NEW YORK ( TheStreet) -- Zeroing in on a Best Stock Now begins with a leading asset class.
Equities are the best place to be in this fifth year of the bull market. Small- and mid-cap U.S. stocks, specifically, are the most attractive.
Here is my current ranking of asset classes:
Data from Best Stocks Now App Once I have determined leading asset classes, I like to focus on the best sectors: Data from Best Stocks Now App The homebuilding and construction sector has been an outperformer for the past 12 months as the real estate rebound is real. I wrote about it last October, about midway through the surge. And the sector continues to hit new highs. Now let's drill down further to find a leading stock. Data from Best Stocks Now App Meritage Homes (MTH - Get Report) is headquartered in Scottsdale, Ariz. I just got back from a trip to Arizona to watch spring training. The Phoenix housing market, which was among the biggest busts in the financial meltdown, is recovering nicely. Scottsdale is a good place to be a homebuilder these days. And Meritage is a small-cap domestic stock. Bingo! Right asset class, right sector. How has the stock performed over the years? Data from Best Stocks Now App Meritage Homes has handily outperformed the broader market over the past one, three, five and 10 years, as well as during the 2008 bear market. When I compare Meritage to the other 3,287 stocks in my database, it earns a performance grade of "B+" and a momentum grade of "A." Momentum and performance are nice, but I also require value. I don't like momentum alone, nor do I like pure value investing. Too many value traps out there. I like to combine momentum with value. Let's take a look at the current valuation of the shares: Data from Best Stocks Now App The shares are currently trading at 15.2 times forward earnings. While I don't quite believe analysts' growth estimate of 58% per year, I would be happy with anything over 15%. That would create a PEG ratio under 1.0.
Check Out Our Best Services for Investors
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Model portfolio
- Stocks trading below $10
- Intraday trade alerts