PowerRatings Weekly Outlook: PAS, PSD, MMM, UTX, ED

This week's PowerRatings Weekly Outlook includes articles from just the past three days, but there were plenty of stocks both familiar and new that we were able to highlight for active investors and long term traders looking for stocks that are likely to outperform the average stock in a year's time.

All About the Upgrades

When we turned to look at Long Term PowerRatings upgrades this Monday, we pleasantly surprised to see not just five stocks that had entered the high Long Term PowerRating "consider buying" zone, but also five stocks that we had not yet presented to readers, subscribers and investors.

The stocks? Arch Capital Group Ltd. (ACGL@ACGL | Quote | Chart | News | PowerRating), PepsiAmericas Inc. (PAS@PAS | Quote | Chart | News | PowerRating), Puget Energy Inc. (PSD@PSD | Quote | Chart | News | PowerRating), Dionex Corporation (DNEX@DNEX | Quote | Chart | News | PowerRating), and International Flavors and Fragrances (IFF@IFF | Quote | Chart | News | PowerRating). Of the five, three - Arch Capital Group, PepsiAmericas and Puget Energy Inc. - have had their Long Term PowerRatings upgraded one point to 9. The other two stocks have experienced PowerRatings upgrades from 7 to 8.

Click here to read our PowerRating analysis from Monday on the day's top PowerRatings upgrades.

All five stocks have maintained their upgrades since Monday, meaning that all five remain as attractive today as they were then. They also represent an interesting mix of finance/insurance, foods and industrial (i.e., chemical) industry exposure. Unsurprisingly, though, all five stocks come from industry groups that we know the market has favored in recent months as the economy has slowed and growth stocks fallen somewhat out of favor.

The Dow's Best and Brightest

Each week we also take a look at the highest Long Term PowerRatings stocks in the Dow industrials. This has become all the more important as a growing number of analysts and market observers conclude that small cap stocks are likely to underperform larger cap stocks as traders and investors become more risk averse.

This week, I decided to look at five stocks all with Long Term PowerRatings of 8. Stocks with Long Term PowerRatings of 8, remember, have been higher one year later more than 74% of the time according to our research on stock behavior going back to 1995.

Those five stocks were: International Business Machines (IBM@IBM | Quote | Chart | News | PowerRating), Johnson & Johnson (JNJ@JNJ | Quote | Chart | News | PowerRating), Coca-Cola (KO@KO | Quote | Chart | News | PowerRating), 3M (MMM@MMM | Quote | Chart | News | PowerRating), and United Technologies (UTX@UTX | Quote | Chart | News | PowerRating). Click here to read our PowerRatings coverage of top Dow industrials.

All five stocks still have the 8 PowerRatings that they had earlier in the week. Perhaps the most interesting stocks in this group from an investor's perspective are 3M and United Technologies, both of which are relative newcomers to the high Long Term PowerRating, "consider buying" club. Both 3M and United Technologies earned their Long Term PowerRatings of 8 within the past 6-7 days - having spent much if not all of June with Long Term PowerRatings of 7.

Where the Investors Are

What stocks did investors want to know about this week at PowerRatings.net? As I wrote on Wednesday, many of the stocks investors were analyzing were stocks that had been introduced earlier in June and May. These stocks included familiar and now-familiar names like Conslidated Edison (ED@ED | Quote | Chart | News | PowerRating), Clean Harbors (CLHB@CLHB | Quote | Chart | News | PowerRating), and Chervon (CVX@CVX | Quote | Chart | News | PowerRating).

Click here to read our weekly "Best of the Requests" column.

Not only are these all stocks that have been discussed in previous articles - some in previous Weekly Outlook roundups, as well. They all also come from industries that are either favored by our current economic weakness or uncertainty - or industries that have benefited from booming commodity prices, particularly in energy.

And as was the case with the other stocks in today's report, all three of these stocks have the same PowerRatings at week's end that they did on Wednesday. The standout is still Consolidated Edison, which not only has a Long Term PowerRating of 9, but also comes from an industry, Diversified Utilities, which has our highest possible rating for an industry group, a 10. 10-rated industries, based on our research, produced average annualized returns of more than 35% between 1995 and 2007. Compare this to the average annualized returns provided by the average industry group over the same period, which were approximately 14.61%.

Stocks in the News

Headlines this week included a pair of legal rulings against an online retailer and a brick and mortar one, mixed fortunes for financial stocks here and abroad, and evidence the slowing economy is putting pressure on commodity-related stocks.

Sony Ericsson - a joint venture between L.M. Ericsson Telephone ADS (ERIC | Quote | Chart | News | PowerRating) and Sony Corporation (SNE | Quote | Chart | News | PowerRating) - announced that it would likely break even rather than produce a second quarter profit due to slowing cell phone demand.

eBay (EBAY | Quote | Chart | News | PowerRating) lost a French lawsuit over counterfeit luxury items sold through its online auctions. The company was directed to pay more than $63 million in damages.

Lehman Brothers Holdings (LEH | Quote | Chart | News | PowerRating) fell more than 10% on Monday amid rumors that the investment bank may be taken over at a price below market value.

Concerns about the effect of a slowing economy on aluminum demand led Credit Suisse to lower quarterly profit estimates for Alcoa (AA | Quote | Chart | News | PowerRating). The stock was among the leaders to the downside in the Dow.

A Minnesota judge ruled that Wal-Mart (WMT | Quote | Chart | News | PowerRating) violated state employment law with regard to overtime, breaks. The plaintiffs were awarded more than $6 million in compensatory damages.

Starbucks (SBUX | Quote | Chart | News | PowerRating) announced plans to close 600 "underperforming" stores between now and the middle of fiscal 2009.

Announcing no need to raise additional capital, Deutsch Bank AG (DB | Quote | Chart | News | PowerRating) reported that it would show a profit for the second quarter.

What To Look For Next Week

Monday: Conference Board Employment Trends Index
Tuesday: Chain Store Sales / Pending Home Sales Index
Wednesday: None
Thursday: Bank of England Announcement / Jobless Claims
Friday: Consumer Sentiment / Import, Export Prices

Best Performing Stocks (PR 8-10) of the Last Five Days

Here are some of the best performing, high Long Term PowerRatings stocks of the past five days. This week, all of the listed stocks have PowerRatings of 8 or 9.

Unit Corporation (UNT | Quote | Chart | News | PowerRating) Long Term PowerRating 9
MDU Resources Group Inc. (MDU | Quote | Chart | News | PowerRating) Long Term PowerRating 9
Pfizer Inc. (PFE | Quote | Chart | News | PowerRating) Long Term PowerRating 9
Exelon Corporation (EXC | Quote | Chart | News | PowerRating) Long Term PowerRating 8
Bristol-Meyers Squibb Company (BMY | Quote | Chart | News | PowerRating) Long Term PowerRating 8

Worst Performing Stocks (PR 1-3) of the Last Five Days

Here are some of the worst performing, low Long Term PowerRatings stocks of the past five days. This week, all of the listed stocks have PowerRatings of 1 or 2.

Dynamic Materials Corporation (BOOM | Quote | Chart | News | PowerRating) Long Term PowerRating 2
American Eagle Outfitters (AEO | Quote | Chart | News | PowerRating) Long Term PowerRating 2
First Solar Inc. (FSLR | Quote | Chart | News | PowerRating) Long Term PowerRating 2
Healthways Inc. (HWAY | Quote | Chart | News | PowerRating) Long Term PowerRating 2
KB Home (KBH | Quote | Chart | News | PowerRating) Long Term PowerRating 1

David Penn is Senior Editor at PowerRatings.net.