PowerRatings Weekly Recap: Wall Street Bailout Approved

What an amazing week for traders!  The very core of pure capitalism was challenged with massive Government intervention attempts into the financial sector resulting in wild volatility and dramatic moves.   This was a week that will form life long memories for market participants, enriching some, breaking others, but securing its place in market history forever.  The week began with shocking news that the widely anticipated,  financial rescue plan,  failed to garner enough yes votes in the US House of Representatives.  Tremendous and powerful selling was triggered across the board on this news. 

The markets experienced their greatest single day point loss ever with not even the commodity complex being spared from the carnage.   Turn around Tuesday lived up to its reputation with the market soaring on news that the financial rescue plan was being revived and reworked for another approval attempt.  The Dollar particularly liked this news and combined with fear of increasing economic turmoil in the Euro Zone, climbed the steepest against the Euro since the Euro's inception in 1999.  The market was relatively flat on Wednesday, ending the day slightly down.

News of Warren Buffet buying into General Electric and anticipation concerning the impending evening US Senate vote on the newly minted rescue plan were the primary movers midweek.  Thursday, news that the US Senate approved the revamped bailout plan, was anticlimactic with novel fears of the plan not being adequate to bolster the system.  These fears shared with unemployment soaring to 7 year highs knocked the markets back down.  Stocks are back in strong positive territory Friday morning as the US House prepared to vote on the revamped bailout bill and news of Wells Fargo buying troubled Wachovia Bank, without Federal assistance, lifted the financial sector. 

These are fantastic times to be a trader, but you need a proven tool to properly evaluate stocks for long term investment.    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 PowerRatings 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 Power Rated stocks profiled this week:

Scholastic Corp (SCHL | Quote | Chart | News | PowerRating) The world's largest publisher of children's books and educational material was upgraded from a 5 to a 6 Long Term Power Rating.  Despite a series of disappointing results in the first quarter of fiscal 2009, blamed on a stellar 2008 due to the popular Harry Potter, the stock appears to potentially be bottoming here around the 25 level.  They just announced their first quarterly dividend and are initiating a stock buyback plan. 

Odyssey Re Holdings (ORH | Quote | Chart | News | PowerRating) - A Stamford, Connecticut based reinsurance company that was just upgraded from a 7 to an 8 Long Term Power Rating.  They write specialty insurance policies for esoteric type things such as crops.  There has been a 20% increase in dividends and Net Cash Flow is up substantially over last year.  Most interestingly, they just announced an additional $200 million dollars increase in their share repurchase program.  Technically, the stock has been in a ripping uptrend since mid September, hitting multi year highs.

Johnson and Johnson (JNJ | Quote | Chart | News | PowerRating) - The health care powerhouse holds a 9-rating in a sector rated 9.  They recently announced 8.7% increase in sales and a 12.4% increase in second quarter earnings.  Its been in an uptrend since the start of July, recently pulling back due to market conditions

Diebold (DBD | Quote | Chart | News | PowerRating) - A 7-rated stock that specializes in ATM machines and bank security products.  It was recently downgraded from a 10 rating due to volatility.  They have just announced preliminary second quarter revenue increase of 11% and a year to date increase of 9.3%.  They have raised revenue expectations and reaffirmed operating margin targets for the year.  The company is used by the Bank of China and was chosen as the ATM provider in key facilities for the 2008 Beijing Summer Olympics.  Banco do Brasil has just added 5400 more Diebold ATM machines to its self service fleet, further emphasizing the true international impact of the company. Technically, the stock has pulled back over the last several weeks, but appears to have bottomed around the 31 area in a clear double bottom formation on the daily chart.

Stocks In The News

Here are few stocks that caught my eye from the wires this week

Cal Maine Foods (CALM | Quote | Chart | News | PowerRating) - The egg farming company cracked lower due to high chicken feed costs falling hard.

Dr. Pepper Snapple (DPS | Quote | Chart | News | PowerRating) - I love drinking Snapple and was pleased to see that the company was chosen to replace Wrigleys in the S&P 500.

Apple (AAPL | Quote | Chart | News | PowerRating) Great news that Goldman Sachs stated an earlier sell off was overdone and they expect the company to hit $145.00 in the near future.

General Electric (GE | Quote | Chart | News | PowerRating) - Word of Warren Buffet's planned purchase of $3 billion dollars of preferred stock, and his optimistic proclamation of GE being the symbol of America failed to carry the stock out of negative territory earlier in the week.

`Wells Fargo (WFC | Quote | Chart | News | PowerRating) has moved to acquire Wachovia Bank for $15 billion, angering the previous suitor, Citigroup into moving to block the deal.

American International Group (AIG | Quote | Chart | News | PowerRating) is planning on liquidating assets to repay the US Government's $85 billion dollar bailout loan.

This Weeks Top Performers

Campbell Soup (CPB | Quote | Chart | News | PowerRating)
Hormel Foods (HRL | Quote | Chart | News | PowerRating)
Techne Corp (TECH | Quote | Chart | News | PowerRating)

This Weeks Worst Performers

Extreme Networks (EXTR | Quote | Chart | News | PowerRating)
Ford Motor (F | Quote | Chart | News | PowerRating)

What To Look For Next Week

Tuesday         Consumer Credit, FOMC Minutes
Wednesday    Pending Home Sales, Crude Inventories
Thursday        Initial Claims, Wholesale Inventories
Friday             Export Prices, Trade Balance

Learn what you need to know as an active investor looking to invest in companies with a history of financial strength and a track record for growth. Click the link above or call us at 888-484-8220 extension 1 to get your copy of the "5 Secrets to Successful Stock Investing" today!

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