Many fundamental analysts look at the economic signs and read them all as pointing to a weak and even weakening recovery. These analysts offer as evidence the standard statistics we've all become acquainted with like negative job growth, high unemployment, continued weakness in the housing market, banks that continue to hold back on lending and a waning in consumer and business confidence. Regardless of the economic news, many retailer stocks in a range of categories (for example, apparel and shoe, food, super and mini-markets, electronics) have made significant moves since January.
It's been some time since I reported on a group that pops out as a result of a dramatic increase in their Industry Group ranking: metal ores (March 22), steels (April 26), alternative energy including solar and coal (May 7), gold miners (May 11) and truck and automobile equipment manufacturers (June 1). Stocks in each of these Groups performed extremely well after they shot up in ranking (although a drop in ranking is inadequate for indicating when to sell).
The Retail-Restaurant Industry Group with 60 stocks, now appears to moved up smartly over the past several weeks from being ranked near the bottom (180th) of the 197 Industry Groups on December 14 to ranking 15th this past Friday (click on image to enlarge):
Many stocks in the Group appear to be or in the process of beginning significant bullish momentum moves out of long consolidation patterns. The Group is large, diverse and encompasses such subcategories as fast food, family and full service; some are purely domestic and others derive a significant portion of their revenues in overseas markets. The common denominator among them, however, is that many have good looking stocks charts. I could have picked many but the following will give you a clear idea of the breakout potential of stocks in the Group (click on image to enlarge):
Yum Brands
Chesapeake Utilities I
Buffalo Wild Wings
The Cheesecake Factory Incorporated
Mcdonald's
Brinker International
Darwin Professional Underwriters (NYSE:DR)
Ruby Tuesday
I could have gone on and on but you get the picture. These aren't 2-3 week trades. If the market cooperates, these and others in the group could generate some huge moves over the next 4-6 months.
A question I'm often asked is "You give us a lot to choose from but which do you think is the best?" So, coming up, answers on narrowing the field.
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