Yahoo Finance Associated British Foods and its High Flying share price
Stockopedia’s ‘High Flyers’ are the stock market superstars. These companies tend to be the ones that fund managers jostle and barter over. They are high quality, growing stocks with a history of beating estimates - and Associated British Foods (LON:ABF)is one of them.
Associated British Foods is a large cap stock in the Food Processing industry. When we analyse Associated British Foods from a factor perspective, we find that it has a Quality Rank of 91, a Momentum Rank of 88, but a Value Rank of only 37. This is the classic factor profile of a High Flyer.
A combination of high quality, high momentum and low value is great when earnings go up but a bad place to be when things go wrong. The higher they rise the harder they fall, after all - and few stocks stay High Flyers for long. Mean reversion is a very real thing and it works like gravity on growth.
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What kind of High Flying stock is ?
So, High Flyers tend to be riskier and more volatile than the market average. But is this true of Associated British Foods?
We can find out quickly by applying Stockopedia’s RiskRatings system, which splits the stock market into five buckets according to stock price volatility. The five classifications (from least to most volatile) are:
Conservative (10% of the market)
Balanced (15% of the market)
Adventurous (20% of the market)
Speculative (25% of the market)
Highly Speculative (30% of the market)
Associated British Foods is a balanced stock. This means that the group is actually in the bottom quartile of the market in terms of stock price volatility, despite being a High Flyer. This kind of stock is a possible ‘Low Volatility Anomaly’ candidate, as proposed by fund managers at Robeco: a high quality, stable stock that outperforms over time on a risk-adjusted basis (think tortoise and the hare).
Not only that, but we can see from Associated British Foods’s above average five-year return on capital employed figure of 12.7% that the group has been highly profitable over multiple years. This suggests that Associated British Foods can back up its favourable factor exposures and volatility characteristics with some kind of economic moat.
This attractive blend of factors and profitability has been noticed by the market - Associated British Foods has a one-year relative strength of 9.00%.
Find the rockstars of the stock market
High Flyers are great stocks to have in your portfolio if you think you need more momentum or quality - just look out for signs that momentum might be changing. If you want to see which other stocks qualify as High Flyers, you can find a comprehensive list on Stockopedia's StockRanks page.
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