Large Cap Report: Best And Worst

By Todd Campbell
Wednesday, April 30, 2014 11:52 AM EDT

Since 2010, our weekly top scoring large cap stocks have produced an average 375 bps of excess return to the S&P 500 over the following year. Among our best scoring picks from a year ago (4/30/2013) the best performing are MGA up 65%, NOC up 61%, and WFT up 60%. 


  • Utilities are the top scoring large cap sector.
  • Electric & diversified utilities are the top scoring industries. 

Across our large cap universe, the average score is 55.71, below the four week moving average score of 56.80. The average large cap is trading -11.69% below its 52 week high, 1.31% above its 200 dma, has 3.89 days to cover held short, and is expected to grow EPS by 13.79% next year.

Utilities score best, followed by consumer goods and basic materials. Healthcare and industrials also score above average. Financials, services, and technology score below average.

LG CAP       5/1/2014 4 Week MA
Company Name Symbol Sector INDUSTRY SCORE SCORE
BEST          
Burger King BKW SERVICES RESTAURANTS 105 102.5
Eqt Corp EQT UTILITIES GAS UTILITIES 105 105
Johnson & Johnson JNJ HEALTHCARE DRUG MANUFACTURERS 105 98.75
Kellogg Company K CONSUMER GOODS PROCESSED & PACKAGED GOODS 105 105
Amphenol Corp APH TECHNOLOGY DIVERSIFIED ELECTRONICS 100 102.5
Avalonbay Comm. AVB FINANCIALS REITS 100 100
Chesapeake Energy CHK BASIC MATERIALS INDEPENDENT OIL & GAS 100 87.5
Edison Intl EIX UTILITIES ELECTRIC UTILITIES 100 100
Essex Ppty Trust ESS FINANCIALS REITS 100 92.5
Idexx Lab IDXX HEALTHCARE DIAGNOSTIC SUBSTANCES 100 91.25
Lam Research Corp LRCX TECHNOLOGY SEMICONDUCTOR EQUIPMENT & MATERIALS 100 77.5
Nextera Energy NEE UTILITIES ELECTRIC UTILITIES 100 98.75
O'Reilly Auto ORLY SERVICES AUTO PARTS STORES 100 97.5
Wisconsin Energy WEC UTILITIES DIVERSIFIED UTILITIES 100 100
Alexion Pharma ALXN HEALTHCARE DRUG MANUFACTURERS 95 86.25
Autozone AZO SERVICES AUTO PARTS STORES 95 92.5
Cabot Oil & Gas Corp COG BASIC MATERIALS INDEPENDENT OIL & GAS 95 70
Camden Ppty CPT FINANCIALS REITS 95 93.75
The Directv Group Inc DTV TECHNOLOGY COMMUNICATION EQUIPMENT 95 93.75
Entergy Corp New ETR UTILITIES ELECTRIC UTILITIES 95 95
Edwards Lifesciences EW HEALTHCARE MEDICAL APPLIANCES & EQUIPMENT 95 97.5
General Dynamics GD INDUSTRIAL GOODS AEROSPACE/DEFENSE  PRODUCTS & SERVICES 95 96.25
Goodyear Tire GT CONSUMER GOODS RUBBER & PLASTICS 95 96.25
Lorillard Inc LO CONSUMER GOODS CIGARETTES 95 92.5
Microchip Tech MCHP TECHNOLOGY SEMICONDUCTOR-SPECIALIZED 95 96.25
Mdu Res Group Inc MDU INDUSTRIAL GOODS GENERAL BUILDING MATERIALS 95 93.75
Merck MRK HEALTHCARE DRUG MANUFACTURERS 95 97.5
M & T Bank MTB FINANCIALS REGIONAL BANKS 95 81.25
Pepsico PEP CONSUMER GOODS PROCESSED & PACKAGED GOODS 95 75
P P L Corp PPL UTILITIES ELECTRIC UTILITIES 95 93.75
Reynolds American RAI CONSUMER GOODS CIGARETTES 95 95
Scana Corp New SCG UTILITIES DIVERSIFIED UTILITIES 95 93.75
S L Green SLG FINANCIALS REITS 95 93.75
Time Warner Cable Inc TWC SERVICES CATV SYSTEMS 95 80
Valeant Pharma VRX HEALTHCARE DRUG MANUFACTURERS 95 73.75
Weatherfold International Inc WFT BASIC MATERIALS OIL & GAS EQUIPMENT & SERVICES 95 93.75
Xcel Energy Inc XEL UTILITIES ELECTRIC UTILITIES 95 95
Brown Forman Corp BF.B CONSUMER GOODS BEVERAGES 90 91.25
Cummins Inc CMI INDUSTRIAL GOODS DIVERSIFIED MACHINERY 90 85
Campbell Soup CPB CONSUMER GOODS PROCESSED & PACKAGED GOODS 90 87.5
C V S Corp CVS SERVICES DRUG STORES 90 91.25
Dover Corp DOV INDUSTRIAL GOODS DIVERSIFIED MACHINERY 90 92.5
DaVita Inc DVA HEALTHCARE SPECIALIZED HEALTH SERVICES 90 92.5
EnCana Corp ECA BASIC MATERIALS INDEPENDENT OIL & GAS 90 97.5
E O G Resources EOG BASIC MATERIALS INDEPENDENT OIL & GAS 90 92.5
Equity Residential EQR FINANCIALS REITS 90 86.25
Green Mtn. Coffee Roasters GMCR CONSUMER GOODS PROCESSED & PACKAGED GOODS 90 92.5
Halliburton HAL BASIC MATERIALS OIL & GAS EQUIPMENT & SERVICES 90 92.5
Hasbro Inc HAS CONSUMER GOODS TOYS & GAMES 90 81.25
L3 Communications LLL SERVICES SECURITY & PROTECTION SERVICES 90 91.25
Eli Lilly LLY HEALTHCARE DRUG MANUFACTURERS 90 95
Mead Johnson Nutrition MJN CONSUMER GOODS PROCESSED & PACKAGED GOODS 90 76.25
Public Service Ent. PEG UTILITIES DIVERSIFIED UTILITIES 90 90
Quanta Svcs Inc PWR INDUSTRIAL GOODS GENERAL CONTRACTORS 90 91.25
Salix Pharm SLXP HEALTHCARE DRUGS-GENERIC 90 87.5
Snap On Inc SNA INDUSTRIAL GOODS SMALL TOOLS & ACCESSORIES 90 78.75
Constellation Brands STZ CONSUMER GOODS BEVERAGES 90 91.25
Transdigm Group Inc. TDG INDUSTRIAL GOODS AEROSPACE/DEFENSE  PRODUCTS & SERVICES 90 92.5
Tyson Foods TSN CONSUMER GOODS MEAT PRODUCTS 90 93.75
           
