Industry Chart Analysis 3-19-2008

Yesterday we highlighted those industries that were performing well and poorly on a momentum basis relative to the S&P 500. Today we will review the sectors that look like they are ready to breakout or breakdown technically.

On the upside:

  • Aluminum
  • Containers & Packaging
  • Computer Servicespic5
  • Waste Management
  • Broadline Retail
  • Drug Retail
  • Trucking

In the Containers & Packaging sector, The Correct Call. especially likes Rock-Tenn Company (RKT)

The company makes packaging for everything from frozen food to cardboard boxes.
Rock-Tenn’s management team has had a keen eye for acquisitions that benefit shareholders. RKT recently acquired Southern Container and immediately said the acquisition will add .28 cents to the bottom line. Their last acquisition in 2005 was considered a “home run” by some analysts.

Acquisitions will not be the only catalyst for the bottom line in ’08 as Rock-Tenn is in a strong enough position to be raising their prices across many business segments. In this market, how many companies have that kind of pricing power?

(please see our investment calendar for more hot sector stocks)

On the Downside, we would be leery of the following industries:

  • Aerospace
  • Gambling
  • Fixed Telecom
  • Computer Hardware

No one company in any of these sectors really jumps out at us with a Danger, Danger, Warning, Warning trouble ahead signal. Although many of these stocks are coughing and wheezing, they are not terminal just yet. While the rest are already so battered and bruised, we are not quite sure it makes sense to try and drain every last drop out of them; too much risk for too little upside.

Filed Under: Industry Chart Analysis

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