3 Buy-Rated Stocks in A-Rated Industries

The S&P 500 may be up 6% for the month, but that doesn’t mean stocks will continue rising through the end of the year. There are still a host of concerns that investors are grappling with, including inflation, labor shortages, and…

supply constraints. Since there could be some more volatility ahead, it’s best to consider stocks that have a stronger chance to outperform in the months ahead.

As you may know, our POWR Ratings system was designed to find the stocks that have the best potential for outperformance. The system weighs 118 different factors for every stock. These factors help contribute to a stock’s likelihood of outperformance. Stocks that have an overall grade of A or B are likely to outperform. But we can take it up a notch. The POWR Ratings also include six Component Grades and an Industry Grade.

Our research found that picking top-rated stocks in top-rated industries increases the potential for outperformance. Our analysis shows that stocks in an A or B-rated industry, on average, are more likely to outperform. So, I ran a screen for stocks with an overall grade of A in an A-rated industry. This resulted in stocks such as Gartner, Inc. (IT – Get Rating), Signet Jewelers (SIG – Get Rating), and CRA International, Inc. (CRAI – Get Rating).

Gartner, Inc. (IT – Get Rating

IT provides independent research and analysis on information technology and other related technology industries. Its research is delivered to clients’ desktops in the form of reports, briefings, and updates. Typical clients are chief information officers and other business executives who help plan companies’ IT budgets.

Its huge and diverse total addressable market has low customer concentration that helps reduce operating risks. This also enables the company to have a competitive advantage against its peers. Its proprietary research content continues to drive steady revenue growth for the company. The results so far this year have led to management raising its full-year guidance.

The company’s 2017 acquisition of CEB, a talent management and best practices consulting firm, helped reinforce its market strength. The combination of IT’s syndicated research, and advisory offerings with CEBs practice and talent management insights allows the company to have a comprehensive suite of offerings worldwide.

IT has an overall grade of A, which translates into a Strong Buy rating. The company has a Growth Grade of A, which makes sense as its earnings per share have grown an average of 57.5% over the past three years. Analysts forecast earnings to increase 71.4% year over year in the third quarter, which is expected to report on Tuesday.

IT also has a Quality Grade of A. Its cash balance of $796 million at the end of June compares favorably to only $5 million in short-term debt. We also provide Value, Momentum, Stability, and Sentiment Grades for IT, which you can find here. IT is ranked #2 in the A-rated Outsourcing – Tech Services industry. For more top stocks in this highly rated industry, click here.

Signet Jewelers (SIG – Get Rating

SIG retails diamond jewelry. Its merchandise mix includes bridal, fashion, watches, and others. The bridal category includes engagement, wedding, and anniversary purchases. Its well-known brands include Kay, Jared, Zales, and Piercing Pagoda. Like many other companies, SIG has invested in increasing its online shopping experience.

The company is on track to lead digital commerce in the jewelry industry. Management has been looking into combining the digital and in-store experience to help it gain a competitive edge. So far, the firm has been integrating its physical stores into the digital customer experience through data-driven in-store consultations and options such as buy online pickup in-store and curbside.

The company is also making interaction a part of its websites, stores, and inventory pipeline. As of now, SIG has added more than…

 

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