Medicine Cabinet Stocks Still Attractive

When it comes to high PowerRatings stocks in high PowerRatings industries, investors need look no further than their medicine cabinets these days to see which stocks are more likely than the average stock to be higher a year from now.

The 10-rated Personal Products industry continues to feature stocks with high PowerRatings. Three stocks at the top of the industry group, Colgate-Palmolive (CL@CL | Quote | Chart | News | PowerRating), Kimberly Clark (KMB@KMB | Quote | Chart | News | PowerRating), and Procter & Gamble (PG@PG | Quote | Chart | News | PowerRating), all have PowerRatings of 9. This puts those stocks in that impressive group of stocks which, according to our research, have averaged gains of more than 18% in a year's time.

That these stocks are ones that investors should be paying more attention is no secret to PowerRatings subscribers. We profiled Colgate Palmolive back in January as part of our Featured Stock Spotlight. Procter & Gamble was part of a report on Most Requested stocks this morning.

What makes these three truly stocks to watch out for is the fact that they are in a 10-rated industry. Sticking to high PowerRatings stocks with a 9 or 10 PowerRating and that are in industries with PowerRatings of at least 7 is a good way to build a stock portfolio that will outperform the market. But stocks that are in 10-rated industries deserve special mention.

Why? Because our research into industry group behavior going back to 1995 revealed that industries with a 10 PowerRating produced average annualized returns of more than 35% through 2006. This is more than double the average annualized return of the average industry over the same time period, which was approximately 14.61%.

Let's take a look at the stocks. Since the companies these stocks represent are fairly well-known, let's pay special attention this time around to their PowerRatings Charts and their technical outlook. All of these three stocks have PowerRatings of 9. Our research showed that stocks with PowerRatings of 9 were not only higher one year later more than 79% of the time. These stocks also tended to gain more than 18% after on year on average. The average stock, by comparison, was higher one year later less than 68% of the time, and averaged gains of 12-13% over the same time period.

Colgate-Palmolive's PowerRating has slipped from a 10 to a 9 as the stock moved from the high 70s to the low 70s over the course of January. The stock has recently been bouncing atop its 200-day moving average near $72, where there has been some technical support over the past few weeks.

Kimberly Clark, on the other hand, has seen its PowerRating rise from 8 to 9 over the past few weeks. Trading under its 200-day moving average, the stock has rallied impressively in recent weeks from the low 60s to the mid 60s. The stock's 200-day moving average waits just north of $68.

Procter and Gamble, like Colgate-Palmolive, has seen its PowerRating move lower from a 10 to a 9. Trading in the mid 70s in mid-December, Colgate pulled back to the low 60s by mid January and has since bounded higher to test its 200-day moving average just south of $68.

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