Industry Rank Analysis 1-19-10 In evaluating the Zacks industry ranks, you want to see two things: a good overall score (low, meaning more Zacks #1 and #2-Ranked stocks than #4 or #5-ranked stocks) and some improvement in the relative position from the prior week. Getting Energized Two industries that in one sense are polar opposites of each other, but in other respects are similar both showed fairly significant improvements in their industry scores this week. Both are in the Energy sector, but one is synonymous with the old, Coal, while the other is supposed to be the salvation of the future, Alternative Energy. Of the two, based on the Zacks Rank, which is a very effective short-term (up to about 3 months) tool for trading, Coal looks better on both the absolute increase, and on the weekly improvement. Coal is currently in 52nd place out of the 206 industries we rank. That in and of itself would not be enough to get it mentioned here. However it improved by 52 spots over the last week, with the average (unweighted) Zacks Rank improving to 2.75 from 2.94. Two stocks that stand out with Zacks number one rankings are Alpha Natural Resources ( ANR ) and Walter Industries ( WLT ). With 16 firms in the industry, it is easier for Coal to make a big move in the ranking (in either direction) than it is for the Alternative Energy Industry, which has 32 names. The more firms there are in an industry, the more the industry rank is going to tend towards 3.00, and the less impact any individual stock’s rank will have on the overall industry rank. The Alternative Energy Industry did move up 12 spots this week to 63rd place. The Coal industry only had one stock with a Zacks Rank #4 weighing on its total (an no Zacks Rank #5s), while the Alternative Energy industry is more differentiated when it comes to the Zacks rank. It has three Zacks Rank #1 firms that are worth taking a look at: Canadian Solar ( CSIQ ), Solarfun Power ( SOLF ) and Trina Solar ( TSL ), as well as seven Zacks Rank #2 stocks. Offsetting those are five #4-ranked stocks and one stock with the dreaded #5 rank -- A-Power Energy APWR). In part the divergence stems from the fact that Alternative Energy consists of several different alternatives. APWR is mostly a wind power firm, and three of the five #4-ranked firms are non-solar alternatives. All three of the #1-ranked firms and four of the #2-ranked firms are in the solar area (and for the most part are based in China, even CSIQ, which has a somewhat deceptive name). While on the topic of the energy Industry, the International Intergrated Oils, a group that contains many of the biggest firms in the world, is now the top-ranked industry in the Energy sector, edging out the Oil Royalty trusts. The royalty trusts fell 19 spots to a still impressive 22nd place, mostly from Strong Buy (#1 ranked) or Buy (#2 ranked) moving to Holds (#3 rank) rather than any movement to the Sell rankings (#4 or #5). With just seven firms in the industry, the Oil Trust industry rank can be fairly volatile. The International Integrated Oil industry has 19 firms, and currently has five Zacks Rank #1 stocks, although two of them are different classes of the same firm, Petrobras ( PBR ) and ( PBR.A ). Other International Integrated firms with #1 ranks include CNOOC ( CEO ) and Gazprom ( GZPFY ). The industry is currently in 21st place, an improvement of 4 spots from last week. Sector This Week's Zacks Rank Week Ago Zacks Rank FY10 Revisions Ratio FY10 Estimates Revised Up FY10 Estimates Revised Down FY11 Revisions Ratio Consumer Staples 2.81 2.82 1.75 131 75 1.87 Basic Materials 2.83 2.82 1.38 171 124 1.37 Computer and Technology 2.83 2.87 2.48 468 189 3.12 Conglomerates 2.88 2.73 2.43 17 7 1.6 Retail-Wholesale 2.9 2.94 2.3 450 196 2.47 Industrial Products 2.92 2.92 1.56 95 61 1.31 Oils-Energy 2.94 2.99 1.48 359 242 1.89 Aerospace 2.95 2.88 1.86 26 14 1.88 Construction 3 3.05 1.05 45 43 0.95 Medical 3.03 3.04 1.11 247 222 1.13 Business Services 3.03 2.94 1.63 52 32 1 Consumer Discretionary 3.06 2.99 1.17 129 110 1.3 Auto-Tires-Trucks 3.07 2.93 1.41 24 17 4 Utilities 3.08 3.09 0.71 52 73 0.51 Transportation 3.19 3.17 1.59 121 76 1.78 Finance 3.2 3.17 0.87 350 403 1.14 Dirk Van Dijk, our Chief Equity Strategist, also manages the Zacks ETF Trader . This service uses Exchange Traded Funds to help investors ride a 4-to-1 performance advantage of stocks in the top half of the Zacks Industry Rank. It commands trends without the extra risk and fees of buying many different stocks. More about the Zacks ETF Trader >> Zacks Investment Research