Power Ratings Weekly Outlook

Another round of conflicting company and economic news this week tossed the markets severely in both directions. Inflation fears, quickly dropping oil prices, negative consumer sentiment, and record consumer prices lead to a very erratic week. Despite the inherent uncertainty in the financial climate, some stocks performed gallantly in the face of economic adversity. Power Ratings are one way a wise investor can evaluate their portfolio and make crucial buy/sell decisions based on 12 years of statistically valid tests. Our studies clearly indicate that stocks that earn a Long Term Power Rating of 10 have an 81% chance of closing higher one year later. What is most interesting, is that our testing was done across most market conditions and the results were similar. On the other hand, low rated stocks with a 1, 2, or 3 rating have proven to be too volatile and thus contain too much risk for a prudent long term portfolio.

Let's take a look at several stocks we highlighted this week from the Long Term Power Rating proprietary screener.

Coca Cola (KO | Quote | Chart | News | PowerRating) - This soft drink giant was awarded an 8 rating in an industry that garners a 10 Long Term Power Rating. They recently announced a 19% earnings per share increase, sales volume is up, and operating income is up 18%. It's important to note that the 19% earnings increase is due to considering items that impact compatibility. If this was not considered, a loss of 24% follows. Technically, the stock has been in a slight uptrend since the first week in July.

International Flavors and Fragrances (IFF | Quote | Chart | News | PowerRating) - This New York City based 10 rated stock in an industry that also has a 10 rating creates fragrances and flavors for other companies to use in their products. It has had double digit increases in adjusted earnings per share and climbing sales numbers. Technically, the stock seems to be basing around the 40 level.

Baxter International (BAX | Quote | Chart | News | PowerRating) - The medical supply company is clearly outperforming its 6 rated sector with a Power Rating of 9. They have had strong second quarter results and have recently declared a dividend. The stock has been in a slow steady uptrend since March.

HJ Heinz (HNZ | Quote | Chart | News | PowerRating) - The Pittsburgh, PA based, world famous maker of Ketchup and other food products, was just promoted from an 8 to a 9 Long Term Power Rating. It is outpacing its sector that has a rating of 8. In May the company increased its dividends by 9.2% and announced record sales of over $10 billion. Technically, the stock is performing quite well in light of the positive fundamental news. It has been in a steady uptrend since February, 2008 and looks poised for additional gains.

Amgen Inc (AMGN | Quote | Chart | News | PowerRating) - This venerable biotechnology company was upgraded from an 8 to a 9 rating. It is heartily outperforming its sector that has a 7 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, the stock has broken out of a base formed in April, May, and June and a nice uptrend has been in place since July.

Stocks In The News

General Motors (GM | Quote | Chart | News | PowerRating) - This knocked-down auto giant surprised everyone Thursday jumping more than 10% after positive news came through from its restructuring plan.

Ambac Financial (ABK | Quote | Chart | News | PowerRating) - The bond insurer moved higher after the Standard and Poors gave positive comments about the business.

Kohls (KSS | Quote | Chart | News | PowerRating) - The retailer announced less than expected losses for the second quarter

NRG Energy (NRG | Quote | Chart | News | PowerRating) - Warren Buffett just disclosed that he has a stake in Texas's second largest power producer.

Abercrombie & Fitch (ANF | Quote | Chart | News | PowerRating) announced falling second quarter profit on the heals of weak consumer spending.

JC Penny (JCP | Quote | Chart | News | PowerRating) posted second quarter profits exceeding analysts estimates by controlling costs.

Harman International (HAR | Quote | Chart | News | PowerRating) - The high end audio equipment maker reported 11% less fourth quarter profit than estimated.

This Weeks Top Performers

International Flavors & Fragrances (IFF | Quote | Chart | News | PowerRating)
Allete Inc. (ALE | Quote | Chart | News | PowerRating)
Cellcom Israel (CEL | Quote | Chart | News | PowerRating)

This Weeks Worst Performers

Flower Foods (FLO | Quote | Chart | News | PowerRating)
Nuvasive Inc (NUVA | Quote | Chart | News | PowerRating)
Progressive Corp (PGR | Quote | Chart | News | PowerRating)

What To Watch For Next Week

Tuesday - Core PPI, Housing Starts
Wednesday - Crude Inventories
Thursday - Initial Claims, Philadelphia Fed, Leading Indicators

David Goodboy is Vice President of Marketing for a New York City based multi-strategy fund.