E Mid Cap Best & Worst Stocks - January 29, 2015

The best scoring small caps from our weekly reports have outpaced the IWM by a median 683 bps in the following year.

  • The best scoring small cap sector is utilities.
  • The top small cap industry is home furnishings.

The average small cap score is 55.83, which is above the four week moving average score of 55.24. The average small cap stock is trading -26.14% below its 52 week high, 1.19% above its 200 dma, and has 7.09 days to cover held short.

Utilities, technology, and consumer goods score above the average small cap universe score. Services and healthcare score in line with the small cap universe average score. Financials, industrial goods, and basic materials score below average.

The best scoring small cap industry is home furnishings & fixtures (SCSS, ETH, STLY). Improving employment and consumer confidence supports purchases. Specialized semiconductor (QLGC, MPWR) is strong scoring, as are semi ICs (TQNT, PLXT, RFMD, OPLK, EMKR). Increasing electrification of consumer products tied to the Internet of Things and typical seasonality associated with the book-to-bill offers tailwinds. Restaurant (RRGB, BJRI, DAVE, SONC) operator's confidence remains bullish with the Nat'l Restaurant Association's performance index above 100 for both current and future expectations. Scientific and technical instrument (AFFX, FLDM, ALOG, NEWP, IIVI, FARO) demand benefits from life sciences spending opportunities tied to willing equity markets and new federal research spending initiatives.

No small cap basic materials baskets score above average -- continue to look elsewhere. In consumer goods, buy home furnishings and auto parts (SRI, MTOR, FSYS). The top financials baskets are investment brokers (GFIG), credit services (EZPW), and S&Ls (PROV, NWBI, OCFC). In healthcare, buy home healthcare (ADUS, AFAM), specialized health services (BEAT, USPH, HWAY), and medical instruments (IART, HBIO, UTMD, OSUR).  The best industrial goods baskets are general building materials (USLM, HW) and aerospace/defense (LMIA, ORB). In services, buy restaurants, resorts & casinos (PENN, BYD), and specialty retail (FRAN, HZO, BKS). The top technology groups are specialized semi, semi ICs and scientific & technical instruments.

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