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Stocks took off today after better then expected Consumer Confidence figures hit the news wire. Retailers are surging on the data and tech stocks are following due to an analyst upgrade of Apple.
The market shrugged off bad news from the Case/Shiller National Home Price Index indicating a record collapse of housing prices of 19.1% in the first quarter. Further negative news regarding General Motors is still not enough to dampen the optimism today. Even though I strongly believe that the bulls are back in control, and the evidence seems to offer support, this is a very difficult market.
Proven tools are needed by long term investors to choose stocks most likely to outperform over the longer term. Our Long Term PowerRatings are one such dynamic tool. This tool fills the niche by being built upon 13 years of extensive, statistically valid studies across most market conditions. Our studies indicate that stocks earning a 10 Long Term PowerRatings have an 81% chance of being higher one year later. Those with a 9 rating possess a 79.1% chance of trading higher one year later. Conversely, stocks that are awarded low ratings of 1 or 2 have clearly shown to be simply too volatile and risky for prudent, conservative long term investors. You can clearly see the statistical advantage in building a long term portfolio consisting of 9 and 10 rated stocks, while avoiding the lower ratings. Interestingly, the Long Term PowerRatings are starting to increase across the board signaling the worse may be over.
Here are several Long Term PowerRated stocks from each of the 3 major indexes that may be worth a deeper look:
Johnson & Johnson (JNJ | Quote | Chart | News | PowerRating) - This company remains the highest ranked stock in the DJIA with an 8 Long Term PowerRatings. In April, the major drug maker, announced a 6.5% dividend increase. 1st quarter results indicate declines across the major fundamental metrics. Sales were down 7.2%, negative currency impact of 12.6% and Net Earnings took a 2.5% hit. However, EPS matched last year at $1.26 and the company reconfirmed its earning guidance of $4.45 to $4.55/share for 2009. The CEO, William Weldon, sounded very optimistic about 2009 despite the slightly negative results. Technically, price has burst our above the 50-day SMA and is hitting resistance at $56.00/share. The 200-day SMA is resting at 57.98 and is the next hard technical resistance level.
McDonald's (MCD | Quote | Chart | News | PowerRating) - This international fast food hamburger chain has slipped from a 7 to a 6 Long Term PowerRatings. World wide sales increased 7.1% in January with a stronger increase in Asia. The entire 2008 year was positive for the company with an astounding 58 million customers served per day. A share repurchase deal and plans to open over 1000 new restaurants bodes well for success into 2009. April showed a 6.9% increase in Global Comparative Sales, a good start for this quarter. Technically, shares have exploded higher on the upside, trading above the 50 and 200-day SMA's. Resistance is appearing at $59.00/share presently.
Nasdaq
Teva Pharma (TEVA | Quote | Chart | News | PowerRating) - This stock remains the number one ranked stock in the Nasdaq index with a 7 Long Term PowerRatings. The firm is headquartered in Israel and is the world's largest maker of generic drug products. First quarter 2009 results have been very strong with a 22% increase in Net Sales and a 4% improvement in GAAP income. This is despite negative U.S. Dollar strength adversely effecting sales. Technically, price is above both the 50 and 200-day SMA and has surged higher over the last several days. A double top may be forming at $46.50/sharer daily resistance level.
Cephalon (CEPH | Quote | Chart | News | PowerRating) - A drug company with a 6 Long Term PowerRatings. The firm reported strong sales and profits in the first quarter of 2009. However, they just priced 5 million shares of common stock and announced the exercise of a $65 million over allotment option on convertible notes. Technically, the stock is in a strong downtrend, possibly finding support around the $57.00/area.
S&P 500
Campbells Soup (CPB | Quote | Chart | News | PowerRating) - The number one listed stock in the index with an 8 Long Term PowerRatings. Unfortunately, the fiscal second quarter lagged a bit due to commodity hedging losses, tax adjustments, and currency issues. However, they gave positive guidance into the rest of 2009 with EPS growth expected to be at the high end of 5-7%. Technically, shares have bounced off of the lows in the $24.50 range and have broken resistance at the 50-day SMA continuing the uptrend.
Wyeth (WYE | Quote | Chart | News | PowerRating) - A global pharmaceutical concern earning an 8 Long Term PowerRatings. The first quarter resulted in a net revenue decrease of 6%. However, if one removes the negative foreign exchange impact, they increased by 2%. Strong sales from core product franchises provided the company a great start into 2009. The charts reflect the optimism with shares being in an uptrend since April 27th. The 50-day SMA is above the 200-day SMA at 42.68 and 38.81 respectively. However, resistance appears at the $45.00/share level with 2 failed attempts at breaking through.
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David Goodboy is Vice President of Business Development for a New York City based multi-strategy fund.
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