E Small Cap Best & Worst Report - December 24, 2014

Since 2010, the average return for our weekly best scoring small caps has outpaced the R2K by a median 711 bps over the following year. The best performers from one year ago are CENX up 147%, UEIC up 62%, GTIV up 52%, and GBX up 51%.

  • The best small cap sector is utilities. 
  • The top small cap industry is specialized semiconductor.

The average small cap score is 58.29, which is above our four week moving average score of 55.46. The average small cap stock is trading -25.83% below its 52 week high, 1.62% above its 200 dma, and has 8.3 days to cover held short.

The top scoring small cap sectors are utilities, financials, technology, and industrial goods. Services score in line with the average universe score. Consumer goods, healthcare, and basic materials score below average.

The top small cap industry is specialized semiconductor (MPWR, QLGC). Semi demand continues to benefit from the internet of things, including the electrification of industrial machinery. Staffing (KFRC, CCRN, KFY, CDI) stocks score highly, in line with typical peak seasonal demand for staffing services. Aging baby boomers and consolidation offset reimbursement risk for home healthcare (AFAM, LHCG, AMED, ADUS) stocks. Rising auto sales support auto parts (SRI, MTOR, FSYS) demand. P&C insurers (STFC, MIG, HMN) are riding tailwinds from rising premiums.

No small cap basics baskets score above average. In consumer goods, auto parts and home furnishing (ETH) score strongly. P&C insurers, regional banks (CFNL, TBBK, LKFN, MBWM), and savings and loans (BANR, BRKL, NWBI) score high across financials. In healthcare, buy home healthcare, medical instruments (HBIO, ANGO, CMN, MMSI, ATRI, VASC, OSUR, ICUI), and specialized health services (USPH, AHS, HWAY, BEAT). The top scoring industrials groups are aerospace/defense (TASR, LMIA) and heavy construction (GVA). In services, focus on staffing, management services (HSII, CRAI), and specialty retail (WMAR, HZO, MED). Specialized semiconductors, computer peripherals (PLNR, ALOT, ELX), and scientific & technical instruments (FARO, BMI, ALOG, RSTI, AFFX) are best in technology.

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Disclosure: None.

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