Discounts At The Top

1/23/2017


You know you want to buy it, that stock jumping after good news. Bullish chart patterns get investors' hearts pumping. But almost as soon as you decide to visit your broker's website, the ardor cools. After all, a stock must be expensive after a move like that.

Right?

Much of the time, yes, but not always. And if we can find a big mover still selling for cheap, we pay attention. Academic and industry research has shown that stocks going up tend to continue rising — and that cheap stocks tend to outperform. Finding these two characteristics — strong price action and attractive valuation — together is the trick. Of the nearly 5,000 stocks in our Quadrix universe, just 462 score above 90 in Value, while 456 top 90 in Performance.

Only 30 make both lists.

Today's ChartScan will try to unearth stocks that have performed well enough to inspire the average momentum investor while not scaring off those who prefer to purchase value stocks.

Each of the companies listed below has outperformed its sector average over the last three months yet still trades at a discount to the typical stock in its sector.

HIGH-FLYERS WITH GOOD VALUES
All of the A-rated stocks below offer an appealing blend of share-price action and value, topping their sector average total return by at least three percentage points and trading at a discount of at least 10% to the sector average. Stocks in bold are on our recommended lists.
----- Total Return -----
------- P/E Ratio -------
Company (Price; Ticker)
3
Months
(%)
Excess Vs.
Sector
Average
(%)
Quadrix
Perfor-
mance
Score
Trailing
Versus
Sector
Average
Quadrix
Value
Score
Alaska Air Group
($93; ALK)
27
13
87
13
0.59
84
American Express
($77; AXP)
27
7
73
14
0.75
88
Applied Materials
($34; AMAT)
19
5
84
19
0.81
67
CDW ($52; CDW)
19
5
77
16
0.68
69
F5 Networks ($143; FFIV)
20
7
70
19
0.83
61
Goldman Sachs
($234; GS)
35
16
93
15
0.78
58
J.P. Morgan Chase
($84; JPM)
23
3
84
14
0.73
72
Lincoln National
($67; LNC)
37
14
92
11
0.56
88
Manulife Financial
($18; MFC)
25
6
91
16
0.83
96
Morgan Stanley
($43; MS)
31
10
92
17
0.88
77
PNC Financial
($116; PNC)
28
7
88
16
0.83
60
Southwest Airlines
($50; LUV)
19
4
71
13
0.59
86
Time Warner ($95; TWX)
21
7
61
18
0.88
70
Note: Quadrix scores are percentile ranks, with 100 the best.

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