Top and Bottom 10 Performers in 1987

With the market rising so strongly so far in 1987, it has not been difficult to pick winning stocks and stock groups. But some groups have performed better than others.

The top 10 groups this year through Feb. 27, according to Standard & Poor’s, were semiconductor stocks (up 45.4%), followed by metals (up 36.8%), copper (up 36.3%), specialty retailing (up 35.8%), offshore drilling (up 35.3%), health care (up 33.4%), tires and rubber (up 33%), shoes (up 32.6%), toys (up 31.8%) and newspaper publishing (up 30.7%).

The bottom 10 performers were air freight (up 1%), telephones (up 4.4%), electric utilities (up 5.1%), coal (up 5.9%), New York City banks (up 6%), banks outside New York City (up 6.2%), truckers (up 6.3%), life insurance (up 6.6%), international oil companies (up 8.1%) and domestic oil companies (up 11.1%).

By contrast, the S&P; 500 was up 17.36% through Feb. 27.

However, even with this year’s gains, some stocks and groups are still undervalued, analysts say.

Elaine M. Garzarelli, chief quantitative analyst for Shearson Lehman Bros. and rated as Wall Street’s top quantitative analyst in 1986 by Institutional Investor magazine, lists drugstores, newspapers, cosmetics, truckers, tobacco, aluminum and forest products among groups selling below normal price-earnings multiples. Forest product stocks, for example, normally sell at price-earnings multiples of 20% higher than the multiple on the S&P; 500, but now are selling at only 8% higher, Garzarelli said.

James McKeever, editor of the McKeever Strategy Letter of Medford, Ore., ranked by the Hulbert Financial Digest as the top investment newsletter over the past year, likes stocks in precious-metals mining, energy, paper and forest products, and data processing. Among specific stocks in these groups, he prefers Mobil, International Paper, Amdahl and Campbell Red Lake Mines.