Tuesday's trading saw an initial spike as merger activity overcame weak
housing data. But stocks slipped in the afternoon, with metals and energy
leading the way down. Today's industry leaders are a mix of high-tech and
tobacco. Meanwhile, the laggards are dominated by energy and precious metals, a
red flag for inflation hawks.
|
Industry
Leaders |
% Gain |
PowerRating |
|
Cigarettes |
2.2% |
4 |
|
Research Services |
2.0% |
2 |
|
Tobacco Products, Other |
1.6% |
2 |
|
Semiconductor Memory Chips |
1.5% |
5 |
Tobacco Products and Cigarettes are both leading groups on Tuesday. Tobacco
seems to be getting a boost from a shift to defensive stocks as investors fear
higher inflation. Granted, the stocks are benefiting from a ruling expected
later today that could settle a dispute between two major players. But the gains
in tobacco stocks today are spread among all of the industry players, which
suggests that investors are at the macro environment for tobacco stocks, and not
at a ruling that affects a few players.
The Cigarette industry and the Tobacco Products industry both have low
PowerRatings (for Industries). The
results of our
simulated trading show that low-rated industries have underperformed over
the next three months, while industries rated 1 have lost money on an annualized
basis. Investors should think twice before investing in any group on our list of
Industries to Avoid.
Another leader on Tuesday is Semiconductor Memory Chips. The group has been
rebounding since news
last week
that Samsung is holding back inventory from the market. This led to a big rise
in chip prices, which have been under pressure in 2007 due to a capacity glut
(especially for DRAM used in personal computers). Unfortunately, not one of
the five semiconductor industries has an attractive PowerRating (for
Industries). Our quantitative data from 1995 through 2006 have done a good job of
identifying industries that have generated superior annualized returns for a
time horizon of three months. So investors who seek growth and
safety are better off considering our list of
Top Rated
Industries.
Finally, Research Services was a leading group on Thursday. This is driven by
a 1.1% rise in shares of Arbitron Inc. (ARB | news | PowerRating | PR Charts ) This follows a 4% rise
on Monday when Arbitron won a large contract for its portable devices to be used
by a major radio station group. This was followed by a similar announcement on
Tuesday when the radio industry in Denmark also agreed to use this system.
Arbitron has a market cap of $1.5 billion and it measures the audiences of
cable, TV, and radio shows via its joint venture with the Nielsen Co. Arbitron
has a PowerRating (for Investors) of 9.
Rob Martorana is Director of Content for PowerRatings.net.
Rob was most recently at TheStreet.com as the Director of Content for
Professional Products. Robert has spent 22 years on Wall Street, and was a
portfolio manager and head of U.S. equity research at Barclays Private Bank.
Robert also managed small-cap stocks at Schroder Capital Management
International, was an equity analyst at Vontobel USA, and was an editor and
senior industry analyst for The Value Line Investment Survey.
