STEPAN CO

78.31 -0.71 (-0.91%) Sell

Are you evaluating investing in SCL? Avoid as it was among the worst performers

13 min read

STEPAN CO was among the worst performers on Thursday. It lost -0.91% to close at 78.31. On a day when the overall market breadth was 35%, it closed higher than 13% of the market. In comparison, the benchmark SP500 index closed today at -0.0002%.

[Themes containing SCL]

SCL showed a strong down trend over the last 3 months. During this period SCL lost -12.37% and saw a maximum drawdown of -16.75%. It has been unusually choppy during this period. Long term investors are better off avoiding investing in SCL till volatility reduces and a clear trend emerges.

Trend

SCL has been underperforming the SP500 index in recent time, after having outperformed till 24 Jul, 2017. Over the last 2 years 11 months and 9 days, SCL outperformed the SP500 index on 53% days.

SCL returned losses on 60% days in the last three months. During this time, it delivered on average -0.2% per day. It delivered it's best daily return of +5.66%, during this period, on Wednesday, 7 Nov, 2018. There was initially a bearish trend during this period which started on 21 Sep, 2018 and went on till 27 Sep, 2018. The trend delivered -3.65% losses to investors. This was followed by a bullish trend that started on 12 Oct, 2018 and ended on 16 Oct, 2018. This bullish trend delivered +4.02% to investors.

SCL had 6 profitable and 6 loss making months over the last year. During the last year, SCL underperformed SP500 index on monthly return basis. SCL was also a more risky investment than SP500 index as it's worst month in the last year, Apr 2018, returned -14.26% compared to -7.28% returned by SP500 index in Oct 2018. SCL had a shorter streak of profitable months than SP500 index. It only went up in 4 straight months during the last year.

Investing is a business, investment is a project and investor is a promoter.
-- Vijay Kedia

SCL is becoming less volatile overall. In comparison, the SP500 index is seeing a rise in volatility. During the last three months, there was a significant surge in SCL's volatility from 28 Sep, 2018 to 7 Dec, 2018. While there was a significant surge in the SP500 index's volatility from 25 Sep, 2018 to 29 Oct, 2018.

Advanced/professional short-term investors should note that SCL has significant positive skewness in it's return distribution. This indicates that investors can expect SCL to recover from drawdowns quickly. Which makes SCL a good candidate for investing on short-term bullish trends or even counter-trends hoping for a pull-back.

SP500 index has more chance of extreme outcomes than SCL. Therefore, SP500 must receive a lower allocation than SCL in your portfolio. SP500 index usually has shorter drawdown period than SCL.

Based on your interest in SCL you may find it interesting to know that CBRL has delivered similar performance as SCL and can be considered as an alternative investment candidate (to SCL).

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