The highest scoring names in large cap from 1 year ago (2/5/2013) returned 622 bps more than the S&P 500.  The best performers are GILD up 99%, BIIB up 99%, YHOO up 83%, LNKD up 73%, MCO up 68%, PCLN up 65%, and ITT up 59%.


 

• Healthcare overtakes industrials as the top large cap sector.
• The best large cap industry is drug stores.

The average large cap score is 60.21 this week, below the four week moving average score of 66.  The average large cap stock is trading -12.6% below its 52 week high, 1.23% above its 200 dma, has 4.3 days to cover short, and is expected to grow EPS by 13% this year.

Healthcare is the top scoring large cap sector, followed by industrial goods, and technology.  Services and consumer goods score in line.  Basics, utilities, and financials score below average.

 

Commentary:
 

Over the past decade, the SPY has finished April higher than it begins February 8 times, returning an average and median 4.27% and 4.94%, respectively.

The following large cap companies offer the best seasonal tailwinds through April.

The top scoring large cap industry is drug stores (OCR, RAD, CVS).  Aerospace/defense (TDG, RTN, GD, NOC) scores highly.  Rails (UNP, NSC, CSX) offer upside thanks to ongoing traffic growth.  So far, rail traffic is up 1.3% year-to-date from 2013, led by petroleum.  Coal shipments grew 6.4% in the most recently reported week. Communications equipment (GLW, HRS, QCOM) is strong.  Rising occupancy and room rates support Lodging (WYN, MAR) sales and profit growth. 626 hotels are expected to open this year, with another 1315 slated for 2015 thanks to cheap financing.  Eventually, capacity will weigh down room rates, however new openings will offer revenue growth for now (the majority of activity is in the upper-midscale segment).

In basics, buy drillers (HP, CLR), ag chemicals (CF), and independent oil & gas (RRC, SWN, COG, CHK).  The number of U.S. rigs climbed to a five month high last week, according to Baker Hughes. Grain rail carloads are up 11.1% in the first four weeks of this year, reflecting better export markets.  Corn exports were the highest of the 2013/14 season last week.  Textiles (HBI, VFC, UA), personal products (KMB), and cigarettes (LO, RAI) are best in consumer goods.  The top finance basket is REITs (HCN, PSA, O, FRT).  Credit services (EFX, ADS) and money centers (JPM, RY) also score highly.  Every large cap healthcare industry is above average.  Focus on medical appliances (STJ, ZMH), biotech (ILMN, BIIB, GILD), and healthcare plans (CI).  Buy aerospace/defense, farm/construction machinery (HTHIY, CAT, DE), and industrial equipment (PNR) in industrial goods.  The value of construction put in place during 2013 totaled $898.4 billion, up 4.8% year-over-year.  Construction spending rose 5.3% in December from a year ago.  In non-residential, spending grew the most in lodging, transportation, commercial, and office.   The best scoring in services include drug stores, rails, lodging, and wholesale drugs (CAH, MCK).  Concentrate on communications equipment, semi-ICs (SWKS, MRVL), and specialized semiconductor (MCHP, LSI, XLNX) in technology.  Internet information providers (YHOO, FB) also score highly. Historically, the SEMI book-to-bill peaks in Q2.  A move to defensive groups boosted utilities, led by electric utilities (NEE, D).