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What are we looking for?

U.S.-listed equities that have trended higher amid the recent market downturn.

As of earlier this week, the S&P 500 had slipped about 6 per cent since posting a record high at 4,545.85 back on Sept. 2. The long-term uptrend in equities that began almost a year ago seemed to be taking a short-term break. We could see a new downtrend in equities to form a bear market – or the continuation of a quick recovery that has been taking place over the past two days. Despite the recent bump in price volatility, we continue to favour a bullish momentum strategy in the current market environment. We were curious to find out which stocks and sectors disregarded the recent broad market decline and continue to trade near 52-week highs on strong price momentum.

The screen

We will start by screening for U.S. stocks with a market capitalization of at least US$10-billion. This will limit our search to the largest and most stable companies in the U.S. equity market.

Next, we looked for stocks with a positive year-to-date and one-year price performance.

In order to add a layer of defence, just in case the recent broad market sell-off worsens, we scanned for stocks that pay a dividend so investors can get paid to ride out the volatility.

We want stocks that are making higher highs and higher lows despite the recent 6-per-cent decline in the broad S&P 500. We scanned for stocks that are trading within 10 days of their 52-week high.

Finally, we will scan stocks using Trading Central’s Quantamental Rating method. This is a proprietary methodology developed by Trading Central that rates stocks on a scale of one to 10, with 10 being the most bullish and one the most bearish. The TC Quantamental Rating uses a combination of valuation, growth, quality, price momentum and income as key metrics to rate a company. In our screen, we set a minimum rating of seven out of 10 in order to screen for the top-rated companies.

We have also included price-to-earnings ratio for informational purposes.

More about Trading Central

Trading Central is a global leader in financial market research and investment analytics for retail online brokers and institutions. Our product suite provides actionable trading ideas based on technical and fundamental research covering stocks, exchange-traded funds, indexes, forex, options and commodities. Strategy Builder, our stock screener, is available through leading retail brokers in Canada and worldwide.

What we found

U.S.-listed large-cap stocks

RankCompanyTickerMkt. Cap. (US$ Bil.) YTD Price Perf. (%)1Y Price Perf. (%)Div. Yld. (%)Days Since 52W HighTC Quant. RatingP/ERecent Price (US$)
1Cdn. Natural ResourcesCNQ-N45.359.3128.
2Comerica Inc.CMA-N11.
3Lincoln National Corp.LNC-N13.542.6104.32.418.49.672.32
4Zions Bancorp NAZION-Q10.244.695.32.417.59.663.57
5American Int'l GroupAIG-N49.051.493.92.317.411.757.59
6Mosaic Co.MOS-N14.666.794.30.827.610.239.23
7EOG Resources Inc.EOG-N50.573.6135.82.017.826.085.85
8Interpublic Grp. of Cos.IPG-N14.759107.42.977.620.037.84
9Nutrien Ltd.NTR-N38.841.268.32.717.339.869.1
10Texas Instruments Inc.TXN-Q179.518.432.52.487.127.0196.56

Source: Trading Central

Out of the 10 companies that made our list, four are in the financial sector and two are in the energy sector. Both have been hot over the past few weeks.

Topping our list is Canadian Natural Resources Ltd., a Calgary-based energy company with a dual listing on the NYSE and TSX. It has the highest dividend yield on our list at 4 per cent. The stock also has the second-highest one-year performance on our list at an impressive 128.5 per cent as the shares trade within a day of its 52-week high. Price action has not been at these levels since 2014. Looking at the TC Quantamental Rating, the company scored 8.1 out of 10 and has been trending higher from a rating of 5.4 more than a year ago.

Radnor, Penn.-based Lincoln National Corp. offers individual and group insurance, retirement, and investment products in the United States and Britain. The company has the highest TC Quantamental Rating on our list at 8.4 and still is trending higher. The stock price is also within one day of its 52-week high after breaking above a major price resistance level of US$72.

Despite broad market declines, the right stock screen and strategy can help investors identify where investor money is flowing in order to identify new market opportunities in an ever-changing market and economic regime.

The investment ideas presented here are for information only. They do not constitute advice or a recommendation by Trading Central in respect of the investment in financial instruments. Investors should conduct further research before investing.

Gary Christie is head of North American research at Trading Central in Ottawa.

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