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 it being earnings season, you want every advantage you can
get to give your stocks the highest probability of positively
surprising, and going up.
I've done some testing over the past and found that, often times,
just getting into an average stock in a strong group will
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, this 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
Today, I'm going to focus on just the Zacks Rank. The best Zacks
Rank stocks, on average, nearly triple the market each year. 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.
Remember, the Zacks Rank keys in on earnings estimate revisions and
Stocks that receive upward earnings estimate revisions have a
tendency of receiving even more upward earnings estimate revisions.
Not only does this lead to an increase in price, but this also, in
turn, is great at predicting which companies have a better
possibility of positively surprising.
So the better the average Zacks Rank is for the Sector, the better
the chances that your stocks have a top Zacks Rank with a greater
potential for positively surprising.
And given the difficulty of the market, this is something everyone
can use right now.
The Top 5 Zacks Ranked Sectors
Currently, the top 5 Zacks Ranked sectors are:
1. Transportation -- Average Zacks Rank 2.64
2. Construction -- Average Zacks Rank 2.76
3. Medical -- Average Zacks Rank 2.83
4. Consumer Discretionary -- Average Zacks Rank 2.90
5. Retail-Wholesale -- Average Zacks Rank 2.91
And here are 5 stocks, each from one of the top 5 Zacks Ranked
Textainer Group Holdings Ltd.
Transportation (reports on 8/07/12)
M.D.C. Holdings, Inc.
Construction (reports on 7/31/12)
Natus Medical Inc.
Medical (reports on 7/26/12)
Multimedia Games Holding Co., Inc.
Consumer Discretionary (reports on 7/31/12)
New York & Co., Inc.
Retail-Wholesale (reports on 7/28/12)
All of these stocks are in the top 5 Sectors as defined by the
average Zacks Rank, and they are all set to report earnings within
the next few weeks.
Start picking stocks in the best Sectors and Industries on your own
today. It's easy to do and with the Research Wizard. Start putting
the odds of success in your favor. You can do it.
Learn how today.
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:
NATUS MEDICAL (BABY): Free Stock Analysis
MDC HLDGS (MDC): Free Stock Analysis Report
MULTIMEDIA GAME (MGAM): Free Stock Analysis
NEW YORK & CO (NWY): Free Stock Analysis
TEXTAINER GROUP (TGH): Free Stock Analysis
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