How We Rate Sectors & Industries

The Risk/Reward Rating of a sector or industry is based on the market-weighted aggregation of our models for the stocks in each sector or industry. New Con­structs’ stock rat­ings are powered by the best fundamental data in the business. This paper compares our analysis on a mega cap company to other major providers. Figure 1 displays the criteria and thresholds that go into the Risk/Reward Rating for each sector & industry. Note that the Risk/Reward Rating for a sector or industry uses the same methodology as our stock ratings, except that the component metrics are market-weighted averages for the stocks in the sector or industry. Then, we rate the sectors and industry based on their market-weighted Overall Risk/Reward ranking:

1. Top 10% = Very Attractive Rating
2. Next 20% = Attractive Rating
3. Next 40% = Neutral Rating
4. Next 20% = Unattractive Rating
5. Bottom 10% = Very Unattractive Rating

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