PowerRatings Weekly Outlook: KMB, KFT, DIS, CEPH, TMX

Topsy Turvy is a good term to describe the action this week. Dramatic and often counteracting economic news combined with radical swings in companies earning compared to estimates, tossed the market up and then down. Dropping oil prices are acting as buoyancy to a confused economic climate and stock market.

Is there shelter for the investor in this uncertain climate?

Our Long Term Power Ratings have been tested across all market conditions over the last 12 plus years. They have been statistically proven to find solid, likely to appreciate stocks regardless of market climate or economic ambiguity. In fact, stocks that earn the 9 and 10 ratings have proven to have a 79.1 and 81% chance of trading higher one year later across a variety of market conditions.

Retrospectively, stocks earning a 1 or 2 rating have proven to simply be too volatile and risky as prudent long term investments. In fact, 65% of all stocks rated 1 or 2 have lost value one year later.

This week, stocks across the spectrum of sectors were discussed in our Long Term Power Rating Articles. Here are a few of the highlights:

Kimberly Clark (KMB | Quote | Chart | News | PowerRating) has the honor of the highest possible rating. KMB not only has a 10 rating but it reported net sales increase of 11% and increased in every business unit last week. Strong performance in emerging markets is credited with the positive results.

Kraft Food (KFT | Quote | Chart | News | PowerRating) was our featured stock this week. It has a Long Term Power Rating of 9 and has increased 8.7% in value since being added on July 14th. Kraft fits a niche for budget conscious food shoppers which fit perfectly in this economic climate.

Walt Disney (DIS | Quote | Chart | News | PowerRating) is another top rated stock, coming in with a 8 Long Term Power Rating. Its film division is turning out creative and box office successful movies. The company continues to innovate in the entertainment space making it an interesting choice for longer term investment.

Cephalon (CEPH | Quote | Chart | News | PowerRating) a Frazer, Pennsylvania based drug manufacturer moved from a 7 rating to an 8 this week. They specialize in drugs that treat addiction, central nervous system disorders and cancer. Revenues have been growing steadily since 2003 and a respected medical journal recently published a study speaking positively about Cephalon’s drug TREANDA.

Although, Telfonos de Mexico (TMX | Quote | Chart | News | PowerRating), the Mexican telephone company suffered a severe drop in June on net income and revenue declines. It jumped from a 7 rating to an 8 rating this week and several analysts still have buy recommendations on the stock. It appears to be starting a climb back up technically. This one deserves a closer look as the Power Rating upgrade may be signaling further moves up from the lows.

Stocks In The News

Inclone (IMCL | Quote | Chart | News | PowerRating): The stock soared on buy out overtures from Bristol Myers.

General Motors (GM | Quote | Chart | News | PowerRating): Posts $15.5 billion dollar second quarter loss due to economic ills and internal factors.

Chevron (CVX | Quote | Chart | News | PowerRating): Earnings were up this quarter, but the oil company missed analyst’s profit targets.

Cigna (CI | Quote | Chart | News | PowerRating): The insurance company’s 2nd quarter profits soared 37% on higher premiums and fees.

CVS Caremark (CVS | Quote | Chart | News | PowerRating): Announced a 7% increase in 2nd quarter profits.

This Week’s Top Performers

Kraft Foods (KFT | Quote | Chart | News | PowerRating)

Partneere Ltd (PRE | Quote | Chart | News | PowerRating)

Enbridge Energy (EEP | Quote | Chart | News | PowerRating)

This Weeks Worst Performers

General Growth Props (GGP | Quote | Chart | News | PowerRating)

Elizabeth Arden (RDEN | Quote | Chart | News | PowerRating)

BE Aerospace (BEAV | Quote | Chart | News | PowerRating)

What To Watch Next Week

Monday—Personal Income and Factory Orders
Tuesday—Consumer Credit
Wednesday—Initial Claims
Thursday—Wholesale Inventory and Productivity

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