Page 1079 - How to Make Money in Stocks Trilogy

Buying Checklist 65

try group was moving sharply higher in the rankings: In mid-March, the
group was ranked #25 out of the 197 groups, up from #176 seven months
earlier.
Remember: At that time, the economy was struggling. People on tight
budgets do more shopping at discount stores, and that’s why institutional
investors began shifting their money into stocks in the Discount & Variety
industry group.
So it’s no coincidence that around the same time, top-rated stocks within
that group started impressive runs: Those moves were being fueled by the
institutional money moving into that industry.

Dollar General 124% gain in 29 months
Dollar Tree 225% gain in 30 months
By checking the rankings, you would have seen that another group in the
Retail sector, Retail–Apparel/Shoes/Accessories, had also been moving up
rapidly. As of February 24, 2010, the group had jumped from #117 to #19
over the last seven months.
Two leaders in that group also happened to be discount retailers: Ross
Stores and TJX Companies, which owns T. J. Maxx and Marshalls. That fur-
ther confirmed the big institutional money was flowing into operators of
bargain stores. Both TJX and Ross broke out within a week and generated
solid gains for investors over the next two years:

Ross Stores 176% gain in 29 months
TJX Companies 125% gain in 30 months

Coincidence? Not at all. Year after year, countless examples reinforce
this simple strategy: Focus on the top-rated stocks in the top-ranked
industry groups.
Why put yourself at a disadvantage by buying low-rated stocks in a low-
ranked group?

Where to Find Industry Group Rankings
You can see the current ranking for your stock’s group in Stock Checkup.
Pay particular attention to stocks in the top 40 groups, and avoid those in
the bottom 40.