If you were going to pick a stock to feature as our weekly Stock Spotlight, would a 9-rated stock from a 10-rated industry be something you would be interested in?
Today's Featured Stock Spotlight shines a light on Navteq (NVT | Quote | Chart | News | PowerRating). Navteq is the best stock for investors right now in the Business Software and Services industry group. As I mentioned at the beginning, this industry group has a PowerRating of 10, which makes the Business Software and Services group among the best places in the stock market for investors looking for stocks that are more likely than the average stock to be higher in a year's time.
Consider this: industry groups with PowerRatings of 10, according to our research, have produced average annualized returns of more than 35% since 1995. By comparison, the average industry group produced average annualized returns of approximately 14.61%. This means that the top rated industries, the best of the best, have more than doubled the returns of the average industry.
Navteq Corporation shares the top spot in the Business Software and Services industry group along with high PowerRating stocks such as BEA Systems (BEAS | Quote | Chart | News | PowerRating) and Automated Data Processing (ADP | Quote | Chart | News | PowerRating), both with Long Term PowerRatings of 8. However, with its PowerRating of 9, Navteq Corporation is truly the cream of the Business Software and Services industry crop.
Before looking more specifically at Navteq Corporation, let's understand how important the stock's 9 PowerRating is for investors looking for stocks with a strong--if not overwhelming--likelihood of being higher in a year's time. We looked at thousands and thousands of simulated trades between 1995 and 2007 and found that stocks with PowerRatings of 9 tended to be higher one year later some 79.1% of the time. The average stock, on the other hand, has tended to be higher after one year less than 68% of the time.
In addition to being more reliable, 9-rated stocks have also outperformed the average stock based on our research. Stocks with PowerRatings of 9 tended to gain more than 18% after one year. This performance is all the more impressive compared to the average stock, which tended to gain between 12-13% after one year.
Navteq (NVT | Quote | Chart | News | PowerRating).
Navteq continues to be subject to a planned merger with Nokia. The deal remains stalled due to significant anti-trust concerns in the European Union. Both companies had agreed to the deal back in October 2007, and had anticipated that the merger would be consummated by the first quarter of 2008. The stock recently rallied back above its 200-day moving average to close just north of $72 per share.
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David Penn is Senior Editor at PowerRatings.net.
