Zacks.com featured expert Kevin Matras highlights: US LEC Corp., AllianceBernstein, ITT Corporation and Kimberly-Clark.

CHICAGO -- Kevin Matras looks at how to find winning stocks in the winningest Sectors. Stocks in this week's article are US LEC Corp. (NASDAQ: CLEC), AllianceBernstein (NYSE: AB), ITT Corporation (NYSE: ITT) and Kimberly-Clark Corp. (NYSE: KMB). Click here for the full story exclusively on Zacks.com: http://at.zacks.com/?id=109

Screen of the Week written by Kevin Matras of Zacks Investment Research:

We've mentioned it here before, but it's worth saying again; nearly half of a stock's price movement is tied to the performance of its respective group (Sector and Industry). That being said, most great stocks from great groups often have some great peers as well.

If you find yourself in a killer trade (or wished you were in one), take a look at the characteristics of THAT STOCK and then hunt within its group to find OTHER STOCKS that share the same characteristics. Does a certain outstanding stock exhibit great sales growth? I'm sure there are at least a few within its group that are also showing similar numbers. What about increasing margins? If the stock is doing well, it's likely that the industry itself is experiencing meaningful increases in margins as well.

This type of screening is often called 'modeling'. Figure out the components of what makes something successful and concentrate on that. If you're in love with a certain stock or sector, but it's not doing anything, or even moving against you, then move on. If you see great stocks in great groups while you're bemoaning your misfortune in laggards or non-movers, find what stocks are successful and model them. If the winningest stocks in a particular sector or industry are trading at PE ratios that you generally won't consider, ... instead consider this; if you had considered them, they would be winning for you.

So therefore, see what characteristics some of the best stocks have in common and try getting on some of those.

Here's something to start you off.

The top three Sectors based on the percentage of stocks at (or within 10% of) their 52-week highs are listed below.

(I'd also like to note that when analyzing a group, I think looking at the number of stocks trading near their 52-week high is better than simply looking at the percentage price change. I say that because if you have a group such as the Oils and Energy sector for instance that has had a huge run up over time, but then pulls back sharply in a wholesale manner (often times signaling a sector rotation), that group can still conceivably have a better average price change than other groups because the recent drop is 'lost' within the preceding price run-up. But monitoring their percentages from their 52-week high can always be detected, regardless of how great their previous run-up was, which in turn lets you cleanly analyze how good the group is really doing.)

Current standings (as of 1/8/07):
1 Utilities     60%
2 Finance       62%
3 Conglomerates 51%

(Consumer Staples was a close 4th at 50%)

Previous standings from Apr 10, 2006
(the last time I wrote about this):
1 Conglomerates   63% (now at 51% and in 3rd place)
2 Finance         60% (still in 2nd place, but now at 62%)
3 Basic Materials 57% (now in 13th place (out of 16) with 31%)

(4th place was Aerospace back then at 54%, but is now 6th with 40%)

Here are a few stocks from each of those current top sectors
(for Monday 1/8/07):

CLEC  US LEC Corp. - Utilities
AB    AllianceBernstein - Finance
ITT   ITT Corporation - Conglomerates
KMB   Kimberly-Clark Corp. - Consumer Staples

Now try screening for stocks in these Sectors that are in the best Industries.

In fact, in the Research Wizard, you can rank the Industries on whatever item you choose. (Same thing for the Sectors.) Want to find the 'best' Industries based on the highest ROE or biggest Earnings Estimate Revisions? You can! Or maybe on the lowest P/E ratios or Price to Book Values. That's no problem either. Whatever items you want to use to rank your Industries can all be done with a few clicks of the mouse.

Then you can even narrow it down to the best stocks within those groups - again, based on whatever criteria you choose.

To search for the best stocks (and Groups) yourself, sign up for your two-week FREE trial to the Research Wizard. Remember the key to successful screening is in discovering those screens that have produced profitable results in the past. And that's exactly what you get with the powerful Screening and Backtesting ability of Research Wizard. You can do it. Learn how, today. http://at.zacks.com/?id=111

Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.

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