PowerRatings Weekly Outlook: LMT, GD, AW, CLHB, ARB

This week at PowerRatings.net we found opportunities in the Defense and Aerospace industry, as well as in a number of other stocks that we have not yet had the chance to share with PowerRatings subscribers.

Best Offense is Good Defense

We started off the week looking at a pair of Defense & Aerospace stocks: Lockheed Martin (LMT@LMT | Quote | Chart | News | PowerRating) and General Dynamics (GD@GD | Quote | Chart | News | PowerRating). These two stocks are the best bets in an industry that shows few signs of slowing down - regardless of who wins the political contest in November. This industry has recently been the scene of merger and acquisitions activity, with the planned takeover of DRS Technologies by the Italian firm, Finmeccanica.

As stocks with Long Term PowerRatings of 8, both Lockheed Martin and General Dynamics are stocks that should be both more reliable and better performers than the average stock over the next year. Specifically, we found that 8-rated stocks were higher one year later more than 71% of the time, compared to the average stock, which was higher one year later less than 68% of the time.

Lockheed Martin was recently in the news due to its winning of a billion dollar contract from the Air Force to build a next generation GPS system - beating out rival Boeing in the process. For its part, General Dynamics was on the receiving end of some positive press from Barron's, which saw opportunity in the company's transition to a new CEO.

You can read our PowerRatings analysis of Lockheed Martin and General Dynamics here.

Keep It Clean

The other industry we looked at this week at PowerRatings.net was the Waste Management industry. And once again we took two off the top in the form of Allied Waste Industries (AW@AW | Quote | Chart | News | PowerRating) and Clean Harbors Inc. (CLHB@CLHB | Quote | Chart | News | PowerRating).

Click here to read our PowerRatings analysis of Allied Waste Industries and Clean Harbors Inc.

As members of the Waste Management industry, both stocks belong to an industry group with a PowerRating of 10. Our research into industry group behavior since 1995 tells us that the top rated industries, the 10-rated industries, produced average annualized returns of more than 35%. The average industry, by comparison, managed average annualized returns of 14.61%.

When we wrote about these stocks earlier this week, both had earned PowerRatings of 8. As of this writing on Friday, however, Allied Waste's PowerRatings had dipped one notch to 7. But it did so as a result of buyers swooping in on the stock on Thursday, sending Allied Waste to new, year-to-date highs.

Odds, Ends and Upgrades

Our Featured stock in this week's Stock Spotlight was a bit of a surprise - if for no other reason than I don't believe it is a stock we have ever discussed here at PowerRatings.net: Arbitron (ARB@ARB | Quote | Chart | News | PowerRating).

Arbtiron is in the business of providing audience data to media companies including advertisers, radio networks, and cable providers. The stock has been moving higher since early May when it ended a pullback that drew it all the way down to its 200-day moving average.

Click here to read our Featured Stock Spotlight for the Week with Arbitron.

In the interest of full disclosure, I should report that I actually have a sister-in-law who has worked for Arbitron for almost as long as I have known her. Arbitron has a Long Term PowerRating of 9 and is the top rated stock in the 10-rated Research Services industry group.

Two other stocks we looked at late in the week were Edwards Life Sciences (EW@EW | Quote | Chart | News | PowerRating) and Tech Data Corporation (TECD@TECD | Quote | Chart | News | PowerRating). Both of these stocks had average PowerRatings for most of the past several weeks. But having made rallies above their 200-day moving averages, and since pulled back, both EW and TECD have become increasingly attractive as investments for active investors and long term traders. As of this writing, EW and TECD have Long Term PowerRatings of 8.

To read our PowerRatings analysis of Edwards Life Sciences and Tech Data Corporation, click here.

Stocks in the News

Stocks making headlines this week included some personnel changes at the top for two major banks, signs of growing competition in the smartphone industry and what appears to be the last gasp of the SUV Era.

Investors and traders in Palm (PALM | Quote | Chart | News | PowerRating) were heartened by news that the company's new smartphone, Centro, was taking way customers from Apple's iPhone.

The chief executive officers of both Wachovia (WB | Quote | Chart | News | PowerRating) and Washington Mutual (WM | Quote | Chart | News | PowerRating) were removed this week, as banks struggled to pin some form of accountability for their exposure to the subprime lending debacle on their leadership.

A reportedly "mild case of bird flu" led meat producer Tyson Foods (TSN | Quote | Chart | News | PowerRating) to eradicate 15,000 chickens this week. Investors sold first and asked questions later, sending the stock down nearly 9% earlier this week.

Have the Monster Trucks (and SUVs) met their match in King Crude? Disappointing sales of both pickup trucks and SUVs led investors and traders to sell shares of both Ford (F | Quote | Chart | News | PowerRating) and General Motors (GM | Quote | Chart | News | PowerRating) this week.

While questions swirl over how much financial difficult Lehman Brothers (LEH | Quote | Chart | News | PowerRating) is facing at it seeks to raise as much as $5 billion in new capital, Merrill Lynch earlier this week upgraded Lehman from "underperform" to "buy."

Verizon (VZ | Quote | Chart | News | PowerRating) announced that it would buy Alltel for $28.1 billion. The move will make Verizon Wireless the largest wireless communications company in the United States.

New highs in crude oil and cutbacks by the airlines helped drag shares of Boeing (BA | Quote | Chart | News | PowerRating) and other aerospace index stocks lower on Friday.

What To Look For Next Week

Monday: Pending Home Sales
Tuesday: Bank of Canada Announcement
Wednesday: Beige Book
Thursday: Retail Sales / Business Inventories / Jobless Claims
Friday: Consumer Price Index / Consumer Confidence

Best Performing Stocks (PR 8-10) of the Last Five Days

Here are some of the best performing, high Long Term PowerRatings stocks of the past five days. This week, all of the listed stocks have PowerRatings of 8 or 9.

Arbitron Inc. (ARB@ARB | Quote | Chart | News | PowerRating) Long Term PowerRating 9
Dominion Resources (D@D | Quote | Chart | News | PowerRating) Long Term PowerRating 8
Medtronic Inc. (MDT@MDT | Quote | Chart | News | PowerRating) Long Term PowerRating 8
ConAgra Foods (CAG@CAG | Quote | Chart | News | PowerRating) Long Term PowerRating 8
Energy East Corporation (EAS@EAS | Quote | Chart | News | PowerRating) Long Term PowerRating 8

Worst Performing Stocks (PR 1-3) of the Last Five Days

Here are some of the worst performing, low Long Term PowerRatings stocks of the past five days. This week, all of the listed stocks have PowerRatings of 1 or 2.

American Eagle Outfitters (AEO@AEO | Quote | Chart | News | PowerRating) Long Term PowerRating 2
China Telecom (CHA@CHA | Quote | Chart | News | PowerRating) Long Term PowerRating 2
J Crew Group Inc. (JCG@JCG | Quote | Chart | News | PowerRating) Long Term PowerRating 2
Merrill Lynch & Company (MER@MER | Quote | Chart | News | PowerRating) Long Term PowerRating 2
Lehman Brothers Holdings (LEH@LEH | Quote | Chart | News | PowerRating) Long Term PowerRating 1

David Penn is Senior Editor of PowerRatings.net.