You Can Still Buy Industrial And Technology Stocks, But Risk Controls Are Key – Digitalmunition




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Published on August 28th, 2020 📆 | 6244 Views ⚑

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You Can Still Buy Industrial And Technology Stocks, But Risk Controls Are Key

Stocks have a tendency to rally further than anybody thinks, and animal spirits could continue rewarding being long, but rules governing risk control will be key when the music stops, so investors ought to be planning exit strategies now, while the going is good. If they don’t, the risk of reacting emotionally to volatility could lead to whipsaw decision-making and losses.

Everybody’s investment style is different, but investment rules are a common theme among successful investors. Rules vary, but those governing risk control often focus on reducing leverage, shrinking position size, limiting losses, and hedging.

Fear of missing out, or FOMO, increases risk associated with a blow-off top, making hedging tricky. However, eliminating margin, raising cash, and selling second-tier stocks that are benefiting from market forces instead of business tailwinds could be wise.

Weekly, we gauge sentiment by measuring how many stocks are trading more than 5% above the 200-day moving average in our 1,500 stock universe.

Since we began crunching numbers on this measure in 2013, we’ve only eclipsed 50% three times: in January 2018, January 2020, and today. With 55% of our universe trading above this hurdle, pressing bets long could be a mistake.

Source: Top Stocks for Tomorrow.

That said, most investors should maintain long-term exposure to the market, and since up to three-fourths of stocks follow market direction, concentrating on the best stocks in the best sectors and industries can be smart.

Best sectors to buy

Weekly, our best and worst sector and industry ranking helps our members spot baskets under accumulation or distribution. By tracking shifts up and down these rankings, you can make sure you’re “fishing in the right pond” for ideas.

This week, industrials, technology, services, consumer goods, and healthcare are best in large cap. Consumer goods, technology, services, basics, and industrials score highest in mid cap, while the best small cap sectors are technology, basics, industrials, consumer goods, and financials.

Overall, REITs, utilities, and energy stocks score poorly, suggesting it’s best to sit on the sidelines in those groups until they move up in the ranking.

Source: Top Stocks for Tomorrow.

Considering sector strength by market cap can also be helpful for narrowing your hunting ground for new ideas. For instance, the following chart suggests mid cap consumer goods is a better hunting ground than small-cap consumer goods, and small cap REITs offer more opportunity for upside than large-cap REITs.

Source: Top Stocks for Tomorrow.

Top stocks to buy

Our system is objective because it’s quantitatively-driven. We rank every one of the institutional quality stocks in our database using a 7-factor model that’s explained more here. In short, the following factors determine scores:

  • Forward earnings growth expectations,
  • Historical trends in reporting earnings that beat Wall Street estimates,
  • Insider buying,
  • Short-term and long-term institutional money flow,
  • Forward valuation relative to historical valuation,
  • Contra-trend short interest analysis, and
  • Quarterly seasonality over the past decade.

Because stocks tend to follow earnings over time, insiders buy for one reason; money flow reflects institutional sentiment, and seasonal patterns can rhyme, our highest-scoring stocks can be a great source of new ideas.

This week, we shared over 150 top-rated stocks with members, including these 100 high-scoring stocks worth considering for portfolios. For convenience, stocks making the biggest jump up in score from the prior week are highlighted.


