PowerRatings Weekly Outlook: GSK, GD, NOC, EW, IBM

This week's PowerRatings Weekly Outlook once again featured both new names and old favorites. In addition to our regular look at stocks that have earned Long Term PowerRatings upgrades and stocks that made our Most Requested PowerRatings list this week, we spotlighted a major - but largely unknown to the general public - health care company and a look at another slate of defense stocks for investors looking to add diversification to their stock portfolios.

Here's to Your Health!

On Monday we looked at two stocks Glaxosmithkline (GSK@GSK | Quote | Chart | News | PowerRating) and Laboratory Corporation of America (LH@LH | Quote | Chart | News | PowerRating). Both of these stocks are involved in the healthcare industry, with Glaxosmithkline being a major drug manufacturer and Laboratory Corporation of America involved in the business of running clinical laboratories and testing facilities for medical professionals.

Both GSK and LH have Long Term PowerRatings of 8. Remember that stocks with Long Term PowerRatings of 8 have been higher one year later more than 74% of the time, according to our research on stock behavior between 1995 and 2007. 8-rated stocks have also tended to gain more than 17% in a year's time.

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

Glaxosmithkline has been moving higher since early June when it established a low just north of $41. Laboratory Corporation of America, for its part, has been moving in the opposite direction over the same time period, falling from just south of $78 in mid-May to its current level just north of $67.

Speaking of medically-related stocks, our Featured Stock Spotlight focused on Edwards Life Sciences (EW@EW | Quote | Chart | News | PowerRating). Edwards Life Sciences is a major player in the medical devices business and is the leading heart valve company in the world. Its focus on cardiovascular disease, Edwards Life Sciences shares top billing in the Medical Appliances and Equipment industry group with 8-rated Medtronic (MDT@MDT | Quote | Chart | News | PowerRating) and Zimmer Holdings (ZMH@ZMH | Quote | Chart | News | PowerRating). Edwards Life Sciences has a Long Term PowerRating of 9.

You can read our Featured Stock Spotlight of Edwards Life Sciences here.

D-FENCE!

We last looked at defense stocks back at the beginning of June, focusing on Lockheed Martin (LMT@LMT | Quote | Chart | News | PowerRating) and General Dynamics (GD@GD | Quote | Chart | News | PowerRating). This week, we took a second look at General Dynamics - which has moved lower by about 10 points since early June - as well as two other companies from the Defense and Aerospace industry: Alliant Techsystems Inc. (ATK@ATK | Quote | Chart | News | PowerRating) and Northrop Grumman (NOC@NOC | Quote | Chart | News | PowerRating).

Alliant Techsystems Inc., Northrop Grumman, and General Dynamics all have Long Term PowerRatings of 8 and come from an industry with an Industry PowerRating of 10. We found that industries with PowerRatings of 10 were among the best places possible for investors to look for stocks. Specifically, our research indicated that 10-rated industries between 1995 and 2007 provided average annualized returns of more than 35%. Compare this to the average industry group, which produced average annualized returns of 14.61% over the same period.

To read "A Trio of Top Defense Stocks for Investors: GD, ATK, NOC" click here.

There has been much discussion in this political season about where the presidential candidates stand on issues of war and peace and, as far as investors are concerned, whether one candidate or the other will be better for defense and aerospace stocks. While there has been debate on both sides, our Long Term PowerRatings suggest that these three defense stocks - at this point - are likely to outperform the average stock regardless of whether the country is welcoming President McCain or President Obama into the White House come January 2009.

Where the Investors Are

This week's snapshot of stocks that investors are researching at PowerRatings.net produced two stocks that have been noted here in recent weeks: International Business Machines (IBM@IBM | Quote | Chart | News | PowerRating) and Consolidated Edison (ED@ED | Quote | Chart | News | PowerRating).

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

But also featured this week was Ameren Corporation (AEE@AEE | Quote | Chart | News | PowerRating) which shares the Diversified Utilities industry group with Consolidated Edison. Ameren Corporation operates a number of rate-regulated and non-rate-regulated electric and gas generation, transmission and distribution businesses.

