MYR Group: Best Infrastructure Contractor as Seen by Market Makers (NASDAQ: MYRG)
Our investment thesis
Is expressed in the bullet points above, where the odds and size of short-term capital gains are put on a like-for-like basis.
The dominance of MYR Group Inc. (NASDAQ: MYRG) following the the result of this analysis on comparative investment alternatives makes reading the rest of this article worth your time and effort if you are interested in rates short-term capital gains. Those who are likely to be multiples of what stock index averages regularly offer.
Description of the main object of investment
MYR Group Inc., through its subsidiaries, provides electrical construction services in the United States and Canada. The Company’s Transmission and Distribution segment focuses on the construction, maintenance and repair for customers in the electric utility industry, including the construction and maintenance of high voltage transmission lines, sub – underground and overhead low voltage stations and distribution systems. The commercial and industrial segment serves commercial and industrial facility owners, government agencies and developers. Groupe MYR Inc. was founded in 1891 and is headquartered in Henderson, Colorado.
Source: Yahoo Finance
Rewards and risks of competitors in alternative investment
(used with permission)
Upside price rewards come from behavioral analysis (of what to do right, not mistakes) by Market-Makers [MMs] because they protect their capital at risk against possible future detrimental price movements. Their predictions of potential rewards are measured by the green horizontal scale.
The risk dimension is that of actual price declines at their most extreme while being held in the previous pursuit of upward rewards similar to those currently seen. They are measured on the red vertical scale.
Both scales are percent change from zero to 25%. Any stock or ETF whose current risk exposure exceeds its reward outlook will be above the dotted diagonal line.
The best reward-risk trade-offs lie on the border of the down and right alternatives. As the “standard” market index currently, the S&P 500 Index ETF (SPY) is at the location . At the most extreme trade-off between risk and reward is GVA at . Our current primary interest is MYRG at the location an advantage over SPY in both risk and reward.
Is the extra reward of GVA worth the extra risk, compared to MYRG? A fuller description of investment considerations should help investors’ decisions about the suitability and credibility of available investment alternatives. Figure 2 presents some of these considerations, drawn from the results of previous MM forecasts having the same proportions of previous expectations from top to bottom as today.
(used with permission)
The advantage of determining market makers‘ forecasts for future stock prices is that they offer many dimensions more than the typical “street analyst” forecast of a single target price at any given time. Instead of a single higher (or lower) future price, MM predictions are drawn from valid market data over relevant (usually shorter) time periods for the upper and lower price limits considered likely to be encountered during such a period.
This future price range for each investment candidate is clearly divided into upside and downside prospects by its current market price. We note how much of this entire predicted price range is between today’s market quote and the low-end perspective, the downside exposure. We label this % from the range as the Range index [RI] and note it in the column [G] of Figure 2. It is used to identify and average all prior IRs of similar size as an appropriate sample of subsequent market outcomes in the column [L]as a proportion of all price range forecasts for each stock over the last 5 years of trading days [M].
With these samples, scaled individually based on relevant results from each candidate’s previous sample, we can now make appropriate direct comparisons of responses to the following questions:
What size Can a capital gain be expected from this stock in the coming months? [I] Out of the sample, what are the odds (what is the probability) which one will be profitable? How longon average, [J] could this be necessary for a typical sample of exploitation to result in a disciplined termination? During this average holding period, what a bad could a temporary price drop be experienced? What credibility [N] is the current upside forecast [E] compared to what history has achieved [I]? Given [E] and [F]what is the current risk reward [T] report?
Given that we are faced with a decision in the inevitable uncertainty of the future, no collection of answers or actual results can be expected to prove perfection. But, overall, they should help investors tailor their candidate choices to best determine how well the data leads to the most satisfying results, most of the time.
When the objective is to find among the candidates in Figure 2 the largest, fastest and most likely capital gain over the next 3 months with the least distress of interim price declines, it seems that the choice logical either with MYRG. Its forecast for a +20% price gain over the next 3 months (or as little as 2) is twice as much as the sweetest Dow-Jones Stock dividend that will pay out all year. And with 3 more calendar quarters to add from other capital gains.
The question raised earlier was “Is the higher potential return of GVA worth the risk exposure seen in earlier cases of risk-reward balancing seen today?”, a range index of -4 for MYRG and -12 for TPC. Minus RIs indicate current market prices below MM’s predicted price ranges. Each stock has its own history of subsequent market price actions at its various RI level experiences. They are presented in the column [H] as chances out of 100 of having had profitable results; here, all 8 were winners for MYRG, but only 2 of 3 (6 of 9) for GVA.
The combination for GVA of higher risk and worse odds of making a profit revealed in Figure 2 makes the comparison in overwhelming favor for MYRG. History shows that MYRG’s earnings forecast is far more credible than GVA’s.
Assurance of perspective is provided by the bottom 3 rows of Figure 2, which deal with the S&P 500 Index ETF, current price range forecast averages of over 3,100 stocks, ETFs and indices , and the likely average performance of the top 20 out of those 3,100+.
This outlook should make it clear that MYRG’s outstanding past and future performance is not simply an unreasonably asserted outlook. Daily market activity contains huge upside prospects, as well as the often well-publicized ugly losses on the 3,100. +391% better forecast population stocks.
By the way, the last MYRG MM forecast of 02/25/22 for a target closing price of $101.69 was reached on 03/22/22 at its close of $101.70, in less than a market month of 21 trading days for a 300% higher CAGR.
Such triple-digit profit rates are difficult for many individual investors to accept, but occur almost every market day. Are you receiving yours? This is what the crowd of “institutional investors” are actively competing for, using resources of skills and experience that few individual investors possess.
In comparing these investment candidates to choose the best prospect for short-term capital appreciation, MYR Group appears to be a much better fit than all the others evaluated here.