This is based on reversion to the mean. Look at sectors that are way way down, or in a 10 year bear market. Perhaps look for recent relative strength.
Here is a place to start.
https://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile…
Some of these industries have peg ratios of .05. Diversified chemicals have a peg ratio of .19.
Of course, many good ideas fail as we all know.
This is based on reversion to the mean. Look at sectors that are way way down, or in a 10 year bear market. Perhaps look for recent relative strength.
Not reversion to the mean but continuing momentum: industries that have performed well over the last month continue to do so the following month. So, if you’re looking for the opposite you may need to use a longer lookback period.
DB2
I was thinking of a screen like this.
peg ratio <= .25
peg ratio <= .5 5 year average peg ratio
current ratio > 1
total liabilities/assets <= .5
hold 40 stocks
(pick a decent liquidity ratio)
holding period is 3 years
Or do something similar with an industry etf.
I was thinking of a screen like this…
The problem would be that different industries tend to have different ratios, such as P/S, and different growth rates. Perhaps your idea of comparing an industry to its own past metrics is the way to go.
DB2
I totally agree. Maybe all lines could be relative to the industry if you go with stocks. If you do it through industry ETFs, it would have to be compared to historical industry metrics of the same industry.