It's no easy task to find winning stocks, but one way to give
yourself an edge is by starting with IBD's industry group
Why worry about the industry group? Well, IBD's research has
found that roughly half of a stock's move is driven by the
strength of its respective group and its sector.
The rankings, starting today on Page B4 and continuing on B11,
list the top-performing groups over the past six months in terms
of relative price performance.
IBD has divvied up publicly traded companies into 197
different groups. That's hardly chopping up the market in a
coarse fashion. In fact, it's dicing things up rather finely. The
aim is to give readers more detailed insights in order to find
the real market gems.
So instead of looking broadly at the medical sector, you get
separate groups for hospital operators, device manufacturers,
insurers, drugmakers and so on.
Which groups should you focus on? IBD has long advised looking
at the top 20 industries, or maybe the top 40, as you search for
stocks to add to your watch list.
But don't take this to an extreme. If you find a stock that
has many, many stellar qualities, but its group ranking is just
50th, it can be smart to overlook that flaw. Maybe that
particular group is rising fast up the ranks.
In addition, you can use the industry group rankings to help
you steer clear of certain stocks. IBD suggests staying away from
the bottom 20 industry groups.
The table next to this column offers an example of how you
could use the industry group rankings to begin assembling a watch
list of promising stocks. It lists five stocks from top-ranked
Remember that in addition to picking top groups, you want to
focus on the leading stocks within those groups -- which is what
you have with this chart.
Note that each industry group name usually begins with the
sector, followed by a hyphen and a more specific category. So for
professional social networkLinkedIn (
), the industry group is Internet-Content.
Don't forget to look also at how the broad sector is faring.
IBD has divided the market into 33 sectors, and the No. 1 sector
is listed first in the Research Tables, which start today on