Ranking Industries by Range by David Merkel, CFA of AlephBlog
As part of a continuing quest to turn up stock ideas in the midst of a market hitting new highs, I wanted to trot out a less commonly used statistic called “range.” Range is the distance that a company’s stock price is between its 52-week low and 52-week high. 0% means the current price is at the 52-week low, and 100% means the current price is at the 52-week high. So far, simple, right? How might industries look if their weighted average range statistics were calculated, weighted by market cap?
The top zone, which is shaded light red, are industries that are above the median range statistic in the market which is around 78.5% (average is around 72.2%). The industries shaded yellow represent industries where the stocks are closer to their 52-week high than their 52-week low, but are have average range statistics lower than the median of the market. Finally, the industries shaded green, what few there are, their current prices are closer to their 52-week low on average.
Personally, I would be inclined to look through the industries toward the bottom of the list, looking for misunderstood companies that have good potential of future outperformance. That said, someone thinking that this rally would have a long way to go would be incented to look for companies at the top of the list who have trends that are underdiscounted.
Corsair Capital was down by about 3.5% net for the third quarter, bringing its year-to-date return to 13.3% net. Corsair Select lost 9.1% net, bringing its year-to-date performance to 15.3% net. The HFRI – EHI was down 0.5% for the third quarter but is up 11.5% year to date, while the S&P 500 returned 0.6% Read More
As it is, this is where the industries are priced in terms of the past 52 weeks. You could look at the industries with the view of finding things that are out of place, and prices could shift in the future to reflect it.
If nothing else, this is food for thought. Technology, Utilities and Healthcare look strong. Basic materials, Capital Goods, and Consumer Durables look weaker.
All for now. Be careful.