TIP OF THE WEEK – Find potential value/contrarian stocks using a “Map of the Market”

Find potential value/contrarian stocks using a “Map of the Market”

Jason Brizic

May 27, 2011

I sometimes use market visualization tools to spot potential value stocks that I miss using stock screeners.

I look for beat down stocks headed for value territory.  Stocks that are down 30% or more during a bull market deserve at least a quick valuation to see if they have any redeeming qualities overlooked by growth investors.

SmartMoney.com’s “Map of the Market” tool is an excellent visualization of the S&P 500’s ups and downs.  This tool really helps you see sector rotation over a period of time also.  The bad news is that it doesn’t incorporate total return.  That means that it doesn’t include dividends paid into the return on a stock.  But I don’t use it to find dividend stocks.  I’m looking for contrarian investment opportunities.

Go to www.smartmoney.com.  Click on the Tools tab and then find Map of the Market under Featured Tools.  Or follow this link: http://www.smartmoney.com/map-of-the-market/?link=SM_topnav_tools .  I choose the following settings in the legend/control panel area:

Show Change since: 52 weeks

Highlight Top 5: Losers 


My eye was drawn to the Basic Materials sector.  What is that big red company amongst all that green?  It turned out to be Weyerhaeuser (WY).  I hadn’t heard of them before.  They are a paper and timber company.  Their stock price is in the dumps because of the housing depression.  I did a quick valuation on the company and it has a lackluster dividend and very little earning power.  Its balance sheet looks okay.  I didn’t find a diamond today, but now you have another method to find some contrarian stocks.

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Published in: on May 27, 2011 at 12:09 pm  Leave a Comment  

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