Industrials Key to U.S. Economic Growth in 2013
Strategists are telling investors that ending the overhang of the fiscal cliff and the continued quantitative easing programs of the Federal Reserve will help this sector lead. I am not that optimistic, but the 10 stocks I am profiling today can still be considered as buy-and-trade candidates.
My benchmark for the industrial products sector is the Industrial Select Sector SPDR Fund (XLI) ($37.22) which set a 2012 high at $38.53 on Dec. 19. Since then the daily chart has become negative with the ETF above its 50-day and 200-day simple moving averages at $36.98 and $36.31. The weekly chart below ended last week with a positive profile with rising momentum and with Friday's close just above the five-week modified moving average at $37.15. My monthly value level is $35.21 with weekly and annual pivots at $37.20 and $37.74 and quarterly risky level at $39.58.
Chart Courtesy of Thomson/Reuters
At www.ValuEngine.com we show the industrial products sector 11.3% overvalued with the machinery-construction/mining industry 26.6% overvalued and the machinery/general industrial industry 7.6% overvalued.
Reading the Table
OV/UN Valued: Stocks with a red number are undervalued by this percentage. 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.
Value Level: Price at which to enter a GTC limit order to buy on weakness. The letters mean; W-weekly, M-monthly, Q-quarterly, S-semiannual and A-annual.
Pivot: A level between a value level and risky level that should be a magnet during the time frame noted.
Risky Level: Price at which to enter a GTC limit order to sell on strength.
Here are my buy-and-trade strategies for 10 industrial products stocks. I profiled five of these names on Oct. 1 in Industrial Products Stocks May Catch QE Fatigue.
Caterpillar (CAT) ($86.81 vs. $86.04 on Oct. 1): Still has a buy rating, is 6.8% undervalued with a favorable trailing 12 months price-to-earnings ratio at 9.5. CAT has a negative daily chart profile with the stock well below its Feb. 24 high at $116.95 and trading between its 50-day and 200-day SMAs at $85.71 and $90.21. The weekly chart profile is positive with the five-week MMA at $86.48 and the 200-week SMA at $77.27.