It's rough out there.
The market had another
wild ride Wednesday,
with the Dow Jones
Industrial Average
posting nice gains in
the 50- to 60-point
range for most of the
day before falling off
in late-day trading to
close down 69 points,
below the
psychologically
important 10,000 mark.
It takes a decline of
-10% for a market skid
to be classified as a
"correction." It seems
we've already reached
that territory. The S&P
500
Index is down -12%
since April 23, having
posted losses in 14 out
of 23 trading days.
With the major averages
dropping like stones and
investors seeing a sea
of red on their computer
screens, it's tempting
to think there aren't
any winning stocks out
there right now. But
that thinking would be
wrong. There are always
winners in the market --
it's just a little
harder to find them in a
market like this.
Correction: a lot
harder.
Out of all 21,000
actively-traded equities
on U.S. exchanges, a
little over 1,500 stocks
are up since the market
began to fall through
Wednesday's close.
That's only 7% of all
stocks that are up, in
case you were wondering.
But as the saying goes,
there's always a bull
market somewhere.
If there's anything
we've learned in the
past two years since the
onset of the financial
crisis, it's that the
market can turn south in
a big way at any time.
So, in order to be
prepared for another gap
down, the
StreetAuthority staff
set out to find which
stocks held strong in
this most recent
sell-off. Perhaps some
patterns could be
determined that could
give us clues to
surviving the next time
around.
Our methods: We screened
for stocks trading on
U.S. exchanges with a
market capitalization of
more than $250 million
that have been higher
since April 23rd. Our
result: 233 stocks. Slim
pickings, but it just
might do.
Here are the top-20
winners:
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Notice any similarities? We did too.
Here is a breakdown of the top five sectors in our results:
Health Care: 36
Information Technology: 36
Consumer Discretionary: 36
Materials: 25
Telecommunications: 9
Now it might be one thing to see a random name here an there, but when I see no fewer than four sectors with at least 25 names in our results, I see a pattern. A few observations:
- The winning streak in health care is obvious. Investors seem to be flocking to defensive, low-beta sectors to escape the rancorous volatility we've seen the past month.
- The number of IT names on this list is surprising, especially
considering the tech-heavy Nasdaq is down about -13%. But not
when you consider their size. A lot of these companies have
small market caps. Because of their size, these companies don't
do a lot of business in Europe. Larger tech names that derive a
significant portion of revenue from Europe like
Hewlett-Packard (NYSE: HP) and IBM (NYSE: IBM) have
suffered.
- Consumer discretionary stocks are dong well across the
board,
thanks to encouraging signs in consumer confidence and, most
recently, durable goods orders. Interesting fact: 10 out of the
36 names here are in the media sector. Ad spending is ramping
up, so keep these names on your radar.
- 18 out of 25 stocks in the materials group are classified as "metals/mining" stocks. With the European debt crisis looming and the euro's future uncertain, gold has enjoyed a surge of interest among investors, piercing $1,240 per ounce recently. But as I said recently, gold has been in the midst a 10-year renaissance. The situation in Europe only enhances what has and will be a good place to park some cash for the foreseeable future.
