Stocks: Four Foul-Weather Finds

S&P's latest list finds four names that held up well during the market's recent slide—and score top marks for valuation

by Michael Kaye From Standard & Poor's Equity Research

The recent market gyrations led to some hefty losses for major stock indexes, with many individual issues losing 10% or more of their value.

But not all equities were hit with hefty declines. Some held up rather well amid the turmoil.

We wondered which stocks were bucking the recent downtrend. Our reasoning: If they were able to do better than the market amid a sharp correction, they may hold up well if another downdraft happens.

This is how we did it. We screened for stocks that have performed in the highest 20% of the entire U.S. equity universe over four periods: the past four weeks, the past 13 weeks, year-to-date, and the past 52 weeks.

Shakeout for Quality

To ensure that we turned up some attractive candidates, we tweaked the list by turning to one of our proprietary measures, Standard & Poor's Fair Value model, a quantitative stock-ranking system. The model calculates a stock's weekly Fair Value—the price at which it should trade at current market levels—based on fundamental data such as corporate earnings and growth potential, return on equity, current yield relative to the Standard & Poor's 500-stock index, and price-to-book value.

Stocks are ranked from 5, indicating significant undervaluation compared to the Fair Value universe, to 1, indicating significant overvaluation. We looked for those issues ranked 5.

Our return only included stocks with a market capitalization of at least $1 billion, and a stock price of at least $5 per share.

This was another tough screen, with only four issues making the cut:

Kaye, a chartered financial analyst, is an analyst for Standard & Poor's Portfolio Services.