Strange Period In The Market Providing A Buying Opportunity On Advanced Micro Devices

The last couple of weeks have been strange in the market. We have seen a reversal in the stock performances of the sectors with energy and financials flipping the script to lead the way while tech and consumer discretionary stocks have been among the worst performers. It also seems like the top-rated stocks, from a fundamental perspective, have been underperforming the lower-rated stocks.

To give you an idea of what we’re talking about, I put together a table of 50 of the most widely followed stocks on Seeking Alpha. I then took those 50 stocks and ran them through Investor’s Business Daily’s rating system.

Looking specifically at the EPS ratings and the SMR ratings, the two ratings that are fundamental ratings, I isolated 11 stocks that really stood out. The companies had an EPS rating over 80 and an SMR rating of an A. Theoretically, these 11 stocks have shown the best fundamentals results of the 50. I also isolated six stocks that were at the bottom of the ratings, EPS ratings below 40 and SMR ratings of a D or E. In theory, these stocks are the weakest stocks from a fundamental perspective.

I took these 16 stocks and looked at the returns from February 8 through February 25. You can see the results in the table below. The color-coding is something I use to identify positive ratings versus cautionary ratings. Now, look at the returns of the 11 stocks with positive fundamental ratings. All 11 lost ground during this 13-day trading stretch. Now, look at the six stocks with cautionary, or poor, fundamental ratings—five of the six gained ground during the same stretch.

Good is Bad, Bad is Good.jpg

Looking at these results and trying to make sense of them, there was one stock that stood out when I looked at the fundamentals and the charts for each company, and that company is Advanced Micro Devices (AMD).

The Numbers behind the Ratings

Obviously the first thing that stood out about AMD was the fundamental ratings. The company has seen tremendous earnings and revenue growth in recent years and the growth is expected to continue in the years ahead.

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William K. 1 month ago Member's comment

AMD has been around for a lot of years and has been consistent in producing useful high quality integrated circuits. They have been doing things right since at least the mid 1970's. An impressive track record indeed.