PowerRatings Weekly Recap: LEH, AIG, HRL, SNDK,

Extreme, historic volatility rocked the financial world, once again this week.  The landscape of Wall Street was forever changed with the collapse of Lehman Brothers, government interventions, rumors of massive bank failures, and total international meltdown. 

Monday saw the stock indexes slammed down as investors panicked due to events that occurred Sunday, namely Lehman's Bankruptcy. 

On Tuesday, the Federal Reserve shocked even the most jaded market observer by refusing to lower interest rates to stem the financial crisis.  However, positive sentiment from the Fed stemmed a steep decline prior to the announcement of tremendous injection of $70 billion dollars to absorb the financial crisis.  This lifted the market closing higher on the day. 

Wednesday, investors poured money into hard assets, namely gold, leading to the sharpest rally of all time in the yellow metal.  Stocks were once again slammed down midweek.

Markets roared on Thursday with the announcement of the creation of a government sponsored entity to remove bad loans from banks' balance sheets.  The massive rally continued into Friday morning as news of the bank bailout and the banning of shorting in 799 financial companies spread across the globe.

Chaotic market conditions such as these require a tested and proven method to pick safe, yet likely to appreciate stocks for your long term portfolio. Our Long Term Power Ratings fill this niche by being built upon 12 years of extensive, statistically valid studies across most market conditions.  Our studies indicate that stocks earning a 10 Long Term PowerRating 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, 2, or 3 have proven to simply be 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 closer look at several of the Long Term PowerRated stocks profiled this week:

WW Grainger (GWW | Quote | Chart | News | PowerRating) - This is an unexpected upgrade from the electronic wholesale sector.  It's substantially outperforming its sector rating of 6 with a Long Term PowerRating of 8 now.  Their sales are up 11% over July of last year, and GWW recently announced a joint venture with an Indian based company. 

Technically, the stock is hugging the 50-day Simple Moving
Average and is nicely above the 200-day.

Allete Inc (ALE | Quote | Chart | News | PowerRating) - This Minnesota-based energy and real estate company was just upgraded from an 8 to a 9 Long Term PowerRating.  It's considered part of the diversified utilities sector that has a 10 rating.  They have recently reaffirmed guidance for the rest of 2008, however income is down in the second quarter compared to the same quarter last year.  However, they just signed an agreement to purchase an interstate transmission line for wind power to meet state guidelines for renewable energy percentages.  Technically, the stock bounced nicely off the 50-day Simple Moving Average and is nicely above the 200 day Simple Moving Average.

General Motors (GM | Quote | Chart | News | PowerRating) - This 2-rated auto giant ranks at the lowest Power Rating of the index.  It's a classic example of an uncertain volatile company that prudent, conservative long term investors should avoid.  They are posting massive losses and their future is, simply put, grim.  It's been downtrending since October 2007 and is lagging its industry that has earned a 5-rating.

Hormel Foods (HRL | Quote | Chart | News | PowerRating) is a 9 Long Term PowerRated Minnesota- based company that was formed in 1891 by George Hormel.  It has grown substantially since then, innovating a variety of meat type products; the most famous being Spam.  In 1988, Forbes Magazine named Hormel as the most innovative company of the year.  Then again in 1999, Forbes listed Hormel as one of the top 400 big companies in the world, where it has remained every year since.  The company reported slightly down earnings, in the third quarter, due to higher feed and food costs.  However, Volume is up, Operating Profits are up 19%, and strong guidance was provided by the CEO for the rest of 2008. 

Stocks In The News

Here is a sampling of briefs coming across our wires this week

Lehman Brothers (LEH | Quote | Chart | News | PowerRating) - The once indestructible investment bank was forced into bankruptcy, plummeting into penny stock status.

 American International (AIG | Quote | Chart | News | PowerRating) was given permission to access $20 billion of capital per the New York Governor to free up liquidity.  The market did not appreciate the gesture pushing the stock down.

Take Two Interactive (TTWO | Quote | Chart | News | PowerRating) - Electronic Arts ended takeover talks knocking shares down hard.

Sandisk (SNDK | Quote | Chart | News | PowerRating) rejected a hostile take over attempt by Samsung.

Oracle (ORCL | Quote | Chart | News | PowerRating) beat analysts' projections triggering a nice upmove on Friday.

Palm Inc. (PALM | Quote | Chart | News | PowerRating) posted its fifth straight quarterly loss leading to a sell off of its shares

This Week's Top Performers

DPL Inc. (DPL | Quote | Chart | News | PowerRating)

New Jersey Resources (NJR | Quote | Chart | News | PowerRating)

Everest Group (RE | Quote | Chart | News | PowerRating)

This Week's Worst Performers

Whiting Petroleum (WLL | Quote | Chart | News | PowerRating)

State Street Corp (STT | Quote | Chart | News | PowerRating)

Huntsman (HUN | Quote | Chart | News | PowerRating)

What to Look For Next Week

Wednesday - Existing Homes Sales, Crude Inventories
Thursday  -   Initial Claims, New Home Sales
Friday       -   Michigan Sentiment, Final GDP

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