The Contextuall team applied a proprietary algorithm to thousands of headlines, classifying each as Positive, Negative, or Neutral. After agregating and ranking all these signals, an interesting name came up.
The Clorox Company (CLX) has seen incredibly positive news coverage recently, especially when compared to other companies the industry.
But should you be buying into this optimism, or is this a contrarian signal?
Trading on One-Sided Investor Sentiment
There have been academic studies that show investors tend to place too much importance on recent information, also known as psychological anchoring.
During periods of negative news, investors may continue to sell a stock, pushing it below its fair value. Conversely, during periods of positive news, investors may get overly optimistic and push the stock beyond fair value.
This is the core driver behind Contextuall’s sentiment analysis technology–by detecting herd behavior, we help our users identify potential contrarian investing opportunities.
Analyzing Media Sentiment for The Clorox Company (CLX)
Our sentiment algorithm analyzed recent The Clorox Company (CLX) news articles, and 48.31% of headlines have been classified as Positive, higher than the Home Improvement industry average of 27.23%.
11.24% of headlines have been classified as Negative (vs. an industry average of 13.79%).
Considering the extreme optimism behind the stock, and our note on herd behavior, what do you think of the stock’s outlook? Have investors become too bullish?
Let us know your thoughts in the comment section on the right.
Browse Sentiment Stats on Other Companies
The following embedded chart can be used to explore sentiment trends for other major companies, where each dot represents a clickable link to a company page (hover over any dot for summary info).
Positive sentiment percentages are plotted on the vertical axis, while negative sentiment percentages are plotted on the horizontal axis.
In other words, companies in the top left have more optimistic news sentiment than companies in the bottom right.