The price action in the stock market has been fast and furious this year as investors have positioned their portfolios for higher inflation. Sector rotation has been on full display, with institutions shifting allocations toward sectors and industries that historically perform better in inflationary periods.
After lagging throughout the latter half of last year, the Basic Materials sector exemplifies this sector rotation as it has vastly outperformed the major indices with a 15.25% year-to-date return. This sector is currently ranked in the top 38% out of all 16 Zacks Ranked Sectors. The Basic Materials sector is displaying some favorable valuation and growth characteristics as illustrated below:
Digging a bit deeper, one particular industry group within this sector that is outperforming is the Zacks Mining – Miscellaneous industry. The group is undervalued (9.83 forward P/E) and is ranked in the top 30% out of approximately 250 Zacks Ranked Industries. Because it is ranked in the top half of all industry groups, we expect this group to outperform the market over the next 3 to 6 months.
Historical research studies have shown that roughly half of a stock’s price movement can be attributed to its industry grouping. In fact, the top 50% of Zacks Ranked Industries outperforms the bottom 50% by a factor of more than 2 to 1. By focusing on the leading stocks within the top 50% of Zacks Ranked Industries, we can dramatically improve our investing success.
Exchange-traded fund (ETF) performance can also serve as a confirmation indicator that supports our investment thesis. The Horizon Kinetics Inflation Beneficiaries ETF (INFL - Free Report) is comprised of domestic and foreign equity securities of companies that are expected to benefit from rising prices of real assets. The stock we will discuss below makes up over 3% of the total INFL holdings.
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
The price action in the stock market has been fast and furious this year as investors have positioned their portfolios for higher inflation. Sector rotation has been on full display, with institutions shifting allocations toward sectors and industries that historically perform better in inflationary periods.
After lagging throughout the latter half of last year, the Basic Materials sector exemplifies this sector rotation as it has vastly outperformed the major indices with a 15.25% year-to-date return. This sector is currently ranked in the top 38% out of all 16 Zacks Ranked Sectors. The Basic Materials sector is displaying some favorable valuation and growth characteristics as illustrated below:
Digging a bit deeper, one particular industry group within this sector that is outperforming is the Zacks Mining – Miscellaneous industry. The group is undervalued (9.83 forward P/E) and is ranked in the top 30% out of approximately 250 Zacks Ranked Industries. Because it is ranked in the top half of all industry groups, we expect this group to outperform the market over the next 3 to 6 months.
Historical research studies have shown that roughly half of a stock’s price movement can be attributed to its industry grouping. In fact, the top 50% of Zacks Ranked Industries outperforms the bottom 50% by a factor of more than 2 to 1. By focusing on the leading stocks within the top 50% of Zacks Ranked Industries, we can dramatically improve our investing success.
Exchange-traded fund (ETF) performance can also serve as a confirmation indicator that supports our investment thesis. The Horizon Kinetics Inflation Beneficiaries ETF (INFL - Free Report) is comprised of domestic and foreign equity securities of companies that are expected to benefit from rising prices of real assets. The stock we will discuss below makes up over 3% of the total INFL holdings.
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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