PowerRatings Weekly Outlook: ABT, PFE, LLY, UHS, ED
In the past few PowerRatings Weekly Outlook columns, we have been talking quite a bit about so-called “recession beater” stocks – stocks of companies that produce goods and services that consumers require and will continue to pay for regardless of how well or how poorly the economy is doing.
Last week, we noted that utilities stocks were often among the most sought after recession beater stocks. This week we reintroduce another set of classic recession beaters: Major Drug Manufacturers.
Unlike many of the hospital stocks that have rallied and fallen back in recent months, the stocks of some of the world’s biggest drug manufacturers have proven an ability to withstand market downturns. This is a testament to the growing role that many of these pharmaceuticals are playing in our lives, as well as the likelihood that such products and services will continue to be important parts of both our health and our modern, post-industrial economy.
If you missed it, click here to read “3 Top Drug Stocks for Investors: ABT, PFE, LLY.”
We highlighted three stocks this week from the Drug Manufacturers industry group – an industry group, by the way, with an impressive Industry PowerRating of 10. Those stocks were Abbott Laboratories [ABT@ABT], Pfizer [PFE@PFE] and Eli Lilly
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PowerRating). All three of those drug stocks has Long Term PowerRatings of 8.
Our research indicates that stocks with Long Term PowerRatings of 8 have been higher one year later more than 74% of the time, compared to less than 68% of the time for the average stock. This same research tells us that 8-rated stocks have also outperformed the average stock after one year, averaging gains of more than 17% in a year’s time compared to 12-13% for the average stock. These results are based on our historical testing of thousands and thousands of stocks between 1995 and 2007.
Although not a drug stock, even the stock we chose for our Featured Stock Spotlight has a medical/health-related angle to it. Universal Health Services [UHS@UHS] has a Long Term PowerRating of 9 and, moreover, comes from an industry group with a top Industry PowerRating of 10.
Universal Health Services is in the business of operating and maintaining a variety of health care facilities, from acute care hospitals to ambulatory surgery centers. With its Long Term PowerRating of 9, the stock belongs to that class of stocks that our research says tends to be higher one year later more than 79% of the time. 9-rated stocks are also superior performers after one year, averaging gains of more than 18% in our historical testing.
Click here to read our Featured Stock Spotlight: Universal Health Services
PowerRatings and Power Companies
When it came time to take a look at the stocks that investors were seeking more information about, it appears that more and more investors are turning toward the potential opportunities in the utilities sector. Of the highest rated stocks in our Most Requested listing, both Consolidated Edison [ED@ED] and Great Plains Energy Inc. [GXP@GXP] were the two we featured in our weekly Best of the Requests column.
Consolidated Edison and Great Plains Energy are both utilities stocks, with Con Ed being a part of the Diversified Utilities industry and Great Plains Energy being included among the stocks of the Electric Utilities industry group. Both stocks have Long Term PowerRatings of 9 and both industries – Diversified and Electric Utilities – have earned our highest PowerRating of 10.
Industries with PowerRatings of 10, it should be mentioned, are among the best places for active investors to look for stocks. We found that, of all the industry groups we studied between 1995 and 2007, those with PowerRatings of 10 produced average annualized gains of more than 35%. This is more than double the performance of the average industry group over the same time period.
Read our PowerRatings coverage of both Consolidated Edison and Great Plains Energy here.
An interesting surprise among the stocks that investors were interested in this week came in the form of a 1-rated stock, Ameron International Corporation [AMN@AMN]. Now, as a stock with a Long Term PowerRating of 1, AMN is not something we would encourage investors to put their money in. However, this stock happens to be the worst stock in an industry, General Building Materials, with a PowerRating of 9. Seeing this, I wondered if there might be a better stock in the group than Ameron International and found MDU Resources Group [MDU@MDU]. MDU Resources Group has a Long Term PowerRating of 8 and actually sits at the top of this 9-rated industry.
Stocks in the News
Stocks making headlines this week included more good news from chip makers, more deal-making in the Internet and beer brewing spaces, and word of additional subprime mortgage related losses from one of the world’s top banks.
Strong sales of BlackBerry and iPhone devices helped bolster the bottom line of Marvell Technologies Group
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PowerRating) which saw its stock skyrocket by more than 20% in trading early on Friday.
Shares of Mastercard Inc.
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Countrywide Financial
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The continued high cost of petroleum-based fertilizers contributed to the decision this week by Dow Chemical
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Will Barry Diller take Expedia
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Shares of UBS AG
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News that Netherlands beer maker InBev NV was interested in buying American brewer Anheuser-Busch
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What To Look For Next Week
Monday: Construction Spending / ISM Manufacturing Index
Tuesday: Factory Orders
Wednesday: ADP Employment Report / ISM Non-Manufacturing Index
Thursday: Chain Store Sales / BofE, ECB Announcements / Jobless Claims
Friday: Consumer Credit / Wholesale Trade
Best Performing Stocks (PR 8-10) of the Last Five Days
Here are some of the best performing, high Long Term PowerRatings stocks of the past five days. This week, all of the listed stocks have PowerRatings of 8.
H.J. Heinz Company [HNZ@HNZ] Long Term PowerRating 8
International Business Machines [IBM@IBM] Long Term PowerRating 8
Clean Harbors Inc. [CLHB@CLHB] Long Term PowerRating 8
MDU Resources Group [MDU@MDU] Long Term PowerRating 8
Union Pacific Corporation [UNP@UNP] Long Term PowerRating 8
Worst Performing Stocks (PR 1-3) of the Last Five Days
Here are some of the worst performing, low Long Term PowerRatings stocks of the past five days. This week, all of the listed stocks have PowerRatings of 1 or 2.
Evergreen Solar Inc. [ESLR@ESLR] Long Term PowerRating 1
Dollar Thrifty Auto Group [DTG@DTG] Long Term PowerRating 1
SunPower Corporation [SPWR@SPWR] Long Term PowerRating 1
United Community Banks [UCBI@UCBI] Long Term PowerRating 2
Stillwater Mining Company [SWC@SWC] Long Term PowerRating 2
David Penn is Senior Editor for PowerRatings.net.