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Over the last 6 months, the Basic Materials and healthcare sectors have lagged the rest of the market. Healthcare, as a group, lost -5.1%, while Basic Materials lost -4.6%.

If you believe in mean reversion, you'd expect these two sectors to catch up to the rest of the market over the next 6 months. Using Materials ETFs like MXI, DBN, UYM, IYM, and XLB, or Healthcare ETFs like XLV, IHF, IYH, IXJ, PTH and RYH can give you broad exposure to these sectors.

But, if you're looking for companies to invest in, here's a list of materials and healthcare stocks that are underperforming their sectors. If you believe in mean reversion, you'd expect these stocks to catch up to other stocks in their sector.

To control the quality of these lists, we only focused on stocks with market caps north of $2B that have seen positive ROA over the last year.

Basic Materials Mean Reversion Trades

Based on the screen mentioned above, all stocks in the basic materials sector had an average return of 3.61% over the last year. Here is a list of the 10 stocks that have lagged the other stocks in this sector screen. Will mean reversion at a sector and market level help these stocks over coming months? (Click to enlarge)

1. Transocean Ltd. (RIG): Oil & Gas Drilling & Exploration Industry. Market cap of $17.25B. Short float at 3.29%, which implies a short ratio of 0.69 days. The stock has lost -35.09% over the last 6 months.

2. Range Resources Corporation (RRC): Independent Oil & Gas Industry. Market cap of $5.62B, offering a dividend yield of 0.46%. Short float at 7.36%, which implies a short ratio of 2.81 days. The stock has lost -34.1% over the last 6 months.

3. Plains Exploration & Production Company (PXP): Independent Oil & Gas Industry. Market cap of $3.28B. Short float at 7.07%, which implies a short ratio of 2.55 days. The stock has lost -30.43% over the last 6 months.

4. EXCO Resources Inc. (XCO): Independent Oil & Gas Industry. Market cap of $3.09B, offering a dividend yield of 1.1%. Short float at 6.73%, which implies a short ratio of 4.16 days. The stock has lost -28.89% over the last 6 months.

5. Petrohawk Energy Corporation (HK): Independent Oil & Gas Industry. Market cap of $4.89B. Short float at 6.14%, which implies a short ratio of 2.45 days. The stock has lost -28.8% over the last 6 months.

6. CONSOL Energy Inc. (CNX): Industrial Metals & Minerals Industry. Market cap of $7.97B, offering a dividend yield of 1.13%. Short float at 1.56%, which implies a short ratio of 0.81 days. The stock has lost -28.53% over the last 6 months.

7. Diamond Offshore Drilling Inc. (DO): Oil & Gas Drilling & Exploration Industry. Market cap of $8.51B, offering a dividend yield of 0.82%. Short float at 12.63%, which implies a short ratio of 5.15 days. The stock has lost -28.23% over the last 6 months.

8. Cabot Oil & Gas Corporation (COG): Independent Oil & Gas Industry. Market cap of $3.14B, offering a dividend yield of 0.4%. Short float at 8.75%, which implies a short ratio of 4.42 days. The stock has lost -26.21% over the last 6 months.

9. Anadarko Petroleum Corporation (APC): Independent Oil & Gas Industry. Market cap of $25.84B, offering a dividend yield of 0.69%. Short float at 2.48%, which implies a short ratio of 1 days. The stock has lost -25.58% over the last 6 months.

10. Nabors Industries Ltd. (NBR): Oil & Gas Drilling & Exploration Industry. Market cap of $4.99B. Short float at 2.93%, which implies a short ratio of 1.03 days. The stock has lost -25.3% over the last 6 months.

Healthcare Mean Reversion Trades

Based on the screen mentioned above, all stocks in the healthcare sector had an average return of 0.53% over the last year. Here is a list of the 10 stocks that have lagged the other stocks in this screen.

1. Gilead Sciences Inc. (GILD): Biotechnology Industry. Market cap of $28.32B. Short float at 2.7%, which implies a short ratio of 1.66 days. The stock has lost -31.71% over the last 6 months.

2. Covance Inc. (CVD): Medical Laboratories & Research Industry. Market cap of $2.66B. Short float at 6.36%, which implies a short ratio of 4.46 days. The stock has lost -28.59% over the last 6 months.

3. Mindray Medical International Limited (MR): Medical Instruments & Supplies Industry. Market cap of $2.87B. Short float at 18.66%, which implies a short ratio of 13.4 days. The stock has lost -27.5% over the last 6 months.

4. Alere Inc. (ALR): Medical Laboratories & Research Industry. Market cap of $2.48B. Short float at 8.57%, which implies a short ratio of 6.16 days. The stock has lost -25.61% over the last 6 months.

5. Tenet Healthcare Corp. (THC): Hospitals Industry. Market cap of $2.07B. Short float at 4.83%, which implies a short ratio of 1.95 days. The stock has lost -24.29% over the last 6 months.

6. Covidien plc (COV): Medical Instruments & Supplies Industry. Market cap of $19.57B. Short float at 0.34%, which implies a short ratio of 0.35 days. The stock has lost -22.55% over the last 6 months.

7. Charles River Laboratories International, Inc. (CRL): Biotechnology Industry. Market cap of $2.01B. Short float at 6.68%, which implies a short ratio of 3.25 days. The stock has lost -19.18% over the last 6 months.

8. Baxter International Inc. (BAX): Medical Instruments & Supplies Industry. Market cap of $26.78B. Short float at 1.13%, which implies a short ratio of 1.19 days. The stock has lost -19.17% over the last 6 months.

9. King Pharmaceuticals Inc. (KG): Drug Manufacturer. Market cap of $2.39B. Short float at 2.44%, which implies a short ratio of 1.2 days. The stock has lost -18.01% over the last 6 months.

10. Quest Diagnostics Inc. (DGX): Medical Laboratories & Research Industry. Market cap of $8.44B. Short float at 1.6%, which implies a short ratio of 1.43 days. The stock has lost -17.17% over the last 6 months.

Disclosure: No positions

Source: 20 Mean Reversion Trades