Best Scoring8/27/20204 WEEK MA
Company NameSymbolSectorINDUSTRYSCORESCORE
BASIC MATERIALS
Enviva Partners, LP(EVA)BASIC MATERIALSLUMBER & WOOD PRODUCTION105107.50
The Sherwin-Williams Company(SHW)BASIC MATERIALSSPECIALTY CHEMICALS100100.00
The Scotts Miracle-Gro Company(SMG)BASIC MATERIALSAGRICULTURAL INPUTS9593.75
Ferro Corp.(FOE)BASIC MATERIALSSPECIALTY CHEMICALS8582.50
Cleveland-Cliffs Inc.(CLF)BASIC MATERIALSSTEEL8576.25
FMC Corporation(FMC)BASIC MATERIALSAGRICULTURAL INPUTS8081.25
Air Products and Chemicals, Inc.(APD)BASIC MATERIALSCHEMICALS8082.50
Eastman Chemical Company(EMN)BASIC MATERIALSCHEMICALS8076.25
Compass Minerals International, Inc.(CMP)BASIC MATERIALSOTHER INDUSTRIAL METALS & MINING8075.00
PPG Industries, Inc.(PPG)BASIC MATERIALSSPECIALTY CHEMICALS8072.50
CONSUMER GOODS
Wolverine World Wide, Inc.(WWW)CONSUMER GOODSFOOTWEAR & ACCESSORIES110102.50
Simply Good Foods(SMPL)CONSUMER GOODSPACKAGED FOODS110107.50
Fox Factory Holdings(FOXF)CONSUMER GOODSRECREATIONAL VEHICLES105108.75
Constellation Brands, Inc.(STZ)CONSUMER GOODSBEVERAGES10078.75
National Beverage Corp.(FIZZ)CONSUMER GOODSBEVERAGES10098.75
The Procter & Gamble Company(PG)CONSUMER GOODSHOUSEHOLD & PERSONAL PRODUCTS100100.00
Bunge Limited(BG)CONSUMER GOODSFARM PRODUCTS9576.25
Tempur Sealy International, Inc.(TPX)CONSUMER GOODSFURNISHINGS, FIXTURES & APPLIANCES9597.50
Motorcar Parts of America(MPAA)CONSUMER GOODSAUTO PARTS9088.33
Archer-Daniels-Midland Company(ADM)CONSUMER GOODSFARM PRODUCTS9092.50
ENERGY
TC Energy Corporation(TRP)ENERGYOIL & GAS MIDSTREAM10082.50
USA Compression Partners, LP(USAC)ENERGYOIL & GAS EQUIPMENT & SERVICES8560.00
Hess Midstream LP(HESM)ENERGYOIL & GAS MIDSTREAM8082.50
MPLX LP(MPLX)ENERGYOIL & GAS MIDSTREAM8071.25
FINANCIALS
Royal Bank of Canada(RY)FINANCIALSBANKS-DIVERSIFIED10085.00
FactSet Research Systems Inc.(FDS)FINANCIALSFINANCIAL DATA & STOCK EXCHANGES10098.75
Intercontinental Exchange, Inc.(ICE)FINANCIALSFINANCIAL DATA & STOCK EXCHANGES10095.00
Brown & Brown, Inc.(BRO)FINANCIALSINSURANCE BROKERS100102.50
Assurant, Inc.(NYSE:AIZ)FINANCIALSINSURANCE-SPECIALTY10095.00
Mastercard Incorporated(MA)FINANCIALSCREDIT SERVICES9595.00
PayPal Holdings, Inc.(PYPL)FINANCIALSCREDIT SERVICES9593.75
Visa Inc.(V)FINANCIALSCREDIT SERVICES9591.25
Moody’s Corporation(MCO)FINANCIALSFINANCIAL DATA & STOCK EXCHANGES9592.50
MSCI Inc.(MSCI)FINANCIALSFINANCIAL DATA & STOCK EXCHANGES9592.50
HEALTHCARE
Medpace Holdings, Inc.(MEDP)HEALTHCAREDIAGNOSTICS & RESEARCH105107.50
Merck & Co., Inc.(MRK)HEALTHCAREDRUG MANUFACTURERS10081.25
Edwards Lifesciences Corporation(EW)HEALTHCAREMEDICAL DEVICES10097.50
Inspire Medical Systems, Inc.(INSP)HEALTHCAREMEDICAL DEVICES10096.25
LeMaitre Vascular, Inc.(LMAT)HEALTHCAREMEDICAL INSTRUMENTS & SUPPLIES100100.00
DexCom, Inc.(DXCM)HEALTHCAREDIAGNOSTICS & RESEARCH9597.50
Quidel Corporation(QDEL)HEALTHCAREDIAGNOSTICS & RESEARCH9597.50
AbbVie Inc.(ABBV)HEALTHCAREDRUG MANUFACTURERS9585.00
AstraZeneca PLC(AZN)HEALTHCAREDRUG MANUFACTURERS9593.75
Dr. Reddy’s Laboratories Limited(RDY)HEALTHCAREDRUG MANUFACTURERS9597.50
INDUSTRIALS
Arconic(ARNC)INDUSTRIALSSPECIALTY INDUSTRIAL MACHINERY10577.50
Old Dominion Freight Line, Inc.(ODFL)INDUSTRIALSTRUCKING105103.75
