Two of the stocks that made the top of our Long Term PowerRatings upgrades roster today are stocks that may be unfamiliar to many investors. But that should not keep them away from these newly 8-rated stocks--both of which are likely to outperform the average stock.
What does it mean to be a stock with a Long Term PowerRating of 8? Our research, looking into thousands and thousands of simulated stock trades, found that stocks with Long Term PowerRatings of 8 were both more reliable and better performers than the average stock.
Specifically, we found that stocks with Long Term PowerRatings of 8 tended to be higher one year later more than 74% of the time. Compare this to the average stock which, according to our research, has been higher one year later less than 68% of the time.
I have written about this characteristic of stocks with Long Term PowerRatings before, calling it the "reliability" factor. If there is one thing that every active investor or long-term position trader wants in a stock, it is for the stock to be higher a year from when it was purchased. The likelihood that a given stock will be higher in a year's time is what I call the "reliability" factor, the ability of an investor to count on a stock to at least avoid losing him or her significant amounts of money.
Of course, while reliability is important, active investors and long term traders want more out of a stock than for that stock to just be higher. After all, a stock that is higher--but only by a small amount--may end up a worse investment than a bond--particularly when the risk of loss with stock investing is factored in. So while reliability is crucial--arguably it is the starting place for all investment--performance is what matters most to investors and long term traders at the end of the day. Not just stocks that will be higher (as opposed to lower), but rather stocks that are likely to outperform the average stock, and preferably by a healthy margin.
When it comes to performance relative to the average stock, then, we find that stocks with Long Term PowerRatings of 8 have been impressive, as well. Again, based on our historical testing, we found that stocks with Long Term PowerRatings of 8 have tended to be higher, on average, by more than 17% after one year. The average stock, by way of contrast, has tended to be higher one year later between 12-13% of the time.
Again, the advantage goes to the high, Long Term PowerRating stock.
Both of the stocks in today's report have had their Long Term PowerRatings upgraded from an average rating of "7" to a "consider buying" rating of 8. Investors and long term traders who are looking for stocks to add to their portfolio should consider putting both of these names on their watchlists as potential purchases as these stocks pull back and become cheaper in dollar terms.
Genuine Parts (GPC | news | PowerRating | PR Charts ). Long Term PowerRating Upgrade from 7 to 8.
Iron Mountain (IRM | news | PowerRating | PR Charts ). Long Term PowerRating Upgrade from 7 to 8.
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David Penn is Senior Editor at PowerRatings.net.
