E Mid Cap Best & Worst Report - September 24, 2014

The best scoring names in mid cap from 1 year ago returned 606 bps more than the S&P 400. The best performers have been TRN up 125%, RFMD up 105%, and GMCR up 79%.

  •   Healthcare is the top scoring mid cap sector.
  •   Semi ICs are the top scoring industry.

The average mid cap score is 54.79 this week, below the four week moving average score of 57.43. The average mid cap stock is trading -15.81% below its 52 week high, -0.40% below its 200 dma, has 7.77 days to cover held short, and is expected to post EPS growth of 19.07% next year.

Healthcare and technology score best across our mid cap universe. Financials, services, and industrial goods score in line with the average mid cap universe score. Consumer goods, basics, and utilities score below average.

Semi ICs (FCS, IRF) score best and benefit as industrials automate and next generation consumer devices launch. Information and delivery services (DNB, FDS) are high scoring into budget season. Truckers (HTLD, ODFL) offer upside opportunity thanks to tonnage growth. Intermodal volume is up 5.6% year-over-year this year, supporting logistics plays. Diesel prices help the bottom line given that per gallon prices have dropped to their lowest since 2012.  Broker (MKTX, GHL) fee growth tied to rising AUM and rebalancing supports the basket. Software (CDNS, TYL, MCRS) demand will continue to benefit from adoption of SaaS solutions, which backs security plays.

None of the mid cap basics groups score above average -- trade up in market cap where possible. In consumer, focus on textiles (DECK, SKX) and processed & packaged goods HAIN. The best financials industries are investment brokers, regional banks (OZRK, NPBC, FHN), and asset managers (AB, EV).  Buy medical instruments (PKI, HRC, TFX) in healthcare. Aerospace/defense (CW, TDY, HXL), diversified machinery (MIDD, DRC), and industrial electrical equipment (RBC, AOS) are all strong across industrial goods. The highest scoring groups across services are trucking, business services (HMSY, VPRT, HPY), and movies LGF. Concentrate on semi ICs, information & delivery services, and technical & system software in technology.

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Disclosure: None.

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