Ranking Industries By Range: A Look At 52-Week Lows

Ranking Industries By Range: A Look At 52-Week Lows

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?

Ranking Industries
Ranking Industries

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.

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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.

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David J. Merkel, CFA, FSA — 2010-present, I am working on setting up my own equity asset management shop, tentatively called Aleph Investments. It is possible that I might do a joint venture with someone else if we can do more together than separately. From 2008-2010, I was the Chief Economist and Director of Research of Finacorp Securities. I did a many things for Finacorp, mainly research and analysis on a wide variety of fixed income and equity securities, and trading strategies. Until 2007, I was a senior investment analyst at Hovde Capital, responsible for analysis and valuation of investment opportunities for the FIP funds, particularly of companies in the insurance industry. I also managed the internal profit sharing and charitable endowment monies of the firm. From 2003-2007, I was a leading commentator at the investment website RealMoney.com. Back in 2003, after several years of correspondence, James Cramer invited me to write for the site, and I wrote for RealMoney on equity and bond portfolio management, macroeconomics, derivatives, quantitative strategies, insurance issues, corporate governance, etc. My specialty is looking at the interlinkages in the markets in order to understand individual markets better. I no longer contribute to RealMoney; I scaled it back because my work duties have gotten larger, and I began this blog to develop a distinct voice with a wider distribution. After three-plus year of operation, I believe I have achieved that. Prior to joining Hovde in 2003, I managed corporate bonds for Dwight Asset Management. In 1998, I joined the Mount Washington Investment Group as the Mortgage Bond and Asset Liability manager after working with Provident Mutual, AIG and Pacific Standard Life. My background as a life actuary has given me a different perspective on investing. How do you earn money without taking undue risk? How do you convey ideas about investing while showing a proper level of uncertainty on the likelihood of success? How do the various markets fit together, telling us us a broader story than any single piece? These are the themes that I will deal with in this blog. I hold bachelor’s and master’s degrees from Johns Hopkins University. In my spare time, I take care of our eight children with my wonderful wife Ruth.
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