Out-of-Step Industries

Sometimes the best investments come from a small group that seems to be bucking the trend of the much larger group that they are a part of. That appears to be the case for the Oil Royalty Trust group. There are eight names in this group, all of which sport Zacks #2 rankings. That puts them in a tie for 4th place among all industries tracked. Meanwhile, the Energy sector is well down the list overall sector rank list.

With royalty trusts, you get high dividends that will vary with the price of oil or natural gas. They don’t do a lot of reinvestment, just pump the oil or gas out of the ground, sell it and pass the proceeds along to the owners. Of course, eventually the wells run dry and with them, so does the stream of income. But they are a very direct play on the price of oil and gas, and you avoid the risk of dry holes.

They are among the best income-generating investments out there, though some of that income is really a return of principal as the wells run dry. Then again, the tax code recognizes that as well.

A few of the names in the group include B.P. Prudhoe Bay (BPT) and Sabine Royalty Trust (SBR), which might be good bets for people looking for high current income and who think that oil prices are likely to head higher as the dollar gets weaker.

At the other end of the spectrum, food stocks are generally very well regarded right now by the Zacks Rank, a big part of the reason that the Consumer Staples sector trails only the very small and analytically incoherent Conglomerates sector. However, there is one glaring exception to this otherwise tasty group, the Meat Processors. With an average rank of 3.67, the industry ranks 199 out of 206 industries tracked. Investors would be well served by looking elsewhere in the food industry right now. Some of the higher ranked alternatives in the food area would include Archer Daniels Midland (ADM), Hershey (HSY) and Del Monte (DLM).

Signs that the housing market might finally be returning from the dead has also boosted the construction sector, and most notably some of the building products fims. Many of these firms were left in the dust not long ago. This led to very low expectations for many in the group, which made it possible for the companies to post massive positive surprises. Some of the more noteworthy firms in this group include Armstrong World (AWI), Masco (MAS) and Owens Corning (OC), all of which sport the coveted Zacks Rank #1.

Sector	This Week's Zacks Rank	Last Week's Zacks Rank	FY09 Revisions Ratio	FY09 Estimates Revised Up	FY09 Estimates Revised Down
Conglomerates	2.62	2.65	5.88	94	16
Consumer Staples	2.70	2.69	5.03	392	78
Construction	2.72	2.73	1.77	149	84
Auto-Tires-Trucks	2.73	2.82	2.10	101	48
Computer and Technology	2.81	2.83	3.91	814	208
Retail-Wholesale	2.82	2.87	3.15	1715	545
Business Services	2.84	2.91	1.99	389	195
Basic Materials	2.97	2.93	1.95	418	214
Consumer Discretionary	3.00	2.95	1.90	969	509
Medical	3.01	2.99	1.85	365	197
Industrial Products	3.04	3.00	1.05	150	143
Utilities	3.05	3.06	1.41	662	468
Oils-Energy	3.05	3.12	1.34	1391	1041
Finance	3.16	3.14	1.66	116	70
Aerospace	3.25	3.30	1.05	266	253
Transportation	3.29	3.36	2.13	175	82

Read the full analyst report on MAS

Read the full analyst report on HSY

Read the full analyst report on DLM

Read the full analyst report on ADM

Read the full analyst report on AWI

Read the full analyst report on OC