114.56 -0.54 (-0.47%) Buy

Want to invest in STE? Wait as it underperformed broader market

13 min read

STE has destroyed investor wealth today. On a longer term basis, investors in STERIS PLC made -0.05% per day. Tuesday's performance of -0.47% was a significant underperformance compared to it's daily average.

[Themes containing STE]

STE showed a up trend over the last 3 months. During this period STE gained +1.29% and saw a maximum drawdown of -9.1%. It has been unusually choppy during this period. Long term investors are better off avoiding investing in STE till volatility reduces and a clear trend emerges.


STE has been outperforming the SP500 index in recent time. Over the last 2 years 11 months and 7 days, STE outperformed the SP500 index on 51% days.

STE returned losses on 54% days in the last three months. During this time, it delivered on average +0.03% per day. It delivered it's best daily return of +4.84%, during this period, on Tuesday, 6 Nov, 2018. There was initially a bearish trend during this period which started on 1 Oct, 2018 and went on till 8 Oct, 2018. The trend delivered -5.98% losses to investors. This was followed by a bullish trend that started on 31 Oct, 2018 and ended on 8 Nov, 2018. This bullish trend delivered +11.45% to investors.

On monthly basis, STE delivered profits in more months over the last year, than losses. STE delivered profits less regularly than SP500 index. STE significantly outperformed SP500 index in May 2018, when it returned +9.86% compared to +4.75% returned by SP500 index during it's best month in the last one year - Jan 2018. STE had a longer winning streak of profitable months than SP500 index. It went up in 7 straight months (from Jan 2018 to Jul 2018) during which period it delivered +27.77%. It is interesting to note that both STE and SP500 index significantly outperform during months when quarterly/annual results are announced.

Don't tell me where your priorities are. Show me where you spend your money and I'll tell you what they are.
-- James W. Frick

STE is becoming more volatile overall. In comparison, the SP500 index is seeing a rise in volatility. During the last three months, there was a significant surge in STE's volatility from 26 Sep, 2018 to 7 Dec, 2018. While there was a significant surge in the SP500 index's volatility from 13 Sep, 2018 to 29 Oct, 2018.

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

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

Based on your interest in STE you may find it interesting to know that ABMD is a mid cap that has shown remarkable performance and deserves to be on every investors' watchlist.

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