RSSThe Quant View: Cooler Heads Emerge
By David Brown | October 14, 2008 | 3:29 PM | 0 Comments
Once again, it was all bad news from a sector viewpoint. Financials did the best of the worst, and Energy did really, really bad. Keep in mind, however, that the Energy sector had the biggest stock profits going in so it had a lot more to lose than the rest of the players.
If you’re considering just large-caps (reflected in the weighted returns in the sector table), Industrials did the best last week, but as I’m writing this on Monday, that doesn’t seem to be the case today. Information Technology was the second best, so if you’re a large-cap investor you might consider the big technology stocks.
Best and Worst Performing Sub-Industries
When we get all the way down to sub-industries, Internet Retail did the best by far (down only 5%) and might well be a good hunting ground for bargains. Fertilizers and Agricultural Chemicals – market darlings before the meltdown – didn’t fall as much as other groups and could represent another place to look. And Footwear did very well last week, probably because we’ve all been running as fast as we could to get away from the market.
Forward-looking Sector Rankings
Utilizing our forward-looking sector rankings, you may wish to concentrate your bargain hunting in the Energy, Materials, Industrials, and even Financial sectors. Sectors to avoid would be Health Care, Information Technology, and perhaps Consumer Staples.
Wrapping Up
In all likelihood, the road back will not be smooth. There will probably be a jolt or two (or three or four). But the mood of the day is “cautious optimism.”
In that spirit, I ran a QMAXX search for top Value & Growth scores among Industrials, Energy, and Materials and found the following four stocks right at the top of the list:
National Oilwell Varco (NYSE: NOV) - Energy
BE Aerospace (Nasdaq: BEAV) – Industrials
Terex Corp (NYSE: TEX) – Industrials
Excel Maritime (NYSE: EXM) – Industrials
When I ran this on Monday, the data was still based on Friday’s closing data. Each of these stocks sported top Sabrient Value Scores in the range of 98-100 as well as top Sabrient Growth Scores in the range of 88-100, but horrible Timing scores (meaning that they were severely oversold). On Monday, each of them went up a minimum of 23%!
Content is from the 10/14/08 Trader's Talk newsletter.
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