Are you having difficulty finding which stocks to invest in? Stock picking is a complicated process as investors must always be on the lookout for a bargain, look at current market conditions, maybe use technical analysis or fundamental analysis, and other techniques that can provide that perfect blend of risk and return. I wouldn't blame you if you said that in this bearish market, most stocks are on a constant downward trend or returning their returns for the year. However, did you know that there is a metric that portfolio and asset managers look at to find resilient stocks? It’s called relative performance.
Relative performance measures an asset's difference in performance against an index, sector, or group of peers. This tells an investor if a stock or asset outperforms the market, sector, or peer group. Finding the leaders in the market easily lets you follow the money by seeing which stocks other investors are potentially following and investing in. Therefore, reducing the number of stocks an investor can focus on or invest in. In addition, having a better sense of what stocks are performing better than the broader market helps create potential opportunities and awareness of potential risks.
This article will look at 3 dividend elites beating the S&P 500 year to date.
West Pharmaceutical Services, Inc. (WST)
Relative Performance Against S&P: 38.16%
West Pharmaceutical Services, Inc. manufactures integrated containment and delivery solutions for injectable medicines. The company was founded in 1923 by J.R. Wike and Herman O. West. Currently, the company is headquartered in Exton, Pennsylvania, U.S. Additionally, the company employs over 13,000 employees. The company offers various pharmaceutical products and services, such as:
· Cartridge Systems and Components
West Pharmaceutical Services stock has an annual dividend yield is 0.23% and a 5-year dividend growth rate of 37.74%. The company recently announced its next dividend to be paid on May 3, 2023, for $0.19 per common share. WST has continuously increased its dividends for 30 straight years and is a part of the elite Dividend Aristocrats.
What do the Analysts Say?
Analysts rate West Pharmaceutical Services a “Moderate Buy” rating based on 2 Strong Buys and 5 Holds. WST’s mean target price is $313.33, with a high target of $375.00, an upside of 13%.
Where are we now?
Prices reached a short-term high, with RSI showing some signs of divergence. This shows a potential correction with the waning momentum and could be an opportunity for investors to buy. Investors should observe price action near the resistance for any confirmed breakouts, a bounce on the rising trendline, or potentially a gap fill near the $280.00 mark.
W.W. Grainger Inc. (GWW)
Relative Performance Against S&P: 16.78%
W.W. Grainger, Inc. is a commercial supply company based in the United States, serving over 4.5 million customers. The company was founded in 1927 by William Wallace Grainger. Currently, the company is headquartered in Lake Forest, Illinois, U.S. Additionally, the company had about 26000 employees in 2021. GWW mainly operates in the United Kingdom, North America, and Japan. The company's products are offered in two sections:
The High-Touch Solutions Assortment section provides over 2 million maintenance, repair, and operating (MRO) products.
The Endless Assortment section offers over 31 million products, and the catalog is still expanding.
Its operations are divided into 10 segments:
- Building Maintenance
- Ecommerce Solutions
- Emergency and Disaster Preparedness
- Energy Management
- Indoor Air Quality (IAQ) Management
- Inventory Management
- People Management
- Sustainable Practices
- Water Resource Management
- Warehouse Management
W.W. Grainger has an annual dividend yield of 1.03% and a 5-year dividend growth rate of 33.99%. Based on historical announcements, the company is expected to announce its next dividend in the last week of April. GWW has continuously increased its dividends for 52
straight years and, as such, is a part of the elite Dividend Kings.
What do the Analysts Say?
Analysts rate W.W. Grainger a “Moderate Buy” rating based on 5 Strong Buys, 6 Holds, and 2 Strong Sells. GWW’s mean target price is $701.10, with a high target of $800.00 - representing a potential upside of 20.23%.
Where are we now?
Price tells us we may have already reached our short-term high price for W.W.Grainger. RSI is showing a recent divergence in price and strength of the direction. This can also be an opportunity for investors to step in and pick up GWW at a bargain. That said, investors can wait and see how prices will behave near the gap support of around $628.18, resistance at $709.21, or potential gap fill. Investors should always wait for ideal entry signals to mitigate potential risks.
Smith A.O. Corp (AOS)
Relative Performance Against S&P: 12.97%
Smith A.O. Corporation is a company that offers water heating and treatment solutions. Smith A.O. Corporation also offers the Lochinvar brand, the leading boiler brand in the US. It also markets its Aquasana branded products directly to consumers through online retailers and e-commerce. Smith A.O. Corporation also offers branded water softener products and solutions for the problem of well water. A.O. Smith Corporation sells through water quality dealers under the Hague, Water-Right, and Master Water brands.
The company has operations in 2 main market segments:
North America - Sells a variety of gas and electric water heaters, boilers, tanks, treatment products for residential and commercial use, commercial solar water heating systems, swimming pool and spa heaters, expansion tanks, and related parts.
The rest of the world, including China, India, and Europe, sells a variety of gas and electric water heaters, tanks, boilers, and treatment products for residential and commercial use.
Smith A.O. Corporation has an annual dividend yield of 1.8% and a 5-year dividend growth rate of 103.57%. Based on historical announcements, the company is expected to announce its next dividend in the 2nd week of April. AOS has continuously increased its dividends for 31 straight years and is a part of the elite Dividend Aristocrats.
What do the Analysts Say?
Analysts rate Smith A.O. Corporation a “Hold” rating based on 3 Strong Buys, 9 Holds, and 2 Strong Sells. AOS’s mean target price is $68.40, with a high target of $80.00, representing a potential upside of 20.68%.
Where are we now?
Smith A.O.’s prices are currently trading within a range between $68.59 and $64.39. This contraction in the volatility shows a potential test in the short-term gap support around $63.63 - or a potential gap fill. RSI is tightening, which can signify a potential break above or below in momentum. This can present a good buying opportunity for investors to scoop up shares of AOS at a lower price than their recent highs.
Final Thoughts
Gauging a stock’s relative performance to a sector or index is one of the most valuable tools to help an investor navigate challenging market conditions. These tools give investors a sense of which stocks are resilient and can help shield stockholders from inherent risks lurking around the corner.
On the date of publication, Rick Orford did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