Like Edwards Life Sciences above, Ameren has a Long Term PowerRating of 9. Our research indicates that stocks with Long Term PowerRatings of 9 have been higher one year later more than 79% of the time. 9-rated stocks have also tended to gain more than 18% after a year's time, compared to 12-13% for the average stock.

Stocks in the News

Headlines this week included good news for retailers - at least in the short term, more concern over the mortgage lending industry, and a number of acquisitions that have moved closer to consummation.

Federal income tax rebates were credited for boosting June sales for retailers such as Wal-Mart (WMT | Quote | Chart | News | PowerRating) and Costco (COST | Quote | Chart | News | PowerRating). Investors were aggressive in taking profits in both stocks, however, which were sharply lower over the final three days of the week.

Speculation that Fannie Mae (FNM | Quote | Chart | News | PowerRating) and Freddie Mac (FRE | Quote | Chart | News | PowerRating) may ultimately need to be bailed out by the Federal government encouraged further selling by investors and traders this week, with both stocks down more than 20% by mid-day on Friday before rebounding.

Dow Chemical (DOW | Quote | Chart | News | PowerRating) made its largest acquisition ever in buying chemical company Rohm & Haas for $18.8 billion - including financing from Berkshire Hathaway and the Kuwait Investment Authority. Dow Chemical continued to move lower over the balance of the week.

Boeing (BA | Quote | Chart | News | PowerRating) will get another shot at the $35 billion tanker deal with the Air Force, according to the Department of Defense. The news did not immediately help shares of Boeing, which stalled late in the week and were lower by 4% on Friday.

U.S. Steel (X | Quote | Chart | News | PowerRating) led steel stocks higher on Wednesday. Steel stocks as a group moved higher after a UBS analyst said the sector was "undervalued." Even with Friday's selling, the stock looked likely to finish the week higher.

Apple Inc. (AAPL | Quote | Chart | News | PowerRating) announced plans to sell its iPhone 3G on Friday July 11th at 8 a.m. across time zones. Shares of Apple were set to finish the week at approximately the same level at which they began the week.

Anheuser-Busch (BUD | Quote | Chart | News | PowerRating) asked a federal judge to block the planned, $43.6 billion takeover by Belgian beermarker, InBev. But, by Friday, the company had resumed talks after InBev agreed to raise its bid. BUD soared by more than 7%.

Microsoft (MSFT | Quote | Chart | News | PowerRating) announced that it would consider reopening its bid for Yahoo! (YHOO | Quote | Chart | News | PowerRating) if the company's board were to be replaced. Both stocks continued to trade lower going into the end of the week.

What To Look For Next Week

Monday: None
Tuesday: Retail Sales / Bank of Canada
Wednesday: Consumer Price Index / Industrial Production / FOMC Minutes
Thursday: Housing Starts / Jobless Claims
Friday: None

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, 9 or 10

Pharmaceutical HOLDRS (PPH@PPH | Quote | Chart | News | PowerRating) Long Term PowerRating 10
Coherent Inc. (COHR@COHR | Quote | Chart | News | PowerRating) Long Term PowerRating 9
Edwards Life Sciences (EW@EW | Quote | Chart | News | PowerRating) Long Term PowerRating 9
International Business Machines (IBM@IBM | Quote | Chart | News | PowerRating) Long Term PowerRating 9
Medtronic Inc. (MDT@MDT | 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.

Hurco Companies Inc. (HURC@HURC | Quote | Chart | News | PowerRating) Long Term PowerRating 2
Lehman Brothers Holdings (LEH@LEH | Quote | Chart | News | PowerRating) Long Term PowerRating 2
NVIDIA Corporation (NVDA@NVDA | Quote | Chart | News | PowerRating) Long Term PowerRating 2
Talbots Inc. (TLB@TLB | Quote | Chart | News | PowerRating) Long Term PowerRating 2
Fannie Mae (FNM@FNM | Quote | Chart | News | PowerRating) Long Term PowerRating 1

David Penn is Senior Editor at PowerRatings.net.