During down periods in the market it’s normal to feel a sense of helplessness, as former winners turn to losers and the world view you thought made sense no longer applies. From a psychological level, this is extremely disjointing and if you’re an anxious person, it could lead to either over trading or missing out on the eventual turn.
It’s also important during these periods to understand how rotations work and the sort of stocks considered to be “secular”, better typified as “low beta”, tend to do very well whilst all of the high grow stuff gets taken to the woodshed.
Here are some outperformers that were up both over the past week and two weeks in the market, while the broader indices suffered.
Broader metrics
Total stocks +2% over 1 week and +2% over two weeks: 117
Average beta: 0.65
Median rev growth: +3.89%
Gross margins: +56%
Median market cap: $6.9b
By sector:
BM: BAK, MP
CG: PG, PM, MDLZ, BTI, MNST, GIS, CHD, TSN, MKC, CLX, CAG, CPB
FIN: CME, WELL, TRV, SUI, WPC, MKTX, NNN, BMA, SKT
HEATH: SNY, ZTS, KVUE, ARGX, BAX, PODD
INDUST: SRCL, AGX
SERVICE: LUV, UAL, GME, LBTYA, ALK, JWN, DNUT
TECH: T, AMT, CCI, BCE, ORAN, VOD, TEF, SBAC,TU
UTES: SO, DUK, PCG, XEL
That’s narrow. Consider that amongst thousands of publicly traded stocks, only 117 were up in both the last week and two. Also consider that the stocks that traded up were either consumer staples or REITs, telecom or airlines. And what do they all have in common: heavily indebted, likely to see an improvement in their balance sheets because of lower borrowing costs. This is a play off lower rates.
When markets turn, these stocks will not participate on the upside, so be careful about entering the defensive trade too late.
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