Looking for Value After a Nine Year Bull Market - A Live Analysis, Part 1
Below are 22 sector graphs based on the S&P Total Market Indices. There are a couple missing - Aerospace/Defense (which could be in capital goods) and real estate. I'll add them when they become available, but there is more than enough to start with.
I'm looking for a sector that's lagged behind the S&P, something out of favour.
A visual review shows me that Energy & Telecommunications fit the bill.
I'm going to focus on Telecommunications. Energy is down relative to its starting point but Energy is highly volatile and I did an article on Energy a few months ago. I haven't put the link in this blog yet, but if you are interested you can find it on Seeking Alpha.
If you click into the three horizontal lines at the top right of the chart there's the option to get a data table. Using that I can see on March 10, 2014 the first data point for Telecommunication, the index had a value of 1335.27 and the S&P had a value of 1877.17. On August 7, 2018 the values were 1417.34 and 2858.48 respectively. In that almost 4.5 year period, the S&P gained 102% or annualized 16.9% and Telecommunications gained 41% or annualized 7.9%.
(It's actually still a good return it's only when it's compared to the S&P does it look anemic).
In the next installment I'll look at the industries and the constituents within the sector to see if anything looks good.
If you have any questions, please leave it in the comments sections below and I'll get to it as soon as possible.
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NextEra had good results relative to a group of peers in a factor-based analysis.NextEra has an appealing profitability and income profile.Its price momentum looks decent, with a caveat.Its relatively small size (a small mid-cap) coupled with its industry (renewable energy) further weight the odds that this company could be a strong performer in the future.
The Analysis Overview
I created a portfolio of stocks in the alternative energy sector, looking specifically for companies with a market cap over $1B but less than $4B. This is a sweet spot that offers strong potential for growth but is also substantial enough not to be too speculative.
It's my believe that alternative energy is on the ascendance, where as fossil fuels will inevitably decline (NextEra isn't a pure play in this regard however, natural gas assets are part of its portfolio). If you share this belief and you want exposure to this market, NextEra looks like a good bet.