Why you should keep clear of stocks with low PowerRatings
From 1995-2005, stocks rated 7 have outperformed the S&P 500 by a better than
4-1 margin over a five-day period. Stocks rated 8 have outperformed the S&P 500
by a better than 8-1 margin; stocks rated 9 have outperformed the S&P 500 by a
13-1 margin, and those stocks that have achieved a 10
PowerRating have
outperformed the S&P 500 by a 16.9-1 margin.
Over the same test period (1995-2005), stocks with a PowerRating of 1, 2 or 3 have underperformed the
S&P 500 over the next five-days. The 1’s have performed 4.9 times worse than the
S&P 500, the 2’s have performed worse than the S&P 500, and the 3’s have only
managed 90% of the S&P 500 performance.
Looking at the numbers it makes sense to avoid these stocks, at the very least.
But, for aggressive traders this creates a list of potential short sale
candidates.
Here is a selection of stocks with a
PowerRating
1-3 on 05/04/06.
| Symbol | PowerRating | % Gain | Symbol | PowerRating | % Gain |
( ERS | Quote | Chart | News | PowerRating) |
1 | 17.67 | ( ANDE | Quote | Chart | News | PowerRating) |
2 | 11.31 |
( GIGM | Quote | Chart | News | PowerRating) |
1 | 10.47 | ( ADZA | Quote | Chart | News | PowerRating) |
2 | 7.94 |
( CAS | Quote | Chart | News | PowerRating) |
2 | 15.90 | ( UIC | Quote | Chart | News | PowerRating) |
3 | 13.47 |
( MTEX | Quote | Chart | News | PowerRating) |
2 | 14.11 | ( TSU | Quote | Chart | News | PowerRating) |
3 | 12.06 |
( QSII | Quote | Chart | News | PowerRating) |
2 | 12.55 | ( HW | Quote | Chart | News | PowerRating) |
3 | 11.59 |
Over the same five-day period the S&P 500
performance was +1.15%.
As you can see from the table and chart above,
avoiding (or selling short) stocks with a
PowerRating
1-3 can help you avoid losses, or maybe even generate profits.
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Ashton Dorkins
Editor-in-Chief
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