Best Near-Term Price Gains Ahead For: Auto-Related Stocks

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Includes: SPY
by: Peter F. Way, CFA

Summary

Market-makers [MMs] hedge big-money-fund portfolio manager trades in these stocks every day, to protect their firm’s capital temporarily put at risk filling large volume trade orders.

That price-change insurance tells just how far the MMs expect those clients, who have the money muscle to make things happen, may push prices – both up and down.

These stocks have histories of daily forecasts, many over 5 years or more, at all levels of market enthusiasm and despair. Today’s forecasts provide expectations for the next few months.

Looking back at prior forecasts with similar upside-to-downside prospects tends to put price volatilities, issue by issue, in perspective.

Looking for better prospects among these stocks than ones you now have? Looking for new entries into this set? Here are Risk~Reward tradeoff comparisons to help you choose.

Major Auto-related Stocks

Figure 1

(used with permission)

Each stock is positioned in this map by its intersection of upside price change forecast on the green horizontal scale and the price drawdown exposures (on the red vertical scale) typical after prior forecasts like today's. Any issue above the dotted diagonal has more potential risk than return at its present price.

Since price-change risk is a dynamic, not a constant, exposure in these relationships will change over time.

Other useful details from similar prior forecasts

Figure 2

Click to enlarge

source: blockdesk.com

Columns (5) and (6) are the source for Figure 1 coordinates. The (7) metric tells what % of the (2) to (3) range lies below (4). It discriminates among (12) prior forecasts to select the similar sample from which columns (8) to (14) data is provided. (13) compares (5)'s promise to (9)'s prior delivery; (14) compares (5) to (6). (15) is a figure of merit combining the several qualitative measures into an odds-weighted, risk-conditioned number as a ranking metric.

Since individual investor preferences will (properly) vary, no single scoring system can be suitable for all, hence several important variables are presented.

The blue rows at bottom of Figure 2 aggregate this set of stocks for comparison with a total population of all stocks and aggregates similarly analyzed this day. SPDR S&P500 ETF (NYSEARCA:SPY) provides an investable market index comparison. The Top-20 stocks aggregate indicates how the most-competitive capital-gain investment candidates in the population compare.

Conclusion

Very few stocks in this set provide able competition in the potential near-term capital gain contest.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.