With their recent Long Term PowerRatings upgrades, these five stocks have become the kind of stocks that should get more attention from active investors.
Everyone wants to own stocks for the long term. What could be easier than buying a few stocks and holding on to them for the rest of your life as they gradually appreciated in value over five, ten, twenty, thirty years or more?
Unfortunately, stocks rarely cooperate so simply with our long term goals. While it is true that there are few long periods of time when other assets have outperformed stocks in general, things become more complicated when investors seek to invest in individual stocks rather than ETFs like the SPDRs (SPY | news | PowerRating | PR Charts ) or in market indexed mutual funds.
The complication is two-fold: for one, while the stock market as a whole has tended to outperform most other asset groups over longer periods of time, most investors tend to want to outperform the market. This leads to complication number two: in order to outperform the market, active investors must put their money into individual stocks. And by investing in individual stocks, investors risk underperforming the same market they are trying to beat.
So the problem for the active investor who wants to beat the market by investing in stocks for the long term needs a way of picking stocks that are likely to outperform the average stock over long periods of time.
We feel that the market is too complex for investors to be able to expect to make bets on individual stocks and commit to those bets for five or more years regardless of what happens. Instead, we looked at our data and asked: what could we conclude about stock price performance over a year's time? What stocks were more likely to be higher? What sort of gains did different types of stocks make after one year?
The answers to these questions are what we have provided to active investors and long term traders in our Long Term PowerRatings.
Click here to get a copy of our special, Free Report on the "5 Secrets to Successful Stock Investing." This report will show you how to use our Long Term PowerRatings to build a portfolio of winning stocks year after year.
We looked at thousands and thousands of simulated stock trades between 1995 and 2007. As a result, we were able to rate stocks on a scale of 1 to 10. Stocks at the lowest end of the scale, stocks with Long Term PowerRatings of 1, were among the worst performing stocks in the market since 1995. These stocks were higher one year later less than 35% of the time. Compare that to the average stock, which was higher one year later as much as 67% of the time.
At the other end of the spectrum were the highest Long Term PowerRatings stocks. These stocks, stocks with Long Term PowerRatings of 8, 9, or 10, were higher one year later more than 74% of the time.
Because of this, we have encouraged long term traders and active investors to use our Long Term PowerRatings as a screen to help them decide which stocks are suitable for the core of an investment portfolio. By sticking with stocks that have Long Term PowerRatings of 8, 9 or 10--and the higher the better--active investors gain an edge that is backed up by more than a decade of quantified model-testing.
All five stocks in today's Long Term PowerRatings report have just had their Long Term PowerRatings upgraded from 7 to 8. This means that they have just entered the "consider buying" zone of high Long Term PowerRatings stocks, and should be on the watchlists of all active investors and position traders looking for stocks that could appreciate in value over the coming months.
H.J. Heinz (HNZ | news | PowerRating | PR Charts )
Laboratory Corporation of America (LH | news | PowerRating | PR Charts )
Medtronic (MDT | news | PowerRating | PR Charts )
Magellan Health Services (MGLN | news | PowerRating | PR Charts )
W.M. Wrigley Jr. (WWY | news | PowerRating | PR Charts )
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 TradingMarkets.com.
