Large Cap Best & Worst Report - February 25, 2015
Since 2010, the top scoring stocks in our large cap report each week have outpaced the SPX by a median 312 bps in the following year.
- Healthcare is the top scoring large cap sector.
- Aerospace/defense is the best scoring large cap industry.
The average large cap score is 68.39, which is above the four week moving average score of 65.75. The average large cap stock is trading -10.56% below its 52 week high, 5.08% above its 200 dma, has 3.83 days to cover held short, and is expected to post EPS growth of 12.58% next year.
Healthcare is the top scoring large cap sector. Industrial goods, services, consumer goods, and technology score above average. Financials, utilities, and basic materials score below average.
The following chart shows historical large cap sector scores since 2010.
Aerospace/defense (BA, TDG, RTN, NOC, LMT, HON, GD, COL, BEAV) stocks are top scoring across our industry ranking. The basket tends to improve through spring and ahead of the air show order season. Healthcare plans (AET, ANTM, CI, HUM, UNH) offer upside tied to rising premium revenue. The decision to create a special enrollment period for those paying the 2014 ACA fine offers additional incremental premium revenue support. Medicaid insurers remain attractive. Wholesale drug (CAH, MCK, ABC) demand is growing thanks to an increasingly insured and older population. Ag chemicals (MON, CF, AGU, MOS, DD) offer upside into planting season. Semiconductor IC (SUNE, SWKS, TSM, BRCM) revenue growth is being driven in part by industrial electrification.
In large cap basics, buy ag chemicals and major chemicals (APD, SHW, ASH), which could see margin expansion on falling input costs. Cigarettes (RAI, MO, LO), textiles (HBI, VFC, NKE, LULU, UA), and processed & packaged goods (MJN, MKC, CPB) are best in consumer goods. Only REITs (HCN, AVB, VTR, SLG, PSA, FRT) score above average in financials. Every healthcare industry scores above average, led by healthcare plans, medical appliances (STJ, ZMH, EW, SNN, MDT), and biotech (MDVN, ILMN, BIIB, REGN, INCY, CELG, JAZZ). Only aerospace/defense scores above average in industrial goods. Wholesale drugs, drug stores (OCR, CVS, RAD), and grocers (KR, WFM) are best across the services sector. In technology, concentrate on semi ICs, broadline semi (FSL, TXN, NXPI, ADI), and business software (DOX, FISV, JKHY). In utilities, own diversified utilities (WEC, SCG, NI).
Disclosure: None.