If you are looking for stocks that are likely to be higher in a year's time, you may not think about the Nasdaq. But we've found two stocks that may make you think again.
True enough, as far as the Nasdaq is concerned, you are more likely to find excellent candidates for our SHORT term PowerRatings than for our Long Term PowerRatings. This should not be too much of a surprise for those who know, understand and use our PowerRatings.
In the short term, higher volatility is a plus. It is this that allows short term traders to get what "Trader" Vic Sperandeo calls "the middle" of a market's move. The higher the volatility, as our research has confirmed, the more the stock's movement, the more "middle" to be captured in the short term.
However when it comes to longer term holdings, stocks that active investors and position traders will look to buy and hold for 6-12 months, volatility is actually a hindrance to success. Our research into buying and trading stocks as a active investor or position trader proves that stocks with lower volatility actually outperform stocks with higher volatility after a year's time.
So when you combine the typically higher volatility stocks of the Nasdaq with Long Term PowerRatings, you could be forgiven for thinking this might not be a match made in active investing heaven.
But it is a match we have uncovered nonetheless in the form of one stock: Sigma-Aldrich (SIAL | news | PowerRating | PR Charts ). Sigma-Aldrich has a high Long Term PowerRatings of 8, and makes the Nasdaq their home.
As a stock with a Long Term PowerRating of 8, Sigma-Aldrich Corporation belongs to that group of stocks which our research tells us are more reliable than the average stock. 8-rated stocks are also better performers than the average stock in a year's time, as our research further indicated.
We looked at thousands of simulated stock trades between 1995 and 2007. The Long Term PowerRatings, which were among the products of this research, allowed us to rate stocks on a scale of 1 to 10. The lowest rated stocks, those with Long Term PowerRatings of 1, were not only among the worst performing stocks. 1-rated stock actually lost money on a year over year basis, dropping by more than 5% on average in a year's time.
On the other hand, stocks with our highest Long Term PowerRating were impressive performers indeed. 10-rated stocks, according to our research, were not only higher one year later more than 80% of the time. But also stocks with Long Term PowerRatings of 10 gained on average more than 20% after one year.
Sigma-Aldrich has earned Long Term PowerRatings of 8. This puts SIAL in that category of stocks that has been higher one year later more than 74% of the time. And as for performance, we found that 8-rated stocks tended to gain, on average, approximately 17.13% in a year's time.
Sigma-Aldrich (SIAL)
Looking for more long-term solutions to your investing problems? Don't let the volatility of this market lead you to miss out on stocks you'll be glad to have bought a year from now. Click here to get a copy of our special, Free Report on the "5 Secrets to Successful Stock Investing," and learn what you need to know as an active investor looking to invest in companies with a history of financial strength and a track record for growth. Call us at 888-484-8220 to get your copy of the "5 Secrets to Successful Stock Investing" today.
David Penn is Senior Editor at PowerRatings.net.
