Opinion: 12 stocks to consider for the next leg of the bull market


You may want to wait until the stock market comes out again before spending energy trying to choose individual companies.

This is because, during bearish markets, almost all stocks are related to the market. Only once a new bullish market begins do the correlations fall, and that’s when you have a relatively good chance of choosing stocks that will exceed the market average.

To illustrate how the correlations with the market cycle vary, consider the bottom of the bear market in March 2020, at the end of the cascading fall that accompanied the early stages of the Covid-19 pandemic. The S&P 500 SPX Index
+ 2.39%
it peaked on March 23 of that year, and most individual actions did the same. In fact, according to my analysis of FactSet data, the average share of the S&P 1500 index, which consists of large, medium, and small-cap stocks, declined to its bearish market low within five days. after March 23. rank.

Earlier this year there was a wider range at the top of the bullish market. Although the S&P 500 hit a record high on January 3, many individual stocks did the same sooner or later. In fact, the average S&P 1500 stock exceeded 55 days on January 3, as early as November 9, 2021, or as late as February 27 this year. This range is more than 10 times wider than at the bottom of March 2020.

We don’t know when a new bullish market will start, needless to say. As of this writing, the S&P 500 is 18.1% below its January high, just below the 20% loss threshold normally considered a bear market. The market could continue to fall, perhaps significantly, and as long as the trend is down, it is a good bet that the stocks you choose will go at the pace of a similar drummer.

But it’s not too early to start creating your shopping list, in anticipation of when the main trend will return. To assist you in this process, I have constructed the following table of actions that are not correlated with the general stock market.

To do this, I started with a stock list that is currently recommended to purchase at least two of the best performing bulletins monitored by my performance audit firm. I then sorted them according to their betas: a statistical measure of the degree to which a stock has historically gone up or down with the market as a whole.

The following table contains the dozen stocks with the lowest betas; they are listed in ascending order of their betas.

Stock

Beta

# newsletters currently recommending the purchase

ZimVie Inc. ZIMV,
+ 2.03%

0.11

2

Clorox Co. CLX,
+ 0.80%

0.26

2

General Mills Inc. GIS,
+ 1.23%

0.37

2

Modern Inc. MRNA,
+ 5.95%

0.41

2

Verizon Communications Inc. VZ,
+ 0.25%

0.46

2

Procter & Gamble Co. PG,
+ 1.07%

0.59

2

Merck & Co. Inc. MRK,
-0.46%

0.60

3

Altria Group Inc. MO,
+ 1.67%

0.60

2

Bristol Myers Squibb Co. BMY,
-0.66%

0.60

2

Johnson & Johnson JNJ,
-0.57%

0.61

2

Pfizer Inc. PFE,
-0.93%

0.62

3

PetMed Express Inc. PETS,
+ 0.05%

0.63

2

Mark Hulbert is a regular contributor to MarketWatch. Your Hulbert Ratings keeps track of investment bulletins that pay a flat fee to be audited. You can contact him at mark@hulbertratings.com.



Source link

Leave a Reply