The best scoring small caps from one year ago (1/31/2013) have outperformed the R2K by 1415 bps over the past year, with no turnover.  The best performers have been RAD up 241%, MDSO up 158%, PRCP up 115%, HOMB up 95%, and CGNX up 89%.

Methodology

Our weekly best and worst reports show you stocks with the best potential returns over the coming 6 to 12 months.  The score is calculated by fusing together the key drivers of price movement including, earnings beats, earnings growth, at-the-market insider buys, institutional activity, short ratio analysis, price to earnings analysis and calendar quarter seasonality.  Those stocks appearing in our best list should be bought while those appearing in our worst list should be sold.

• Industrial goods is the top scoring small cap sector.
• The best small cap industry is railroads 

The average small cap score is 58.96 this week, below the four week moving average score of 60.11.  The average small cap is trading -19.6% below its 52 week high, 5.71% above its 200 dma, and has 7.06 days to cover held short.

The best scoring small cap sector is industrial goods.  Healthcare and financials also score above average.  Utilities and services score in line.  Consumer, technology, and basic materials score below average.
 

Small cap short interest has fallen 0.99 days since November and is 1.51 days lower than this time last year.  Since November, the largest covering has occurred in small cap financials.  Since last year, the biggest covering has occurred in both financials and healthcare.

The best scoring small cap industry is railroads (GBX, ARII).  Diversified electronics (IVAC, MEI) score strongly.  Staffing (CDI, BBSI) offers upside exiting the peak demand season.  Historically, staffing demand drops in January before building again into the end of the quarter.  Scientific & technical instruments (PRCP, AFFX, NEWP, NANO) offer upside.  Management services (NCI, HSII) rounds out our best industries list this week.

In small cap basics, only steel & iron (ZEUS, NWPX) score above average.  Large cap offers more opportunities.  Across consumer goods, buy processed & packaged goods (DMND, KTEC) and textiles (DXYN).  The best scoring financials industries include regional banks (MBWM, TBBK), investment brokers (CLMS), and P&C insurers (STFC, GLRE).  In healthcare, buy medical appliances (OFIX, IVC, EXAC), biotech (BCRX, ONVO, INSY, EXEL), and specialty health services (HGR).  The top industrials groups are aerospace/defense (ORB) and general building materials (HW).  In services, focus on rails, staffing, and management services. The best scoring technology groups are diversified electronics, scientific & technical instruments, and business software (PRFT, NTCT, CSGS).