Is expressed in the above bullet-points, where odds for, and size of near-term capital gains are put on a comparable basis.
The dominance of MYR Group, Inc. (NASDAQ:MYRG) in following the outcome of that analysis over investment-comparative alternatives makes reading the rest of this article worth your time and effort if you are interested in rates of near-term capital gains. Ones which are likely to be multiples of what market-index averages regularly offer.
MYR Group Inc., through its subsidiaries, provides electrical construction services in the United States and Canada. The company's Transmission and Distribution segment focus on construction, maintenance, and repair to customers in the electric utility industry, including construction and maintenance of high voltage transmission lines, substations, and lower voltage underground and overhead distribution systems. The Commercial and Industrial segment serves commercial and industrial facility owners, governmental agencies, and developers. MYR Group Inc. was founded in 1891 and is headquartered in Henderson, Colorado.”
source: Yahoo Finance
(used with permission)
Upside price rewards are from the behavioral analysis (of what to do right, not of errors) by Market-Makers [MMs] as they protect their at-risk capital from possible damaging future price moves. Their potential reward forecasts are measured by the green horizontal scale.
The risk dimension is of actual price drawdowns at their most extreme point while being held in previous pursuit of upside rewards similar to the ones currently being seen. They are measured on the red vertical scale.
Both scales are of percent change from zero to 25%. Any stock or ETF whose present risk exposure exceeds its reward prospect will be above the dotted diagonal line.
Best reward-to-risk tradeoffs are to be found at the frontier of alternatives down and to the right. As a market-index “norm” currently, the S&P500 Index ETF is at location . At the more extreme trade-off of Risk vs. Reward is TPC at . Our present primary interest is MYRG at location .
Is the added reward of TPC worth the added risk, compared to MYRG? A fuller description of investing considerations should add to investors’ decisions of the suitability and credibility of the available investment alternatives. Figure 2 presents some of those considerations, drawn from outcomes of prior MM forecasts having the same up-to-down earlier expectation proportions as those of today.
source: Author, blockdesk.com
The advantage of determining Market-Maker forecasts for coming stock prices is that they offer many dimensions more than typical “street analyst” forecast of a single target-price at one point in time. Instead of only one higher (or lower) future price, the MM forecasts are drawn from market data valid across relevant (typically shorter) periods of time for both the upper and lower price limits seen as likely to be encountered in such a period.
That range of coming prices for each investment candidate is clearly split into upside and downside prospects by it’s today market price. We note what proportion of that whole forecast price range is between the today market quote and the low-end prospect, the downside exposure. We label that % of the range as the Range Index [RI] and note it in column [G] of Figure 2. It gets used to identify and average all prior RIs of similar size as a suitable sample of subsequent market outcomes in column [L], as a proportion of all price-range forecasts for each stock in the past 5 years of market days [M].
With those samples, scaled individually to each candidate’s relevant prior-sample outcomes, we now can make appropriate direct comparisons of answers to questions of:
How big a capital gain might be expected from this stock in the next few months? [ I ] Out of the sample, what are the Odds (how likely) that any one will be profitable? How long, on average, [J] might it take for a typical sample holding to come to a disciplined termination? In that average holding period, how bad an interim price drawdown might be experienced? How credible [N] is the current upside forecast [E] compared to what history realized [ I ]? Given [E] and [F], what is the current Reward to Risk [T] ratio?
Given that we are posed with a decision under the inevitable uncertainty of the future, no collection of answers or actual outcomes can be expected to prove perfection. But on balance they should help investors to tailor their candidate choices to best address the degree to which the data leads to the most satisfying outcomes, most of the time.
Where the objective is to find from the candidates in Figure 2 the biggest, quickest, most likely capital gain in the next 3 months with the least interim price drawdown distress, it appears that the logical choice is with MYRG. Its +14% price-gain forecast in the next 3 months (or as little as 2) is twice as much as the sweetest Dow-Jones Stock dividend will yield in the entire year. With another 3 calendar quarters to add to it from other capital gains.
The reassurance of perspective is provided by the bottom 3 rows of Figure 2, which deal with the ETF of S&P 500 Index (SPY), with averages of the current price range forecasts of 3,400+ stocks, ETFs, and indexes, and with the average likely performance of the best 20 out of that 3,400+.
That perspective ought to make it clear that MYRG’s outstanding past and likely future performance is not just a cherry-pick assertive outlook without reason. Every day’s market activity contains some enormous winning prospects, as well as the often well-publicized ugly losses out of the 3,400.
(used with permission)
This is NOT a “technical analysis chart” of past market action. Instead, its vertical lines measure daily MM forecast price ranges. The heavy dot in each forecast is the stock’s closing price on the day of the forecast dividing the range into upside and downside prospects.
MYRG now has returned to its prior payoff level of $109, with current upside expectations to near $125. Note the increase in upside prospect in this last day’s forecast, despite the day’s price decline.
Comparing these investment candidates to choose the best near-term capital gain prospect, MYR Group, Inc. (MYRG) appears to be far better suited than all the others evaluated here.
This article was written by
Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, but may initiate a beneficial Long position through a purchase of the stock, or the purchase of call options or similar derivatives in MYRG over 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.
Additional disclosure: Additional disclosure: Peter Way and generations of the Way Family are long-term providers of perspective information, earlier helping professional investors and now individual investors, discriminate between wealth-building opportunities in individual stocks and ETFs. We do not manage money for others outside of the family but do provide pro bono consulting for a limited number of not-for-profit organizations.
We firmly believe investors need to maintain skin in their game by actively initiating commitment choices of capital and time investments in their personal portfolios. So our information presents for D-I-Y investor guidance what the arguably best-informed professional investors are thinking. Their insights, revealed through their own self-protective hedging actions, tell what they believe is most likely to happen to the prices of specific issues in coming weeks and months. Evidences of how such prior forecasts have worked out are routinely provided. Our website, blockdesk.com has further information.