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Industry Composite Price Performance - December 10, 2010
The nearby table is a presentation of the composite price performance of the 98 industry groups that are included in the Value Line (Arithmetic) and (Geometric) Averages. Please note that the performance of the Investment Co. and Investment Co. (Foreign) industries are not found here, since they are excluded from the Value Line averages. The industries are listed in order of their constituent stocks' aggregate percentage price changes over the last six months, from best down to worst. We also show three- and 12-month performances for comparison (price data as of November 30, 2010). The current Timeliness ranks and those from six months ago appear, as well. Please note the Pipeline MLP, Telecom. Utility, Heavy Truck/Equip Makers industries do not have Timeliness ranks for the six-month period, since they were added to The Survey within this timeframe.
An industry Timeliness rank is simply the arithmetic average of the Timeliness ranks of the stocks comprising the group. This straightforward computation means that highly ranked groups have the largest concentrations of favorably ranked stocks, which makes those sectors a logical place to start looking for investment ideas. However, investors should be aware that the ranks of small industries are more sensitive to the rankings of individual issues. We also note that only ranked stocks are included in this screen, so figures shown for the number of equities in some industries are lower than the actual tally of stocks under review in The Investment Survey. Moreover, those groups with low standings for composite price performance and Timeliness may well contain a few equities whose singular prospects outshine those of their industry. In general, though, comparing industry performances over the periods we have presented in conjunction with an examination of current and prior Timeliness ranks may divulge trends useful in assessing portfolio changes.
The 98 industry groups shown here are arranged in five divisions, or quintiles. The Value Line (Arithmetic) and (Geometric) Averages are provided as performance benchmarks for each group relative to the arithmetic and geometric norms. The Arithmetic average, with a six-month gain of 10.8%, appears near the bottom of the third division. Our Geometric average, which rose 8.2% in the same period, is found in the middle part of the fourth grouping.
It is interesting to compare each industry's six-month performance with that of the most recent three-month and trailing 12-month periods. We note that the three- and six-month periods each benefited from the generall upward trend in the market, particularly since early September. Indeed, for the most part, the returns registered by our industries in these two periods were good, in a number of cases quite good. On the other hand, the performance of our industries in the last 12 months has been much more mixed. Indeed, investor sentiment has varied widely since the beginning of 2010.
There is a reasonable correlation between the six-month returns shown in this roster with the six-month returns recorded with the one published on June 4, 2010, though the recent market strength has pushed the current set relatively higher. Meanwhile, as is usually our wont, we note a handful of industries that have made particularly wide moves in the last six months. The results show that the Basic Chemcials and Coal industries have moved all the way from the last quintile of our previous list to positions in the first tier. Meanwhile, the Furniture/Home Furnishings industry now occupies a position in the bottom tier, after placing in the top group in our last review.
For those who wish to regularly track industry trends, we also recommend several of The Value Line Investment Survey's weekly rosters: "Industries in Order of Timeliness," contained in Part 1, Summary & Index; "Timely Stocks in Timely Industries," also in Summary & Index; and "Industry Price Performance, Last Six Weeks," featured in Selection & Opinion.