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Last week's stock rally is continuing with strength today. Election day exuberance and falling oil prices add to the positive vibe despite the non stop bad news. It seems any bad news is already priced in and the slightest positive bit of information sends stocks higher.
I believe the bottom is in here for the stock market. However, markets never go straight up, we will have days of rallies punctuated with sharp declines. My opinion is the worst is over and the new bull has begun. Several new and interesting names have hit our Long Term PowerRating screeners today.
For those of you unfamiliar with this critical tool for long term investors, here is a brief synopsis: Long term PowerRatings locate stocks expected outperform across the 3 major indexes. Our studies clearly indicate that stocks with a 9 rating have a 79.1% chance of being higher one year later. Those with a 10 rating have proven to have an 81% chance of trading higher one year later. On the flip side, those stocks that receive only a 2 or 3 rating have proven to be simply too volatile and risky for longer term investment purposes. The statistically valid studies span 12 years in most market conditions making them something every trader should look at prior to choosing stocks for investment. Let's drill down into several names from each of the major stock indexes.
DJIA
McDonald's (MCD | Quote | Chart | News | PowerRating) - This king of burger chains has earned a 5 Long Term PowerRating. The company had a strong third quarter driven by 7.1% global comparable sales growth and a 20% increase in operating income. The price chart shows price hovering right below the 200 day Simple Moving Average and well off its mid October lows.
Johnson & Johnson (JNJ | Quote | Chart | News | PowerRating) - A pharmaceutical power house has the highest rating the DJIA with a 6. Sales have increased 6.4% and EPS climbed 10.4% in the third quarter over last year. Technically, price seems to be stabilizing in the mid $60.00's range.
Nasdaq
Cephalon (CEPH | Quote | Chart | News | PowerRating) - This is the highest rated stock in the Nasdaq index earning a 6 Long Term PowerRating. It has recently announced great results with new drug products. They are maintaining positive guidance for 2008. Price is in a strong uptrend above both the 50 and 200-day simple moving averages. It appears to be getting ready to challenge the 80 level soon. Time will tell.
Amgen Inc (AMGN | Quote | Chart | News | PowerRating) - This Biotech company has been awarded a 5 rating. Earnings have increased by 2% , Revenue by 1% and Full Year Revenue Guidance was raised from $14.2 billion to $14.6-14.9 billion. The CEO stated that the first 6 months of 2008 showed stability and they are very pleased with the outcome of various tests on new drug products. Technically, it has been in a strong uptrend since mid October. It has broken through both the 50 and 200-day simple moving averages and is surging higher.
S&P 500
Abbott Labs (ABT | Quote | Chart | News | PowerRating) - A 6 rated drug stock in the broad based S&P 500 index. They just announced an impressive 17.6% increase in sales, and reiterated their guidance into next year. Price just broke above the 50 day Simple Moving Average and looks to be consolidating in the $55-57.00 area.
CR Bard (BCR | Quote | Chart | News | PowerRating) - Another company in the medical field which earned a 6 Long Term PowerRating. Revenue was up 13% in the third quarter and Net Income was up 9%. Price has been uptrending since mid October and its presently trying to break through the 50-day simple moving average. This is one stock you should be watching closely!
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David Goodboy is Vice President of Marketing for a New York City based multi-strategy fund.
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