E Mid Cap Best & Worst Report - October 8, 2014

Since 2010, the best scoring names in our weekly mid cap reports have outpaced the S&P 400 by a median 4.07% in the following year. The best performers from our list from 1 year ago are ILMN up 115%, GMCR up 95%, and TRN up 92%.

  •  Services are the best mid cap sector.
  •  The top industry is trucking.

The average mid cap score across our universe is 58.37 this week, above the four week moving average score of 56.71.  The average mid cap stock is trading -17.87% below its 52 week high, -2.68% below its 200 dma, has 9.02 days to cover held short, and is expected to post EPS growth of 18.79% next year.

Across our mid cap universe, services and technology stocks score above average. Healthcare, utilities, industrials, consumer goods, and financials score in line. Basics score below average.

The following table lists mid cap stocks with the strongest history of positive returns in the fourth quarter. Each has gained in 9 or 10 of the past 10 Q4's.

Trucking (KNX, ODFL, HTLD) is the top scoring mid cap industry. Investment brokers (MKTX, SF, GHL) benefit from rising volatility and overall AUM growth this past year. Semi IC (IRF, MSCC) demand growth from increasing electrification of industrial goods and emerging markets supports book-to-bill this winter. Technical and system software (MCRS, CDNS) offer upside as federal budgets are spent and new IT budgets are developed. Foot traffic growth supports restaurant (CBRL, WEN, EAT) sales into the holidays.

The only basics basket that scores above average this week is industrial metals & minerals (ARLP, BTU). In consumer goods, focus on textiles (WWW, CRI, DECK) and processed & packaged goods (HAIN, GIS). The top financials groups are investment brokers, accident & health insurance (CNO), and regional banks (OZRK, ASBC, FHN). In healthcare, buy medical instruments (PKI, DXCM, HRC, HAE). Residential construction (NVR, RYL), aerospace/defense (TDY, ESL, CW), and diversified machinery (MIDD, BC) score best in industrial goods. The top services industries are trucking, restaurants, and business services (VPRT, GPN, HPY, RBA). In technology, concentrate on semi ICs, technical & system software, and information & delivery services (DNB).

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Disclosure: None.

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