In Search Of Price Action

2/25/2013


On average, stocks in the S&P 1500 Index returned 5% over the last month and 17% over the last three, with more than three-fourths delivering positive returns in each period. Cyclical sectors (industrials and technology) set the pace over the last three months, while defensive sectors (consumer staples, health care, and utilities) lagged.

Our Quadrix Performance score can help find pockets of relative strength. For example, as shown below, the industrial, financial, materials, and consumer-discretionary sectors — all sensitive to economic trends — average the highest Performance scores. Most of the score's weighting comes from periods up to one year, but it also rewards stocks with poor three- and five-year returns. Stocks with high Performance scores have outperformed over the last month and the last year, though the score hasn't worked well for most of the last five years.

As shown below, small-cap and midcap stocks seem to have more share-price mojo than large-caps, while stocks with high scores for Momentum and Earnings Estimates average Performance scores of at least 60.

Interested in stocks with price action? Check out these three recommended names, all with solid Performance scores and strong recent returns: BlackRock ($244; BLK), Helmerich & Payne ($68; HP), and Thermo Fisher Scientific ($75; TMO).

WHERE'S THE PERFORMANCE?
-------- Average Total Return --------
Group Of Stocks
Avg. Quadrix
Performance
Score
1
Month
(%)
3
Months
(%)
6
Months
(%)
Market Capitalization
Above $10 Billion
50
3
12
12
$3 Billion To $10 Billion
56
5
16
16
$1 Billion To $3 Billion
53
5
17
16
$1 Billion Or Below
49
5
21
17
Valuation
Value Scores Above 80
48
6
17
12
Value Scores 80 Or Lower
53
4
17
17
P/E Ratio Above 20
57
4
14
14
P/E Ratio 16 To 20
52
4
14
14
P/E Ratio 12 To 16
48
4
17
15
P/E Ratio 12 Or Below
45
6
20
19
Operating Momentum
Momentum Scores Above 80
60
4
16
22
Momentum Scores 80 Or Lower
50
5
17
14
12-Mo. Sales Gro. 8% Or Higher
53
4
17
16
Sales Growth 4% To 8%
54
5
16
17
Sales Growth Below 4%
50
5
17
14
Quadrix Scores
Quality Above 80
47
4
14
12
Quality 80 Or Lower
54
5
18
17
Earnings Estimates Above 80
61
4
18
23
Earnings Estimates 80 Or Lower
50
5
17
14
S&P 1500 Index
52
5
17
16
Notes: Averages exclude stocks with P/E ratios below 0 or above 75.   Returns are calculated based on market cap, valuation, growth rates, or Quadrix scores at the start of the holding period.

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