WORST          
Alcatel ALU TECHNOLOGY COMMUNICATION EQUIPMENT 15 18.75
Bed Bath & Beyond BBBY SERVICES HOME FURNISHING & FIXTURES 15 15
Fireeye Inc FEYE TECHNOLOGY APPLICATION SOFTWARE 15 16.25
Incyte Corp INCY HEALTHCARE BIOTECHNOLOGY 15 18.75
Leucadia Nat'l LUK CONGLOMERATES CONGLOMERATES 15 18.75
Nomura Holdings NMR FINANCIALS INVESTMENT BROKERAGE 15 16.25
Regeneron Pharma REGN HEALTHCARE BIOTECHNOLOGY 15 23.75
Red Hat Inc RHT TECHNOLOGY APPLICATION SOFTWARE 15 23.75

Seasonality shifts from tailwinds to headwinds as we move into the the back end of the second quarter. The SPY has gained in just 4 of the past 10 3-month periods ending July. Mid caps (MDY) have performed even worse, posting gains just 3 times. Median returns for the 4 major market ETFs are negative during the period. For comparison, I've also included the historical seasonality for TIPs (TIP), which has gained in 8 of the past 10 years.
 



The following chart shows our average large cap score back to 2010.


 

Defensive stocks dominate the best scoring industry ranking this week, led by utilities. After leading through the shoulder months, utilities tend to lag in May and re-exert in June and July during peak summer electricity demand. Net generation growth and higher retail prices support dividends heading into summer doldrums. 



Major oil and gas, independents, and pipelines score best in basics. However, historically May has been a good opportunity for managers to lighten up exposure

In consumer, buy cigarettes, processed & packaged goods, and major food. In financials, only REITs score above average. The top healthcare baskets are drugmakers and medical appliances. Aerospace/defense, diversified machinery, and farm & construction machinery score highest in industrial goods. The top services groups are drug stores, railroads, and restaurants. In technology, buy semi ICs, diversified computer systems, and domestic telecom.  Electric utilities and diversified utilities are also high scoring.

The following table displays the seasonally strongest large cap stocks for the next three months.


