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The shortened 4th of July trading week does not appear to be ending on an upbeat patriotic note. Sour job data indicates that the unemployment rate hit a 26 year high of 9.5% pressuring stocks steeply into negative territory during the morning session. Treasuries climbed as oil and metal dropped with fear seeping back into the marketplace.
The week started on a positive note as stocks rallied in support of super swindler Bernie Madoff being put away for 150 years. The next day saw a reversal of fortune as poor consumer confidence figures knocked shares back into the red. Midweek, Wednesday, was the first day of the 3rd quarter and investors greeted it very positively. Stocks soared on an upbeat manufacturing report and positive news from the housing front. The stock market is closed on Friday for the July 4th holiday celebration. Uncertain is a nice word to describe this erratic, ever changing market environment.
Regardless of the surface waves, interestingly, our Long Term PowerRatings are creeping higher across the board in a variety of stocks. This is indeed a positive sign of an improving situation overall in the stock market. The Power Ratings are based on 13 years of extensive, statistically valid studies across most market conditions. Our studies indicate that stocks earning a 10 Long Term PowerRatings have an 81% chance of being higher one year later. Those with a 9 rating possess a 79.1% chance of trading higher one year later. Conversely, stocks that are awarded low ratings of 1 or 2 have clearly shown to be simply too volatile and risky for prudent, conservative long term investors. You can clearly see the statistical advantage in building a long term portfolio consisting of 9 and 10 rated stocks, while avoiding the lower ratings.
Let's take a look at several of the featured PowerRated stocks this week:
Procter & Gamble (PG | Quote | Chart | News | PowerRating) - This leading personal products company is the highest ranked stock on the upgrade list today. It has been upgraded from a 6 to a 7 Long Term PowerRating. CEO A.G. Lafley provided positive outlook for fiscal 2010. Organic sales are expected to grow by 1 to 3%; however growth and net sales are expected to be flat on the year. EPS is expected to be between zero and 4% and the company looks forward to strong investment growth. Technically, the stock has resumed its uptrend after finding intraday support at $47.00/share on June 22nd. Price is now above the 50-day Simple Moving Average but below the 200-day SMA at 55.61.
Charles River Labs (CRL | Quote | Chart | News | PowerRating) - A biotech company who supplies essential products and services to help other firms develop drugs and pharmaceutical products. It has been upgraded from a 5 to a 6 Long Term Power Rating. However the first quarter of 2009 was not kind to the company with an 11% sales decrease and a decrease of 19.4% of earnings. They still provided positive guidance into the rest of 2009 due to a stabilizing demand and pricing. Techincally, shares have been in a ripping uptrend since April 27th. Price is now above the 50 and 200-day SMA which are 29.54 and 31.04 respectively.
Ruddick Corp (RDK | Quote | Chart | News | PowerRating) - A holding company that owns the Harris Teeter grocery stores and American & Efird, an industrial sewing thread company. They have just been upgraded from a 5 to 6 Long Term PowerRating. Sales for the fiscal second quarter increased by 3.5% driven by the Harris Teeter division. Sales declined at the A&E division. Technically, price hit resistance at the 200-day SMA and has been knocked down, finding support at the $23.00/share level. It is trading below both the 200 and 50-day SMA's currently.
Altria Group (MO | Quote | Chart | News | PowerRating) - This so-called purveyor of vice and sin has been awarded a 7 Long Term PowerRating. They are most famous for owning cigarette maker, Phillip Moris, 20 labels of premium wine, and SAB Miller Plc., as well as other tobacco and alcohol related concerns. The first quarter of 2009 was decent with diluted EPS up 5.4% and their cigarette segments income was up over 10%. The company reaffirmed 2009 guidance with an expected growth rate of 3 to 6%. Technically, price has been channeling between $16.20 and $17.20/share. It is tightly between the 50 and 200-day SMA's currently at 16.55 and 16.26, respectively.
Teva Pharmaceuticals (TEVA | Quote | Chart | News | PowerRating) - This Israeli based maker of generic drugs remains the number one ranked stock in the Nasdaq 100. It has earned a 7 Long Term PowerRating. Moody's just upgraded their rating from stable to positive. First quarter results were strong with Net Sales up 22% and Non GAAP Net Income was up 4%. However Non GAAP EPS was down 4% due to the Barr purchase. Technically, shares have been in a ripping uptrend, trading above both the 50 and 200-day SMA's. Price is pushing toward $50.00/share after falling back to near the 50 day SMA.
Wyeth (WYE | Quote | Chart | News | PowerRating) - This major drug maker is the highest ranked stock in the S&P 500 and the entire Long Term PowerRating universe with the highest possible rating of 10. First quarter results were mixed with declining Revenue due to currency exchange but increasing diluted EPS. The second quarter results will be released on July 23rd. Technically, shares are in an uptrend but a double top may be forming around the $45.00 range.
Abbott Laboratories (ABT | Quote | Chart | News | PowerRating) - This major drug maker has earned a 7 Long Term PowerRating. It is the third highest ranked stock in the S&P 500. They just reported a 10.1% increase in worldwide sales, an annual EPS growth of 14.0% and nine new regulatory approvals for 2008. The company reconfirmed a strong outlook for earnings in 2009. They just declared their 342 consecutive quarterly dividend of 40 cents/share. Interestingly, Centocor Ortho Biotech was just awarded a huge $1.67 billion dollar verdict against Abbott Labs in a patent infringement suit. Centocor Ortho Biotech is a wholly owned subsidiary of our PowerRated stock, Johnson & Johnson. Technically, price has been uptrending since May 1st but has hit resistance at $48.00/share where a potential double top has formed.
Stocks In The News:
Here are a few nuggets from the newswire catching my eye:
Starbucks (SBUX | Quote | Chart | News | PowerRating) - This consumer favorite was hit by the falling confidence figures.
Apollo Group (APOL | Quote | Chart | News | PowerRating) - The for profit educator crushed estimates.
Electronic Arts (ERTS | Quote | Chart | News | PowerRating) - Was upgraded to buy at Bank of America.
Geron Group (GERN | Quote | Chart | News | PowerRating) - Reached a stem cell agreement with GE health care .
Constellation Brands (STZ | Quote | Chart | News | PowerRating) - The wine company beat analysts estimates by 1 cent.
General Mills (GIS | Quote | Chart | News | PowerRating) - The cereal giants fourth quarter profit soared 94% due to slower ingredient cost growth.
Yum! Brands (YUM | Quote | Chart | News | PowerRating) - Goldman raised their rating to a buy .
Repros Therapeutics (RPRX | Quote | Chart | News | PowerRating) - downgraded to market perform at Openheimer & Co.
This Week's Top Performers
American Greetings (AM | Quote | Chart | News | PowerRating)
Broadwind Energy (BWEN | Quote | Chart | News | PowerRating)
Spectrum Pharma (SPPI | Quote | Chart | News | PowerRating)
This Week's Worst Performers
Myriad Genetics (MYGN | Quote | Chart | News | PowerRating)
Force Protection (FRPT | Quote | Chart | News | PowerRating)
CardioNet (BEAT | Quote | Chart | News | PowerRating)
What To Expect This Week
Monday: ISM Services
Wednesday: Crude Inventories, Consumer Credit
Thursday: Initial Claims, Wholesale Inventories
Friday: Export/Import Prices, Trade Balance, Sentiment
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David Goodboy is Vice President of Business Development for a New York City based multi-strategy fund.
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