Martin Marietta Materials stock (NYSE: MLM) increased 26% in the last one month and currently trades near $270 per share. The rise was driven by the management’s decision to increase its quarterly dividend by 4% in the midst of a pandemic. This underscores investors’ confidence in the supplier of aggregates and heavy building materials’ future performance and cash generation capacity. But will the company’s stock continue its upward trajectory over the coming weeks, or is a correction in the stock more likely?
According to the Trefis Machine Learning Engine, which identifies trends in a company’s stock price data for the last 20 years, returns for MLM stock average -4% in the next one-month (21 trading days) period after experiencing a 26% rise over the previous one-month (21 trading days) period. Notably, though, the stock is likely to underperform the S&P500 over the next month, with an expected return which would be almost 3% lower compared to the S&P500.
But how would these numbers change if you are interested in holding MLM stock for a shorter or a longer time period? You can test the answer and many other combinations on the Trefis Machine Learning to test MLM stock chances of a rise after a fall and vice versa. You can test the chance of recovery over different time intervals of a quarter, month, or even just 1 day!
MACHINE LEARNING ENGINE – try it yourself:
IF MLM stock moved by -5% over 5 trading days, THEN over the next 21 trading days, MLM stock moves an average of 1.8 percent, which implies an excess return of 0.6 percent compared to the S&P500.
More importantly, there is 57% probability of a positive return over the next 21 trading days and 49% probability of a positive excess return after a -5% change over 5 trading days.
Some Fun Scenarios, FAQs & Making Sense of MLM Stock Movements:
Question 1: Is the average return for Martin Marietta Materials stock higher after a drop?
Answer:
Consider two situations,
Case 1: Martin Marietta Materials stock drops by -5% or more in a week
Case 2: Martin Marietta Materials stock rises by 5% or more in a week
Is the average return for Martin Marietta Materials stock higher over the subsequent month after Case 1 or Case 2?
MLM stock fares better after Case 2, with an average return of 1.4% over the next month (21 trading days) under Case 1 (where the stock has just suffered a 5% loss over the previous week), versus, an average return of 1.5% for Case 2.
In comparison, the S&P 500 has an average return of 3.1% over the next 21 trading days under Case 1, and an average return of just 0.5% for Case 2 as detailed in our dashboard that details the average return for the S&P 500 after a fall or rise.
Try the Trefis machine learning engine above to see for yourself how Martin Marietta Materials stock is likely to behave after any specific gain or loss over a period.
Question 2: Does patience pay?
Answer:
If you buy and hold Martin Marietta Materials stock, the expectation is over time the near term fluctuations will cancel out, and the long-term positive trend will favor you – at least if the company is otherwise strong.
Overall, according to data and the Trefis machine learning engine’s calculations, patience absolutely pays for most stocks!
For MLM stock, the returns over the next N days after a -5% change over the last 5 trading days is detailed in the table below, along with the returns for the S&P500:
Question 3: What about the average return after a rise if you wait for a while?
Answer:
The average return after a rise is understandably lower than a fall as detailed in the previous question. Interestingly, though, if a stock has gained over the last few days, you would do better to avoid short-term bets for most stocks – although MLM stock appears to be an exception to this general observation.
MLM’s returns over the next N days after a 5% change over the last 5 trading days is detailed in the table below, along with the returns for the S&P500:
It’s pretty powerful to test the trend for yourself for Martin Marietta Materials stock by changing the inputs in the charts above.
What if you’re looking for a more balanced portfolio instead? Here’s a high quality portfolio to beat the market, with over 100% return since 2016, versus 55% for the S&P 500. Comprised of companies with strong revenue growth, healthy profits, lots of cash, and low risk, it has outperformed the broader market year after year, consistently.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
