing anything or even moving against you, then move on. If you see great stocks in great groups while you’re stuck in laggards or non-movers, find what stocks are successful and model them.
So therefore, see what characteristics some of the best stocks have in common and try getting on some of those.
Here’s something to start you off.
The top four Sectors based on the percentage of stocks at (or within 10% of) their 52 week highs are listed below:
- Conglomerates -- 54%
- Utilities -- 47%
- Aerospace -- 46%
- Basic Materials -- 40%
Here are a few stocks (one from each of those Top Sectors) for Tuesday, 10/2/07):
|KAMN||Kaman Corp. - Conglomerates|
|FPL||FPL Group, Inc. - Utilities|
|ATK||Alliant Techsystems, Inc. - Aerospace|
|CIR||CIRCOR, International - Basic Materials|
The Research Wizard, you can rank the Industries on whatever item you choose. (Same thing for the Sectors.) Want to find the ‘best’ Industries based on the Zacks Rank? You can. What about the highest ROE or biggest Earnings Estimate Revision? No problem. Whatever items you want to use to rank your Industries can all be done with a few clicks of the mouse. Then, you can even narrow it down to the best stocks within those groups – again, based on whatever criteria you choose.
To search for the best stocks (and Groups) yourself, sign up for your two-week FREE trial to the Research Wizard. Remember the key to successful screening is in discovering those screens that have produced profitable results in the past. That’s exactly what you get with the powerful Screening and Backtesting ability of Research Wizard. You can do it. Learn how, today: http://at.zacks.com/?id=111
Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.
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