It's rough out there. The market had another wild ride
Wednesday, with the Dow Jones Industrial Average posting nice gains
in the 50- to 60-point range for most of the day before falling off
in late-day trading to close down 69 points, below the
psychologically important 10,000 mark.
It takes a decline of -10% for a market skid to be classified as a
"correction." It seems we've already reached that territory. The
S&P 500 Index is down -12% since April 23, having posted losses
in 14 out of 23 trading days.
With the major averages dropping like stones and investors seeing a
sea of red on their computer screens, it's tempting to think there
aren't any winning stocks out there right now. But that thinking
would be wrong. There are always winners in the market -- it's just
a little harder to find them in a market like this.
Out of all 21,000 actively-traded equities on U.S. exchanges, a
little over 1,500 stocks are up since the market began to fall
through Wednesday's close. That's only 7% of all stocks that are
up, in case you were wondering.
But as the saying goes, there's always a bull market somewhere.
If there's anything we've learned in the past two years since the
onset of the financial crisis, it's that the market can turn south
in a big way at any time. So, in order to be prepared for another
gap down, the StreetAuthority staff set out to find which stocks
held strong in this most recent sell-off. Perhaps some patterns
could be determined that could give us clues to surviving the next
Our methods: We screened for stocks trading on U.S. exchanges with
a market capitalization of more than $250 million that have been
higher since April 23rd. Our result: 233 stocks. Slim pickings, but
it just might do.
Here are the top-20 winners:
Notice any similarities? We did too.
Here is a breakdown of the top five sectors in our results:
Health Care: 36
Information Technology: 36
Consumer Discretionary: 36
Now it might be one thing to see a random name here an there, but
when I see no fewer than four sectors with at least 25 names in our
results, I see a pattern. A few observations:
- The winning streak in health care is obvious. Investors seem
to be flocking to defensive, low-beta sectors to escape the
rancorous volatility we've seen the past month.
- The number of IT names on this list is surprising, especially
considering the tech-heavy Nasdaq is down about -13%. But not
when you consider their size. A lot of these companies have small
market caps. Because of their size, these companies don't do a
lot of business in Europe. Larger tech names that derive a
significant portion of revenue from Europe like
- Consumer discretionary stocks are dong well across the board,
thanks to encouraging signs in consumer confidence and, most
recently, durable goods orders. Interesting fact: 10 out of the
36 names here are in the media sector. Ad spending is ramping up,
so keep these names on your radar.
- 18 out of 25 stocks in the materials group are classified as
"metals/mining" stocks. With the European debt crisis looming and
the euro's future uncertain, gold has enjoyed a surge of interest
among investors, piercing $1,240 per ounce recently. But as I
said recently, gold has been in the midst a 10-year renaissance.
The situation in Europe only enhances what has and will be a good
place to park some cash for the foreseeable future.
Now, we'll take a look at five specific stocks that are up and
see if they can continue their winning ways.
Coinstar (Nasdaq: CSTR)
is one name that has delivered impressive results in the
short-term, but I'd stay away if looking for a long-term,
buy-and-hold investment. Coinstar's kiosk DVD rental business has
been disruptive to video rental chains, but the ultimate disruptive
force, the Internet, will eventually render this a moot point.
Chip-maker Cirrus Logic (Nasdaq: CRUS)
has gained nearly +39% through Wednesday's close after recently
posting impressive results. The chip sector as a whole looks
promising, although a stock like
Applied Materials (Nasdaq: AMAT)
may hold more promise.
You may know
iRobot (Nasdaq: IRBT)
for the company's Roomba robotic vacuum, but there's more to the
company than that. This company makes robots of all shapes and
sizes. As David Sterman price-to-earnings ratio (P/E) , but I think
it may be warranted. The stock still has bright days ahead as
government sales account for about 46% of total revenue, and should
have room to grow in the long-run.
Dollar Thrifty (
has surged +18% amid the market's downturn on buyout rumors from
. Hertz put in the original bid, valued at $940 million, and Avis
is mulling a counteroffer. The shares have surged past the $41 per
share offer, but an actual deal could be difficult to swing in this
Investors have their pick among gold miners that are up, including
U.S. Gold Corp. (
-- up +29%,
Eldorado Gold (
-- up +18%,
Seabridge Gold (
-- +17% and
Allied Nevada (
-- up +13%. But the best play of them all is a little further down
on our list,
. The miner is up +7%, but may be the best long-term gold play on
the market because it has the lowest production costs in the
industry and can still be profitable even if prices drop. (To read
more about why we like Goldcorp, read this and this.)
Disclosure: Brad Briggs does not own shares of any security
mentioned in this article.