Expert: Paul Henneman - 4/27/2007

Question
What is the difference between in favor and out of favor stocks.  msmoney.com talks about in/out of favor stocks.  How would you use this information to determine which stocks to buy.  

Answer
Thank you for your question!
'In favor' would simply imply that a stock is viewed postively by investors, and is generally in good demand. "Out of favor" implies that stock is not looked upon in good terms by investors, and is generally dropping in price and perhaps has lower trading volume.
How exactly one determines if a stock is in favor or out of favor is very open to interpretation. Unfortunately it is not a very valuable tool to determine what stocks to buy, as these are such general terms and you would not know exactly how a service such as MNSmoney is determining this. While it could be at least marginally helpful to know if other investors are looking postiviely or negatively at a stock, there are many more much more important data points. Some investors prefer stocks that are 'in favor' and go with the flow so to speak, other investors are looking for stocks that are not over priced and perhaps 'out of favor' is a good thing, to get in before any strong price rise.
To summarize, while an interesting minor point, I would not suggest spending too much time with these terms.

I hope this is helpful, please to not hesitate to follow up with me if I can be of any additional service!

Sincerely,
Paul Henneman
President
ValuEngine, Inc
www.ValuEngine.com