Investing 101: Stocks that Outperform During Market Downturns

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(By Alexander Crawford. Data sourced from Finviz.)

Given the recent volatility and uncertainty defining the stock market, it can be reassuring to look to the past and find those stocks that outperformed during past market downturns.

Although past performance is no guarantee of future results, stocks that have tended to do well during times of market turmoil may be viewed by the market as “safe havens.” If you think crisis lies ahead, it may serve you well to look for those stocks that weathered past market storms.

We ran the numbers on the three last major market downturns, those between 10/01/2007 and 03/02/2009, 04/19/2010 and 06/28/2010, and 07/18/2011 and 09/18/2011. We ran a screen on those stocks that generated the most “alpha,” or return in excess of the S&P 500 benchmark, during these three downturns.

We then screened these stocks for those seeing the most net insider buying over the last six months.

If you believe that more market turmoil lies ahead, do you think these stocks will prevail? Use this list as a starting-off point for your own analysis.

Analyze These Ideas (Tools Will Open In A New Window)

1. Access a thorough description of all companies mentioned
2. Compare analyst ratings for all stocks mentioned below
3. Visualize annual returns for all stocks mentioned

List sorted by average alpha.

1. Ultralife Corp (ULBI): Offers products and services ranging from portable and standby power solutions to communications and electronics systems. Market cap of $82.05M. Between 10/01/2007 and 03/02/2009: Price changed from $12.56 to $7, a price return of -44.27% (alpha of 10.43%). Between 04/19/2010 to 06/28/2010: Price changed from $4.18 to $4.51, a price return of 7.89% (alpha of 18.16%). Between 07/18/2011 and 09/18/2011: Price changed from $4.73 to $4.95, a price return of 4.65% (alpha of 11.5%). [Average Alpha: 13.37%]. Net insider shares purchased over the last six months at 11.42K, which is 0.10% of the company's 11.20M share float. It's been a rough couple of days for the stock, losing 5.2% over the last week.

2. Superior Uniform Group Inc. (SGC): Manufactures and sells a range of uniforms, corporate identity apparel, career apparel, and accessories in the United States. Market cap of $64.57M. Between 10/01/2007 and 03/02/2009: Price changed from $9.69 to $5.55, a price return of -42.72% (alpha of 11.97%). Between 04/19/2010 to 06/28/2010: Price changed from $8.81 to $9.22, a price return of 4.65% (alpha of 14.92%). Between 07/18/2011 and 09/18/2011: Price changed from $10.75 to $11.29, a price return of 5.02% (alpha of 11.87%). [Average Alpha: 12.92%]. Net insider shares purchased over the last six months at 1.41K, which is 0.04% of the company's 3.27M share float. The stock has gained 18.07% over the last year.

3. Monmouth Real Estate Investment Corp. (MNR): A real estate investment trust. It owns, manages, and leases properties to investment-grade tenants on long-term leases. Market cap of $279.75M. Between 10/01/2007 and 03/02/2009: Price changed from $6.1 to $4.03, a price return of -33.93% (alpha of 20.76%). Between 04/19/2010 to 06/28/2010: Price changed from $6.95 to $6.9, a price return of -0.72% (alpha of 9.55%). Between 07/18/2011 and 09/18/2011: Price changed from $8.13 to $8.15, a price return of 0.25% (alpha of 7.1%). [Average Alpha: 12.47%]. Net insider shares purchased over the last six months at 38.31K, which is 0.11% of the company's 34.10M share float. The stock has gained 11.71% over the last year.

4. Star Gas Partners LP (SGU): Operates as a home heating oil distributor and services provider in the United States. Market cap of $333.91M. Between 10/01/2007 and 03/02/2009: Price changed from $3.81 to $2.11, a price return of -44.62% (alpha of 10.08%). Between 04/19/2010 to 06/28/2010: Price changed from $3.9 to $4.09, a price return of 4.87% (alpha of 15.14%). Between 07/18/2011 and 09/18/2011: Price changed from $5.01 to $4.98, a price return of -0.6% (alpha of 6.25%). [Average Alpha: 10.49%]. Net insider shares purchased over the last six months at 1.20M, which is 2.56% of the company's 46.85M share float. Offers a good dividend, and appears to have good liquidity to back it up--dividend yield at 6.29%, current ratio at 1.88, and quick ratio at 1.5. The stock has gained 12.56% over the last year.

