Tobacco and Tech are Among Today's Leaders

Tuesday's trading saw an initial spike as merger activity overcame weak housing data. But stocks slipped in the afternoon, with metals and energy leading the way down. Today's industry leaders are a mix of high-tech and tobacco. Meanwhile, the laggards are dominated by energy and precious metals, a red flag for inflation hawks.

Tobacco Products and Cigarettes are both leading groups on Tuesday. Tobacco seems to be getting a boost from a shift to defensive stocks as investors fear higher inflation. Granted, the stocks are benefiting from a ruling expected later today that could settle a dispute between two major players. But the gains in tobacco stocks today are spread among all of the industry players, which suggests that investors are at the macro environment for tobacco stocks, and not at a ruling that affects a few players.
The Cigarette industry and the Tobacco Products industry both have low PowerRatings (for Industries). The results of our simulated trading show that low-rated industries have underperformed over the next three months, while industries rated 1 have lost money on an annualized basis. Investors should think twice before investing in any group on our list of Industries to Avoid.

Another leader on Tuesday is Semiconductor Memory Chips. The group has been rebounding since news last week that Samsung is holding back inventory from the market. This led to a big rise in chip prices, which have been under pressure in 2007 due to a capacity glut (especially for DRAM used in personal computers). Unfortunately, not one of the five semiconductor industries has an attractive PowerRating (for Industries). Our quantitative data from 1995 through 2006 have done a good job of identifying industries that have generated superior annualized returns for a time horizon of three months. So investors who seek growth and safety are better off considering our list of Top Rated Industries.

Finally, Research Services was a leading group on Thursday. This is driven by a 1.1% rise in shares of Arbitron Inc. (ARB@ARB | Quote | Chart | News | PowerRating) This follows a 4% rise on Monday when Arbitron won a large contract for its portable devices to be used by a major radio station group. This was followed by a similar announcement on Tuesday when the radio industry in Denmark also agreed to use this system. Arbitron has a market cap of $1.5 billion and it measures the audiences of cable, TV, and radio shows via its joint venture with the Nielsen Co. Arbitron has a PowerRating (for Investors) of 9.

Rob Martorana is Director of Content for PowerRatings.net.

Rob was most recently at TheStreet.com as the Director of Content for Professional Products. Robert has spent 22 years on Wall Street, and was a portfolio manager and head of U.S. equity research at Barclays Private Bank. Robert also managed small-cap stocks at Schroder Capital Management International, was an equity analyst at Vontobel USA, and was an editor and senior industry analyst for The Value Line Investment Survey.