 

LG CAP INDUSTRY SCORE BY SECTOR   5/1/2014
Sector Industry SCORE
     
BASIC MATERIALS MAJOR INTEGRATED OIL AND GAS 72.50
BASIC MATERIALS INDEPENDENT OIL & GAS 70.00
BASIC MATERIALS OIL & GAS PIPELINES 70.00
BASIC MATERIALS INDUSTRIAL METALS & MINERALS 67.50
BASIC MATERIALS OIL & GAS EQUIPMENT & SERVICES 66.36
BASIC MATERIALS OIL & GAS DRILLING & EXPLORATION 59.44
BASIC MATERIALS OIL & GAS REFINING & MARKETING 56.67
BASIC MATERIALS CHEMICALS- MAJOR DIVERSIFIED 55.00
BASIC MATERIALS AGRICULTURAL CHEMICALS 50.00
BASIC MATERIALS GOLD 46.67
BASIC MATERIALS STEEL & IRON 35.00
CONSUMER GOODS CIGARETTES 75.00
CONSUMER GOODS PROCESSED & PACKAGED GOODS 75.00
CONSUMER GOODS FOOD - MAJOR DIVERSIFIED 70.00
CONSUMER GOODS BEVERAGES 66.67
CONSUMER GOODS AUTO PARTS 60.83
CONSUMER GOODS TEXTILES 52.78
CONSUMER GOODS PERSONAL PRODUCTS 50.00
CONSUMER GOODS AUTO MANUFACTURERS- MAJOR 40.00
FINANCIALS REITS 74.76
FINANCIALS CREDIT SERVICES 55.63
FINANCIALS PROPERTY & CASUALITY INSURANCE 51.25
FINANCIALS MONEY CENTER BANKS 48.33
FINANCIALS LIFE INSURANCE 47.50
FINANCIALS INSURANCE BROKERS 46.25
FINANCIALS REGIONAL BANKS 46.00
FINANCIALS FOREIGN MONEY CENTER BANKS 43.00
FINANCIALS ASSET MANAGEMENT 40.00
FINANCIALS SAVINGS & LOANS 37.50
FINANCIALS INVESTMENT BROKERAGE 31.25
HEALTHCARE DRUG MANUFACTURERS 66.30
HEALTHCARE MEDICAL APPLIANCES & EQUIPMENT 58.13
HEALTHCARE HEALTH CARE PLANS 55.00
HEALTHCARE MEDICAL INSTRUMENTS & SUPPLIES 48.89
HEALTHCARE BIOTECHNOLOGY 42.50
INDUSTRIAL GOODS AEROSPACE/DEFENSE  PRODUCTS & SERVICES 63.00
INDUSTRIAL GOODS DIVERSIFIED MACHINERY 59.29
INDUSTRIAL GOODS FARM & CONSTRUCTION MACHINERY 57.00
INDUSTRIAL GOODS INDUSTRIAL EQUIPMENT & COMPONENTS 53.75
SERVICES DRUG STORES 75.00
SERVICES RAILROADS 62.00
SERVICES RESTAURANTS 62.00
SERVICES GROCERY STORES 61.67
SERVICES LODGING 55.00
SERVICES CATV SYSTEMS 53.57
SERVICES DEPARTMENT STORES 53.33
SERVICES ENTERTAINMENT- DIVERSIFIED 52.50
SERVICES DISCOUNT, VARIETY STORES 51.67
SERVICES BUSINESS SERVICES 49.50
SERVICES AIR DELIVERY & FREIGHT SERVICES 47.50
SERVICES APPAREL STORES 45.00
SERVICES DRUGS WHOLESALE 41.67
SERVICES RESORTS AND CASINOS 36.67
TECHNOLOGY SEMICONDUCTOR- INTEGRATED CIRCUITS 68.75
TECHNOLOGY DIVERSIFIED COMPUTER SYSTEMS 66.67
TECHNOLOGY TELECOM SERVICES - DOMESTIC 66.67
TECHNOLOGY SEMICONDUCTOR-SPECIALIZED 60.00
TECHNOLOGY DIVERSIFIED COMMUNICATION SERVICES 58.33
TECHNOLOGY SEMICONDUCTOR EQUIPMENT & MATERIALS 56.00
TECHNOLOGY SCIENTIFIC & TECHNICAL INSTRUMENTS 53.75
TECHNOLOGY BUSINESS SOFTWARE & SERVICES 53.00
TECHNOLOGY COMMUNICATION EQUIPMENT 52.50
TECHNOLOGY SEMICONDUCTOR- BROAD LINE 51.25
TECHNOLOGY DATA STORAGE DEVICES 47.50
TECHNOLOGY TECHINICAL & SYSTEM SOFTWARE 46.67
TECHNOLOGY INTERNET INFORMATION PROVIDER 45.83
TECHNOLOGY APPLICATION SOFTWARE 45.00
TECHNOLOGY INTERNET SOFTWARE & SERVICES 45.00
TECHNOLOGY WIRELESS COMMUNICATIONS 36.875
UTILITIES ELECTRIC UTILITIES 81.79
UTILITIES DIVERSIFIED UTILITIES 76.00
UTILITIES FOREIGN UTILITIES 46.67

 

 

None.

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