Zacks.com featured expert Kevin Matras highlights: Kellogg, Permian Basin Royalty Trust, S&T Bancorp, SureWest Communications and Wabtec

2008-10-09 21:46:58 -

- Kevin Matras looks at the best places to be right now in the market. Stocks in this week's article are Kellogg (NYSE: K), Permian Basin Royalty Trust (NYSE: PBT), S&T Bancorp (NASDAQ: STBA), SureWest Communications (NASDAQ: SURW) and Wabtec Corp. (NYSE: WAB). Click here for the full story exclusively on Zacks.com: at.zacks.com/?id=109

Screen of the Week written by

Kevin Matras of Zacks Investment Research:

Today's topic is a bit of an extension on this week's Roundtable Review discussion in which we talked about what to do with $100,000 in new cash. In that video segment, I talked about putting cash in 3 of the top sectors, such as Consumer Staples, Medical/Healthcare and Utilities. I also talked about putting some in 3 of the most beaten down or avoided sectors like Oils & Energy, Transportation and Finance.

Today I want to drill down and talk about how I would go about finding stocks in each of these sectors.

First, Consumer Staples and Utilities are oftentimes called "defensive" stocks. These stocks are usually solid companies that produce solid earnings. They're called defensive because these are the kinds of companies that will typically perform better than the market when it's going through a difficult period. The caveat is that they will often underperform during boom times. But boom times we are not in, so these defensive stocks are definitely on the agenda.

As for Oil & Energy stocks, as well as Transportation and Finance - these are not defensive plays.

Oil & Energy - namely exploration and development stocks - will usually do well when the price of energy is on the rise and worldwide demand is increasing. At the moment, oil and energy are on the decline (or have been lately - down roughly 40% over the last few months) and worldwide demand is slowing down as well.

However, the energy 'crisis' if you will, didn't just disappear. And while oil prices have fallen, as well as the hyper demand we had seen - the fact of the matter is that prices are still high by any historical measure. Furthermore, the appetite for energy continues to increase as time goes by. Even at $50 and $60 oil (we're at $90 now), there's a tremendous financial incentive for companies to explore and drill. The recent price plunge has spooked a lot of investors, but not the companies themselves as there's a lot of money to be made at these prices.

Some might call these beaten down groups contrarian plays. I just personally think there's much more value and upside in these groups than is currently priced in the market.

Screen

I'm first screening specifically for the below 6 Sectors:

* Consumer Staples

* Utilities

* Medical

* Finance

* Transportation

* Oil & Energy

Then I'm searching only for those stocks with a Zacks Rank of less than or equal to 3. No sells or strong sells allowed.

They also need Upward Earnings Estimates Revisions for not only this current year but next year as well (F1 and F2).

And they also must have a positive annual Projected Growth Rate.

Then I narrow it down by looking for the top 10 price performers in each sector over the last 12 weeks.

I now have 60 stocks - 10 from each sector. I'll then do more peer analysis to determine the ones I'm most interested in. But this is a good place to start.

Here are some stocks from a few of those groups.

K Kellogg Co. -- Consumer Staples

PBT Permian Basin Royalty Trust -- Oil & Energy

STBA S&T Bancorp -- Finance

SURW SureWest Communications -- Utilities

WAB Wabtec Corp. -- Transportation

To search for the best stocks (and Groups) yourself, sign up for your 2-week FREE trial to the Research Wizard. Remember, the key to successful screening is in discovering those screens that have produced profitable results in the past. And that's exactly what you get with the powerful Screening and Backtesting ability of Research Wizard. You can do it. Learn how, today: at.zacks.com/?id=111

Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.

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