In December 2014, I picked Old Dominion Freight Inc. (ODFL) for the Best Stocks for 2015 contest. At the time, the data was showing great potential for this domestic stock.
Unfortunately, since then, the stock market has taken quite a few hits. Since I recommended this stock, the S&P 500 is down nearly 7%.
Economic growth has also been swinging between highs and lows. A strong U.S. dollar and volatile oil prices have impacted various sectors in the economy, including exports and imports.
More recently, global markets have been experiencing an unusual level of fluctuations, and indices have flirted with recent lows and a possible market correction.
As you will see in the chart below, share prices have fallen significantly since I first recommended ODFL. And while this isn’t the worst performing stock in the Best Stocks contest, the stock is still down 21%.
The main culprit behind this dip is the market environment, and in the current environment, you should only invest in stocks that are both technically and fundamentally strong.
Right now, according to the Turner Analytics database, ODFL earns 80 out of 100 for its fundamental score and is rated technically bearish. Overall, the stock earns a “hold” rating in the database. So, while ODFL is a fundamentally strong stock, the current market environment is way too volatile for this position to thrive.
If the market were to steady and move back into a bullish trend, there is no doubt that this domestic stock would be on an uptrend again.
Since my last update, ODFL did start to rally back up, and by July, the stock moved from bearish to neutral. However, like many stocks, ODFL was hit hard by August’s volatility. So, I decided to implement my stop-loss strategy, which helps limit losses and protect profits. I set my stop at $72.17, which means I exited the position at a 7% loss, much better than current market price. You should always implement strategies to protect your portfolio from major losses.
If you’re still invested in this position, I expect ODFL to move back up once the market gains traction again. ODFL remains up more than 100% in the past three years, so it’s not unusual to see the stock’s price fluctuate on a day-to-day basis.
ODFL has a 52-week high of $81.48 and low of $61.17. Historically, it has moved higher in the long term, which is the important thing for investors. So the best course of action remains to hold ODFL and set a stop, so when the data makes a more definitive move, you can exit with minimal losses.
Mike Turner and his team of software engineers developed Turner Analytics, a sophisticated software market and trade-timing system that provides unbiased, quantifiable recommendations on thousands of equities and rates, ranks and scores these equities from best to worst in an easy-to-use on-line tool for individual investors. He is also the editor of Signal Investor.
