Although last week U.S. equity market performance was a bit better, volatility will likely continue this summer. A couple of interesting things to look at right now include the latest view from Standard and Poors Investment Policy Committee and a noticeable lack of attention being paid to certain mid-cap stocks.
Here you go,
The Missing Mid-caps
Standard and Poors Investment Policy Committee
Stocks of middle capitalization (mid-caps) are those with a market value of between $2-10 billion. This is calculated by multiplying the total number of outstanding shares by the current stock price. Mid-capitalization companies are subject to higher volatility than those of large-capitalized companies.
The past several weeks have brought a decline in the percentage many investment companies, including LPL Financial, are recommending investors hold of mid-cap stocks. In general, volatility tends to favor larger companies whose dividends may help investors weather the storm.
But I think mid-cap industrial companies may be worth a look if you are a growth investor with at least a five year horizon. The following is a sampling of the types of firms currently classified as mid-cap industrials. These names are being shared for educational purposes only. Don’t run out and buy them. Seek advice first.
United Rentals, Inc. (URI) – equipment rental company
Aercap Holdings N.V. (AER) – aviation leasing, trading, management
USG Corp. (USG) – building materials; worldwide
Standard and Poors Investment Policy Committee put the following out on June 14th and it’s a fairly good summation of where we are right now:
Investors are impatient by nature, in our opinion, like one who gets upset after missing a slot in a revolving door. Not surprisingly, they don’t take kindly to waiting for catalysts. As a result, they generate their own activity, driving prices higher one day and lower the next, less on news and more on speculation. Even though the charts are looking a bit more encouraging to us, we think a choppy, drawn out advance would be the likely trading pattern during this seasonally vulnerable period. At the same time, we can’t rule out the possibility that this is just a countertrend rally. Though valuations offer support, Wall Street’s belief that the bailout of Spanish banks is only a practice run for a sovereign bailout represents formidable resistance.
Until next week,
Susan R. Linkous
Quote of the Week: “If you want the rainbow, you gotta put up with the rain.” ~Dolly Parton