Trading Industrial and Transportation Stocks

The above table shows data from ValueEngine.com covering the top 16 of the 60 components of the XLI, listed by weighting from top to bottom.

Reading the Table

OV/UN Valued -- The stocks with a red number are undervalued by the percentage shown. Those with a black number are overvalued by that percentage, according to ValuEngine.

VE Rating -- A 1-Engine rating is a strong sell, a 2-Engine rating is a sell, a 3-Engine rating is a hold, a 4-Engine rating is a buy and a 5-Engine rating is a strong buy.

Last 12-Month Return (%) -- Stocks with a red number declined by that percentage over the last 12 months. Stocks with a black number increased by that percentage.

Forecast 1-Year Return -- Stocks with a red number are projected to decline by that percentage over the next 12 months. Stocks with a black number in the table are projected to move higher by that percentage over the next 12 months.

Analysis of the Top 16 Components of Industrial SPDR

Looking at the overvalued and undervalued data, 14 of the 16 stocks are undervalued, with FedEx(FDX) and Caterpillar(CAT) the cheapest at 20.2% and 20.1% undervalued, respectively.

United Parcel Service(UPS) and Union Pacific(UNP) both have "5-Engine" strong buy ratings according to ValuEngine. Ten stocks have "4-Engine" buy ratings and four have "3-Engine" hold ratings.

All 16 stocks traded higher over the past 12 months, led by General Electric(GE) with a gain of 45%.

All 16 stocks are projected to be higher 12 months from now by 2.6% to 13.1%, with reasonable P/E ratios between 9.6 and 17.3 times forward 12-month EPS estimates.

Here are my "buy and trade" price levels for the five Dow Industrial and five Dow Transport components of the XLI:

General Electric ($21.10) -- My annual value level is $20.41 with a weekly pivot at $20.97 and quarterly risky level at $22.99.

United Technologies(UTX) ($77.89) -- My weekly value level is $74.51 with monthly and semiannual pivots at $78.60 and $78.58 and an annual risky level at $86.76.

3M(MMM) ($92.29) -- My annual value level is $73.14 with semiannual and weekly pivots at $90.72 and $92.78 and monthly and quarterly risky levels at $94.76 and $95.07.

Caterpillar ($88.94) -- My weekly value level is $83.42 with a monthly risky level at $94.16.