E Mid Cap Best & Worst Report - May 27, 2015

Since 2010, the best scoring names in our weekly mid cap report have outpaced the S&P 400 by a median 327 bps in the following year.

  •  Healthcare is the top scoring mid cap sector.
  • The best industry is technical & system software. 

The average mid cap score is 58.89 and that is above the four week average score of 57.60. The average mid cap stock is trading -13.77% below its 52 week high, 4.12% above its 200 dma, has 7.18 days to cover held short, and is expected to post EPS growth of 16.25% in the coming year.

The best mid cap sector is healthcare. Technology, consumer goods, and utilities also score above average.  Services, financials, basics, and industrials are below average and should be underweight.​

The best mid cap industry is technical & system software (CDNS, TYL, MENT). Printed circuit boards also score highly. Specialty retail is attractive; however, retailers often offer a more attractive entry point into the third quarter and then again in fall (see chart below). Broadline semiconductor (FLEX, CLS, JBL) and information and delivery services (FDS, MORN) round out our top industry list this week.

In mid cap basics, oil & gas equipment (RES, PDS) and specialty chemicals (PPO) are solid; however, oil & gas equipment & services is very hit-and-miss. In consumer, focus on processed & packaged goods (HAIN, FLO) and textiles (SKX, CRI, COLM). The top financials baskets are accident & health insurance (CNO, AIZ), regional banks (SIVB, FHN, OZRK, CATY, BXS), and asset managers (AB, JNS, WETF). Concentrate on medical instruments (NUVA, TFX, HRC, PKI, THOR), hospitals (LPNT, SEM), and healthcare plans (CNC, MOH) in healthcare. No industrials groups score high. In services, specialty retail -- stay very selective (AAN, OUTR, BID), movies (LGF, CNK), and rental & leasing (AER, UHAL) are best. The top technology groups include technical & system software, printed circuit boards, and broadline semiconductor. Gas utilities (PNY) can also be bought.

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Disclosure: None.

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