Six Places to Be
Today's topic is a bit of an extension on this week's Roundtable Review discussion in which we talked about what to do with $100,000 in new cash.
Today I want to drill down and talk about how I would go about finding stocks in each of these sectors.
First, Consumer Staples and Utilities are oftentimes called "defensive" stocks. These stocks are usually solid companies that produce solid earnings.
They're called defensive because these are the kinds of companies that will typically perform better than the market when it's going through a difficult period. The caveat is that they will often underperform during boom times. But boom times we are not in, so these defensive stocks are definitely on the agenda.
As for Oil & Energy stocks, as well as Transportation and Finance – these are not defensive plays.
Oil & Energy – namely exploration and development stocks, will usually do well when the price of energy is on the rise and worldwide demand is increasing.
At the moment, oil and energy are on the decline (or have been lately – down roughly 40% over the last few months) and worldwide demand is slowing down as well.
However, the energy 'crisis' if you will, didn't just disappear. And while oil prices have fallen, as well as the hyper demand we had seen – the fact of the matter is that prices are still high by any historical measure. Furthermore, the appetite for energy continues to increase as time goes by.
Even at $50 and $60 oil (we're at $90 now), there's a tremendous financial incentive for companies to explore and drill.
The recent price plunge has spooked a lot of investors, but not the companies themselves as there's a lot of money to be made at these prices.
Some might call these beaten down groups contrarian plays. I just personally think there's much more value and upside in these groups than is currently priced in the market.
Screen
I’m first screening specifically for the below 6 Sectors:
- Consumer Staples
- Utilities
- Medical
- Finance
- Transportation
- Oil & Energy
And they also must have a positive annual Projected Growth Rate.
Then I narrow it down by looking for the top 10 price performers in each sector over the last 12 weeks.
I now have 60 stocks – 10 from each sector. I'll then do more peer analysis to determine the ones I'm most interested in. But this is a good place to start.
Here are some stocks from a few of those groups.
K - Analyst Report Kellogg Co. -- Consumer Staples
PBT - Snapshot Report Permian Basin Royalty Trust -- Oil & Energy
STBA - Snapshot Report S&T Bancorp -- Finance
SURW - Snapshot Report SureWest Communications -- Utilities
WAB - Snapshot Report Wabtec Corp. -- Transportation
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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.