Trex Company, Inc.(TREX)INDUSTRIALSBUILDING PRODUCTS & EQUIPMENT10098.75
The Middleby Corporation(MIDD)INDUSTRIALSDIVERSIFIED MACHINERY10095.00
John Bean Technologies Corporation(JBT)INDUSTRIALSDIVERSIFIED MACHINERY10098.75
Republic Services, Inc.(RSG)INDUSTRIALSWASTE MANAGEMENT10091.25
Patrick Industries(PATK)INDUSTRIALSBUILDING PRODUCTS & EQUIPMENT9595.00
Illinois Tool Works Inc.(ITW)INDUSTRIALSDIVERSIFIED MACHINERY9596.25
Deere & Company(DE)INDUSTRIALSFARM & CONSTRUCTION MACHINERY9591.25
SiteOne Landscape Supply(SITE)INDUSTRIALSINDUSTRIAL DISTRIBUTION9597.50
REITS
Prologis, Inc.(PLD)REITSREIT-INDUSTRIAL8586.25
QTS Realty Trust, Inc.(QTS)REITSREIT-INDUSTRIAL8586.25
Iron Mountain Incorporated(IRM)REITSREIT-SPECIALTY8582.50
CoStar Group, Inc.(CSGP)REITSREAL ESTATE SERVICES8078.75
Monmouth Real Estate Investment Corporation(MNR)REITSREIT-INDUSTRIAL8082.50
PennyMac Mortgage Investment Trust(PMT)REITSREIT-MORTGAGE8081.25
Global Net Lease, Inc.(GNL)REITSREIT-OFFICE8077.50
Equinix, Inc. (REIT)(EQIX)REITSREIT-SPECIALTY8082.50
SERVICES
Churchill Downs(CHDN)SERVICESGAMBLING110113.75
CarMax, Inc.(KMX)SERVICESAUTO & TRUCK DEALERSHIPS100100.00
Americas Car Mart(CRMT)SERVICESAUTO & TRUCK DEALERSHIPS100102.50
Group 1 Automotive, Inc.(GPI)SERVICESAUTO & TRUCK DEALERSHIPS100103.75
Booz Allen Hamilton Holding Corporation(BAH)SERVICESCONSULTING SERVICES10095.00
Equifax Inc.(EFX)SERVICESCONSULTING SERVICES100101.25
IHS Markit Ltd.(INFO)SERVICESCONSULTING SERVICES10096.25
Comcast Corporation(CMCSA)SERVICESENTERTAINMENT10098.75
Lowe’s Companies, Inc.(LOW)SERVICESHOME IMPROVEMENT RETAIL100100.00
Medifast, Inc.(MED)SERVICESPERSONAL SERVICES10097.50
TECHNOLOGY
Open Text Corporation(OTEX)TECHNOLOGYSOFTWARE-APPLICATION105102.50
Coupa Software Incorporated(COUP)TECHNOLOGYSOFTWARE-APPLICATION105101.25
Fastly, Inc.(FSLY)TECHNOLOGYSOFTWARE-APPLICATION105102.50
Black Knight, Inc.(BKI)TECHNOLOGYSOFTWARE-INFRASTRUCTURE105103.33
Ubiquiti Inc.(UI)TECHNOLOGYCOMMUNICATION EQUIPMENT10097.50
Lumentum Holdings Inc.(LITE)TECHNOLOGYCOMMUNICATION EQUIPMENT10096.25
NETGEAR, Inc.(NTGR)TECHNOLOGYCOMMUNICATION EQUIPMENT100100.00
Fortive Corp.(FTV)TECHNOLOGYSCIENTIFIC & TECHNICAL INSTRUMENTS100102.50
ANSYS, Inc.(ANSS)TECHNOLOGYSOFTWARE-APPLICATION10096.25
Elastic NV(ESTC)TECHNOLOGYSOFTWARE-APPLICATION10098.75
UTILITIES
Brookfield Renewable Partners L.P.(BEP)UTILITIESUTILITIES-RENEWABLE9592.50
Public Service Enterprise Group Incorporated(PEG)UTILITIESUTILITIES-DIVERSIFIED9087.50
Ameren Corporation(AEE)UTILITIESUTILITIES-REGULATED ELECTRIC9085.00
Brookfield Infrastructure Partners L.P.(BIP)UTILITIESUTILITIES-DIVERSIFIED8566.25
CenterPoint Energy, Inc.(CNP)UTILITIESUTILITIES-REGULATED GAS8578.75
Dominion Energy, Inc.(D)UTILITIESUTILITIES-DIVERSIFIED8081.25


Never miss a money-making idea. Weekly large cap, mid cap, small cap and ADR rankings. Know what sectors, industries, and stocks to buy and when to buy them. Over 400 bps of excess return in the following 52 weeks since 2017. Free trial, special introductory pricing, and you can cancel anytime. Join the conversation. Sign up for Top Stocks For Tomorrow.

Disclosure: I am/we are long MA, PYPL, INSP, DXCM, FSLY, ESTC. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.


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