By Josh Selway / October 25, 2017 / www.schaeffersresearch.com /
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Rockwell Automation (NYSE:ROK) and AMETEK, Inc. (NYSE:AME) both showed up on our list of best stocks to buy for November. These names fall under our Electronics sector, which, as a whole, has performed well over the past year. According to data from Schaeffer's Senior Quantitative Analyst Rocky White, 70% of the stocks we cover in this group are trading above their 80-day moving average, with an average 52-week gain of 42.2%. Shares of ROK and AME both sport year-over-year gains even greater than that, but more upside could be coming.
Rockwell Automation Stock Seems Overdue for Upgrades
For instance, Rockwell Automation stock has added 57.3% during the past year, and just yesterday hit a record high of $189.91. The shares haven't traded below their 20-day moving average since Sept. 8, and this technical strength sent the security's 14-day Relative Strength Index (RSI) to 78 at last night's close, well into overbought territory. That could be why ROK stock is down 1% at $186.59 today.
As alluded to, though, November has been very good to the equity, so this pullback may not last long. The shares have ended the month higher eight of the past 10 years, with an average gain of 6.06%. Such a move would put the security near the $198 level.
Despite Rockwell's outperformance, analysts have remained bearish. In fact, only two of 14 covering brokerage firms say to buy the equity, and its average 12-month price target of $165.13 is a significant discount to current levels. It would seem like only a matter of time before some bullish analyst attention comes ROK's way, which should result in tailwinds.
AMETEK Stock Short Sellers Have Been Hitting the Bricks
As for AMETEK stock, it has added 51.7% over the past 12 months, and also hit a record high yesterday at $69.07. And with its 14-day RSI closing last night at 75, it's now pulling back, last seen 1.1% lower at $67.95. But the shares have closed higher in November eight of the last 10 years, and have averaged a 3.73% gain.
Short sellers are certainly getting out of the way. These bearish bets have been declining for months, including a 26.4% drop during the past two reporting periods. If this trend continues, it could help AME stock continue its ascent.
Looking ahead, the company is scheduled to report earnings ahead of the open next Thursday, Nov. 2. Still, near-term options don't seem overly expensive. For instance, AMETEK's Schaeffer's Volatility Index (SVI) of 19% is only 16 percentage points from an annual low. In other words, volatility expectations for short-term options contracts are unusually muted at the moment.