When utilities, food and tobacco are among the top sectors, something's not right.
If you need additional evidence, look at the laggards. The bottom third of IBD's 33 sectors include leisure, retail and autos.
Bulls would prefer to see those lineups reversed. Since about 70% of the U.S. economy is linked to consumer spending, strong retail and leisure sectors are helpful. And autos are big-ticket items that ripple through an economy.
Yes, the market is in an uptrend, but it's as if the uptrend is fielding a team of defensive, slow-moving substitutes.
Polaris Industries ( PII ) is a wide-open offensive player. The maker of all-terrain vehicles, motorcycles and snowmobiles is about fun. So far, this market uptrend is about as much fun as paying your electric bill. So, any discussion of Polaris has to begin with the drawbacks:
The market is not favoring the leisure sector right now.
Polaris' Relative Strength line -- which compares its performance to the S&P 500 -- has been in a choppy decline since May
The Accumulation-Distribution Rating is a neutral C in Stock Checkup at Investors.com, which suggests that big money is neither rushing for the exits nor busting down the doors to get in.
Yet, earnings are strong. EPS growth stepped up from 15% to 27% to 44% in recent quarters. Revenue was a steady 26%, 25% and 24% in the same period.
After-tax margin was 8.2%, 8.9% and 9.2% in those three quarters. These margins are near at least four-year highs.
Return on equity, a measure of financial efficiency, was a dazzling 52% last year, which actually is down for the third straight year. However, the company slashed its debt-to-equity ratio from 98% to 21% in 2009-11.
Debt can artificially boost ROE. So, a somewhat lower ROE accompanying a significant reduction in debt is probably a good thing.
The dividend yield is 2%.
Where does this leave investors?
For IBD investors who reap their income from capital appreciation, it would be more encouraging if Polaris' industry group and sector would improve.