E Small Cap Report

The best small cap industry is trucking (SAIA, MRTN). Rates benefit from volume growth with April spot market rates for vans and reefers growing 15% year-over-year. Rising railcar volume tied to rebounding grain and coal volume and ongoing crude products volume supports sales and profit at suppliers (GBX). Recovering European commercial and passenger car vehicle registrations suggest revenue growth for auto parts suppliers (MTOR, SMP). P&C insurers (STFC, MIG) offer robust seasonality through the summer hurricane season. Storm damage historically provides rate pricing power. Restaurants (DAVE, BJRI) are also strong scoring. 

In small cap basics, only independent oil & gas (GDP, PVA, PQ) score above average. In consumer, buy auto parts and processed & packaged goods (DMND). The best financials baskets are P&C insurers and investment brokers (CLMS). In healthcare, focus on specialty health services (HWAY). The top industrial goods groups are general building materials (USLM) and heavy construction (AEGN). In services, concentrate on trucking, rails, and restaurants. In technology, buy semi ICs (DIOD), business software (TSYS, NTCT, MSTR), and semi equipment (ATMI, KLIC).

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