The Best Stocks in the Market: March

Jelly Roll Capital Equity Research

Market Analysis, Education, and Wall Street-Quality Stock Reports

The Best Stocks in the Market: March

About once every month I rerun a data model that does a quantitative evaluation of about 1,600 stocks. The model gathers the names, prices, and latest financials, does some calculations, and then generates a power ranking from (for this update) stock #1 to stock #1547. While not perfect, this model is very useful for generating leads into some excellent and potentially under-priced businesses. This model is also good for finding the sector that, on average, has the most high-ranking companies - which should lead that sector to outperformance over the next several months to one year. The 25 stocks are:

1. FreightCar America (ticker: RAIL)

2. Aspreva Pharmaceuticals (ASPV)

3. InterDigital Communications (IDCC)

4. Patterson-UTI Energy (PTEN)

5*. Phelps Dodge (PD) and Freeport-McMoRan (FCX) are in the process of merging. Both stocks are in the top 25, so we expect the combined company to be as well.

6. Grey Wolf (GW)

7. NVR

8. Loews Carolina (CG)

9. Pioneer Drilling (PDC)

10. Vaalco Energy (EGY)

11. Alliance Resource (ARLP)

12. TGC Industries (TGE)

13. ExpressJet (XJT)

14. Tiens Biotech (TBV)

15. Hercules Offshore (HERO)

16. Occidental Petroleum (OXY)

17. Tesoro (TSO)

18. Nucor (NUE)

19. Georgia Gulf (GGC)

20. Swift Energy (SFY)

21. Mannatech (MTEX)

22. Valero (VLO)

23. Basic Energy Services (BAS)

24. EOG Resources (EOG)

25. St. Mary Land & Exploration (SM)

Those of you familiar with many of these stocks may notice the prominence of Basic Materials companies. While that sector comprises only 13.4% of the stocks we covered in this scan, they made up a whopping 35.5% of the top 10%. No other sector came close to ranking so highly; Healthcare was the next closest, which makes up 10.8% of the coverage universe and 12.4% of the top 10%. The outsized share of Basic Materials companies at the top came largely at the expense of Technology (19.7% of all stocks, but only 9% of the top 10%), and Industrial Goods and Consumer Goods to a lesser extent. While the profitability of many Basic Materials companies is obviously being buoyed by the bull markets in many commodities, such companies appear to be priced in such a way as to assume that commodities prices will retreat to multi-year lows. If such prices were to stabilize at present levels, or even to only undergo a small pullback, the stocks of companies in the Basic Materials sector appear poised to rally.