Stock Ratings Define Sector Ratings

NEW YORK ( TheStreet) -- In March I noticed a dramatic shift in the distribution of buy rated stocks and sell rated stocks among the 16 sectors covered by ValuEngine. My analysis resulted in how I rated key sectors and what story each told about the U.S. economy. This last time I covered this concept was on April 5 when I wrote, Stock Ratings Key Market Top. Today I provide the current status of this unique analysis.

The basic materials sector is undervalued by 6.4% but only nine stocks out of 411 in the sector have buy ratings. There are 143 sell rated stocks and 57 strong sell rated stocks and thus 48.7% of all stocks in this sector are rated sell. This gives the sector an underweight rating.

Among the sell rated names in this sector is Dow component DuPont ( DD) which peaked at $57.25 on May 31. The stock closed Friday at $52.68 with this month's value level at $48.23.

The construction sector is 13.2% overvalued but only 17 stocks out of 160 in the sector have buy ratings. There are 40 sell rated stocks and 27 strong sell rated stocks and thus 41.9% of all stocks in this sector are rated sell. This gives the sector an underweight rating.

There are five home builders in the sector that have been upgraded to buy recently and I will cover them on Thursday following this week's data on home builder sentiment and housing starts.

A notable buy rated stock in this sector is cement company Cemex ( CX) which peaked at $12.57 on May 15. The stock closed Friday at $10.46 with its 200-week simple moving average at $9.90.

The oils-energy sector is 8.2% overvalued and only 14 stocks out of 558 stocks in the sector have buy ratings. There are 141 sell rated stocks and 47 strong sell rated stocks and thus 33.7% of all stocks in this sector are rated sell. This gives the sector an underweight rating.

A notable buy rated stock in this sector is the extremely volatile First Solar ( FSLR) which peaked this year at $59.00 on May 21. The stock closed Friday at $44.71 with a semiannual value level at $36.34 and this month's pivot at $48.63, which was a value level as June began.

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