How to Find a Successful Investment Opportunity by Tracking an Industry Trend - Real Time Insight
September 26 2012 - 9:22AM
Zacks
Inside an economy’s churn, broad opportunities and equally broad
risks exist for any investor.
My colleagues have positioned their investors on bullish
opportunities. Picks from individual strategists in Homebuilders
(XHB), Financials (PNC), Energy (ERX), and Utilities-Water (AWK)
are just a few.
But be equally aware, churn includes significant downside
risks.
Here are five industry trends to think about…
(1) Momentum in U.S. housing markets helps the
Financials sector and Home Construction
industries the most.
For Zacks Rank industries, we see strong earnings ranks tied to
Housing such as Home Furnishing-Appliance, Real
Estate, Construction-Building Services, Banks-Major and Banks
&Thrifts.
(2) Rising oil prices mostly help the Energy
sector.
For Zacks Rank industries, we see strength in Oil-Misc.,
Pipelines, and Drilling. Also, we see a strong Zacks
Rank for Energy-Alternative Sources.
We see Zacks Rank weakness in Airlines, Oil &
Gas-Integrated and Coal.
(3) Fiscal Cliff. Coming tax sunsets could raise U.S.
personal income tax rates, or impose sequestration that cuts
spending. This appears to hurt the Industrials and
IT sectors the most.
We have seen weakness in capital goods spending and hiring
across all business sectors. For a Zacks Rank example, a weak
Misc.Tech industry is now apparent.
(4) The U.S. drought has negative effects on the upstream
Consumer Staples sector in such industries as Food
Distributors and Packaged Foods, who must pass on the
higher input prices.
We see strength in Zacks Rank downstream industries like
Utilities-Water, Ag. Products, Fertilizers, and Ag.
Chemicals.
(5) China slowdown shows up in weakness in Steel and
Metals-non-Ferrous.
Some questions most investors would like to ask?
Aside from a strong Zacks Rank, what makes one industry trend
MORE interesting to an investor than another industry trend?
What did you use as timing criteria to ENTER into an investment
position that chases a current industry trend? What you do
plan to use to time your EXIT from riding this industry trend?
AMER WATER WORK (AWK): Free Stock Analysis Report
DIR-EGY BULL 3X (ERX): ETF Research Reports
PNC FINL SVC CP (PNC): Free Stock Analysis Report
SPDR-SP HOMEBLD (XHB): ETF Research Reports
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