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Stocks have been very choppy this week with a surge upward on Tuesday and a smack down on Wednesday of nearly the same magnitude. The strong uptrend that started on March 9th is still in full effect with the Dow Jones Industrial Average trading nicely above the 50-day SMA, although currently channeling between 8200 and 8600.
News is both positive and negative depending on the day, or even the hour. Although I strongly believe the bull market is here to stay, despite the pullbacks, no one really knows for sure. Long term stock traders need proven tools to help them choose stocks that have the best odds of top performance over the longer term.
The Long Term PowerRatings are one such proven tool. For those of you unfamiliar with our Long Term PowerRatings here is a brief overview. High rated stocks have proven to outperform their low rated brethren by a statistically relevant factor. In fact, 9 rated stocks have been proven, via significant testing, to possess a 79.1% chance of being higher one year later. Those with a 10 rating have proven to have an 81% chance of closing higher one year later.
On the other hand, those with a low rating have shown to be simply too volatile, thus risky for the prudent long term investor. These low rated stocks can and do experience extreme price moves that potentially can work for or against you, however the fact remains that this type of volatility is simply too risky for conservative long term investment.
Let's take a closer look at a sampling of the Long Term PowerRatings communities most requested stocks.
Intel (INTC | Quote | Chart | News | PowerRating) - This leading computer chip maker made the most requested list with a 5 Long Term PowerRatings. They were just fined 1.06 billion euros for anti trust violations in the European Union. This action caused fear in some investors of a dividend cut and other negative impact on the firm. However, the company reiterated that it will not cut dividends and is in line for meeting 2009 goals. In fact, showing supreme confidence for the future, CFO Stacy Smith stated, "There is still plenty of cash to pay the fine, invest in our business, and pay the dividend." The release of the ATOM low cost processor also has caused concern for the company's future as it may place downward pressure on the margins due to the low relative price. The CFO put these fears to rest, in addition, by explaining that the ATOM costs less, therefore will not affect margins. Technically, a 50 and 200-day MA crossover appears ready to begin. Price has been uptrending since March 9th and is currently sitting directly in between the 50 and 200-day SMA's which are 15.38 and 15.52 respectively.
Apple (AAPL | Quote | Chart | News | PowerRating) - Another 5 Long Term PowerRated high tech computer company hitting the most requested list today. The first quarter of 2009 was stellar with record revenues and profits. Over 4 million iPhone's and more than 22 million iPod's were sold in the quarter representing 88% and 3% unit growth respectively. On the charts, price surged above both the 200 and 50-day SMA's, however hitting resistance around $135.00/share. Price dropped back to $120.00 where it found support and has since bounced back toward resistance at $135/share.
Hormel Foods (HRL | Quote | Chart | News | PowerRating) - This giant meat products food company is the highest ranked company on the most requested list earning a 6 Long Term PowerRating. They just reported positive fiscal second quarter results with Diluted EPS up 5%, Segment Operating Profit up 2%, even dollar sales, and slightly down volume of 2%. Technically, a strong uptrend has been in effect since April 27th. Shares are trading above both the 50 and 200-day SMA's, however resistance may have been hit at the $35.00/share range.
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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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