The Starmine Sector Analysis Scorecard: The 60-Day Takeaway
A sector-level analysis can prove particularly helpful to investors who usually concentrate on trying to find something to set individual stocks apart. Here, we review the results of our December sector-level analysis based on StarMine models.
Last December, we published our first quarterly StarMine U.S. Sector Outlook, with the goal of giving investors more insight into what is happening within the stock market than can be obtained by confining their analysis to individual stocks. In this report, published on December 13, we provided a sector-level analysis of the S&P 500 index, publishing all the StarMine model scores aggregated by both sector and market cap. Evaluating the relative merits of those ten sectors at the time caused us to note that the Financials appeared particularly strong.
Today, 60 days later, we are following up on that initial report. Over that period, the Financials sector has outperformed the broader market by 4.8 percentage points. In our original report, also identified a number of strong stocks with strong fundamentals and a handful of ones whose model scores appeared to be weaker in each of the ten S&P 500 sectors. On average, in the 60 days that followed that report, those stronger names beat the S&P 500 by an average of 3.3 percentage points (a performance that would generate excess annual return of about 20.1%). Meanwhile, the two companies whose stocks we believed appeared to demonstrate signs of weakness ended up lagging the market by 10.55 percentage points. (In other words, selling these stocks short would have resulted in an excess annual return of 64.2%, based on that two-month performance.
This kind of sector analysis serves as a useful complement to the traditional StarMine analysis that focuses on individual companies. For a complete overview of the full results of our December analysis, based on the performance of the sectors and stocks identified in that original report as of February 13, please click here.
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