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From the doghouse to under-the-radar market leaders

In poking around through the various stock screens on my site I came across the following interesting situation. Let me take you through my journey...

I started out looking at the Sector and Style Scorecard here at Trade-Radar. I noticed there were two Consumer related ETFs in the top eight: the iShares Dow Jones U.S. Consumer Index Fund (IYC) and the iShares Dow Jones U.S. Consumer Goods Index Fund (IYK). Interesting factoid but so far no clear investment ideas.

I popped over to the Industry Inspector at sister site TradingStockAlerts.com and set up the screener to look for industries where more than 50% of the stocks in an industry were above their 50-day EMAs and had bullish MACD. This resulted in a modest sized list of industries. Toward the top were some of the industries that have been quite popular lately including Precious Metals and Pharmaceuticals. Down the list a ways, in the Consumer Services sector (and with a less than descriptive title) was the "Other Consumer Services" industry.

Taking a quick look at the charts (by hovering over the symbols in the list of companies making up the "Other Consumer Services" industry group) revealed that many of the stocks have been steadily moving higher; however, since there are 67 stocks in this particular industry, I realized I needed a better way to sift through them before deciding which ones might be worth putting on a watch list.

So I popped over to the Premium Stock Screener and selected the "Other Consumer Services" industry as one of the screener criteria. Then I started adding more criteria, trying to whittle the list down to something manageable. Looking for only those stocks above their 50-day EMA, bullish MACD, a bullish Trend Performance Score and ROE over 15% yielded the following list:

Symbol Name
APEI American Public Education, Inc.
APOL Apollo Group, Inc.
ASPS Altisource Portfolio Solutions S.A.
BPI Bridgepoint Education
CECO Career Education Corporation
CSTR Coinstar, Inc.
DV DeVry Inc.
EDU New Oriental Education & Technology Group, Inc.
ESI ITT Educational Services, Inc.
IT Gartner, Inc.
LINC Lincoln Educational Services Corporation
LOPE Grand Canyon Education, Inc.
NAUH National American University Holdings, Inc.
STNR Steiner Leisure Limited
STRA Strayer Education, Inc.
UTI Universal Technical Institute Inc

It was more than interesting to see that almost all of these companies are involved in the for-profit education sector. Barely a year ago these stocks were shunned. It looked like government regulation was about to cut them off from lucrative government backed student loans if the schools couldn't show that their graduates were actually able to obtain decent enough jobs to repay the loans. The schools cried that this would decimate their earnings potential and sent an army of lobbyists to Washington. The rules were watered down and now these stocks have quietly regained favor. As the market has swung suddenly from one extreme to another, these companies have for the most part put in solid, much less volatile performances.

A couple of other notes: not all of these stocks are for-profit education companies. Also on the list is Coinstar, owner of the ubiquitous Redbox DVD vending machines. There is Gartner, the technology sector analysis and consulting firm. Steiner Leisure, purveyors of spa products. Finally, there is Altisource Portfolio Solutions which provides services and software for the real estate industry.

By the way, you may be interested to know that Strayer pays a nearly 3% dividend.

In conclusion, if you are looking for stocks that have sidestepped some of the recent volatility and are quietly proceeding on nice bullish trends, the list above should provide some good material for your watch list.

Disclosure: no positions in any stocks mentioned in this post

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