5. Republic Services, Inc. (RSG): Provides nonhazardous solid waste collection, transfer, and disposal services in the United States. Market cap of $10.15B. Between 10/01/2007 and 03/02/2009: Price changed from $30.22 to $17.44, a price return of -42.29% (alpha of 12.41%). Between 04/19/2010 to 06/28/2010: Price changed from $29.32 to $29.9, a price return of 1.98% (alpha of 12.25%). Between 07/18/2011 and 09/18/2011: Price changed from $29.31 to $28.84, a price return of -1.6% (alpha of 5.25%). [Average Alpha: 9.97%]. Net insider shares purchased over the last six months at 1.73M, which is 0.55% of the company's 314.31M share float. The stock is currently stuck in a downtrend, trading 7.34% below its SMA20, 5.94% below its SMA50, and 9.26% below its SMA200. It's been a rough couple of days for the stock, losing 7.13% over the last week.

6. Heartland Financial USA Inc. (HTLF): Provides commercial and retail banking services to businesses and individuals. Market cap of $208.79M. Between 10/01/2007 and 03/02/2009: Price changed from $20.04 to $9.83, a price return of -50.95% (alpha of 3.75%). Between 04/19/2010 to 06/28/2010: Price changed from $16.18 to $17.29, a price return of 6.86% (alpha of 17.13%). Between 07/18/2011 and 09/18/2011: Price changed from $14.81 to $14.79, a price return of -0.14% (alpha of 6.72%). [Average Alpha: 9.2%]. Net insider shares purchased over the last six months at 13.32K, which is 0.12% of the company's 11.07M share float. The stock is currently stuck in a downtrend, trading 9.57% below its SMA20, 13.19% below its SMA50, and 17.59% below its SMA200. It's been a rough couple of days for the stock, losing 11.44% over the last week.

7. ClearOne Communications Inc. (CLRO): Operates as a communications solutions company that develops and sells audio conferencing, collaboration, streaming media, and connectivity systems and other related products for audio, video, and Web applications. Market cap of $45.21M. Between 10/01/2007 and 03/02/2009: Price changed from $7.24 to $3.2, a price return of -55.8% (alpha of -1.1%). Between 04/19/2010 to 06/28/2010: Price changed from $3.1 to $3.02, a price return of -2.58% (alpha of 7.69%). Between 07/18/2011 and 09/18/2011: Price changed from $5.9 to $6.05, a price return of 2.54% (alpha of 9.39%). [Average Alpha: 5.33%]. Net insider shares purchased over the last six months at 6.0K, which is 0.10% of the company's 6.27M share float. The stock is currently stuck in a downtrend, trading 19.13% below its SMA20, 17.97% below its SMA50, and 14.92% below its SMA200. It's been a rough couple of days for the stock, losing 17.25% over the last week.

8. Exar Corp. (EXAR): A fabless semiconductor company, together with its subsidiaries, engages in the design, contract manufacture, and sale of silicon, software, and subsystem solutions for industrial, telecom, networking, and storage applications. Market cap of $266.26M. Between 10/01/2007 and 03/02/2009: Price changed from $13.36 to $5.44, a price return of -59.28% (alpha of -4.58%). Between 04/19/2010 to 06/28/2010: Price changed from $7.57 to $7.09, a price return of -6.34% (alpha of 3.93%). Between 07/18/2011 and 09/18/2011: Price changed from $6.18 to $6.43, a price return of 4.05% (alpha of 10.9%). [Average Alpha: 3.41%]. Net insider shares purchased over the last six months at 2.18M, which is 5.78% of the company's 37.70M share float. The stock has gained 6.44% over the last year.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Investing Ideas , Stocks


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