TradeSmith offers investors valuable tools for determining which stocks to watch. A good example is its Health Indicator feature. This comprehensive indicator provides an overall rating of a stock’s current health.
Using this metric, you can quickly find potential opportunities to explore. Broken down into three “zones” (green, yellow, and red), you’ll have a general idea about whether it’s best to be bullish, bearish or neutral on a particular stock.
As you may have guessed, stocks in the “Green Zone” are performing well, with little indication that the trend is on the verge of shifting.
A stock in the “Yellow Zone” has corrected by more than 50% of its volatility quotient (or VQ), a proprietary TradeSmith metric that helps measure a stock’s risk. When a stock in your portfolio goes from green to yellow, it may be a good time to reassess whether to maintain the position.
Stocks entering the “Red Zone,” have corrected by more than their calculated volatility quotient. VQ can be useful when adding stop losses to positions. View any move into the Red Zone as a warning sign to exit your position for now.
These three stocks to watch are currently in the “Green Zone,” with one of them just entering it recently.
Boyd Gaming (BYD)
Boyd Gaming (NYSE:BYD) has recently attracted attention for being an oversold stock worthy of investor interest. TradeSmith also gives it a Green Zone rating — and has for more than eight months.
The resort and casino operator has gained about 20% in the past year, and a few catalysts suggest it could rally further. Primarily, its online betting operations are expanding and it has a partnership with FanDuel.
In terms of risk, TradeSmith does classify it as medium-risk with a VQ of 29.75%. However, with the wind at its back and a solid Green Zone rating, BYD stock is certainly worth watching here.
McDonald’s (MCD)
While McDonald’s (NYSE:MCD) has been in the Green Zone for the past 10 months, investors in the stock have accrued modest (albeit steady) gains during this time frame. Inflationary pressures have likely played a role in this muted performance. These concerns persist, despite the fast food giant’s recent reporting of strong quarterly results.
So, what makes MCD stock one of the stocks to watch now? Sentiment for shares may be on the verge of improving, given the latest inflation data. Cooling inflation may be why analysts at Wells Fargo just upgraded the stock. In the upgrade, the sell-side firm cited the potential for margin expansion as one of many potential catalysts for shares.
A blue-chip stock, and a dividend aristocrat to boot, MCD’s Green Zone rating is yet another favorable factor in its corner. TradeSmith’s current volatility quotient for McDonald’s is 12.92%, which makes it a low-risk stock.
Exxon Mobil (XOM)
Like MCD, Exxon Mobil (NYSE:XOM) has also been a Green Zone stock for nearly a year (more than 11 months). Shares in the integrated oil and gas giant have remained on an upward trajectory.
Said trend may be set to continue. This makes XOM stock one of the top stocks to watch. XOM’s earnings for the June quarter fell short of expectations, but the big run-up in crude oil prices since then points to stronger quarterly results ahead.
Not only that, while not much has been said about it since February, Exxon Mobil continues to aggressively reduce operating expenses. The resultant $9 billion in annual cost savings will fall mostly to the bottom line, which will likely provide an additional boost for the stock. With a volatility quotient of 26.28%, XOM should be considered a medium-risk stock.
The TradeSmith Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.
