It's that time again. Every few months, I like running this screen to see which Sectors are considered the best Sectors.
Since roughly half of a stock's price move can be directly attributed to the group that it's in, it's important to stay on top of which groups are the best ones.
And with the brunt of earnings season having just completed, some new groups have found their way on this list.
In my testing, I have found that getting into an average stock in a strong group will oftentimes outperform even the best stocks in a troubled group.
Put the Odds on Your Side
Just because stocks in the best groups have a tendency to outperform doesn't mean you can just pick anything and make money. Far from it. But it illustrates how powerful the underlying group is to the success of your stock picking.
There are several ways you can define the best Sectors or Industries.
Today, I'm going to focus on just the Zacks Rank. The best Zacks Rank stocks, on average, nearly triple the market each year. And a sector or Industry is simply a group of stocks in similar businesses. So looking at the average Zacks Rank for all of the stocks in that group will tell you if that group as a whole is enjoying good times or bad.
Stocks that receive upward earnings estimate revisions have a tendency of receiving even more upward earnings estimate revisions. And that leads to an increase in price.
So the better the average Zacks Rank is for the Sector, the better the chances that your stocks have a top Zacks Rank, and move higher.
And given the uneasiness of the market at these new highs, this is something everyone can use right now.
The Top 5 Zacks Ranked Sectors
Currently, the top 5 Zacks Ranked sectors are:
1) Construction - Average Zacks Rank 2.74
2) Aerospace - Average Zacks Rank 2.81
3) Finance - Average Zacks Rank 2.82
4) Utilities - Average Zacks Rank 2.88
5) Auto/Tires/Trucks - Average Zacks Rank 2.91
And here are 5 stocks, each from one of the top 5 Zacks Ranked sectors:
RYL Ryland Group Inc. - Construction ATK Alliant Techsystems Inc. - Aerospace ( STT - Analyst Report) State Street Corp. - Finance ( IDA - Analyst Report) IdaCorp, Inc. - Utilities ( SMP - Analyst Report) Standard Motor Products Inc. - Auto/Tires/Trucks
All of these stocks are in the top 5 Sectors as defined by the average Zacks Rank, and they all look set to outperform.
Start picking stocks in the best Sectors and Industries on your own today. It's easy to do with the Research Wizard. Start putting the odds of success in your favor.
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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.
Disclosure: Performance information for Zacks portfolios and strategies are available at: https://www.zacks.com/performance.