E Small Cap Best & Worst Report: Turkey Day Edition - November 27, 2014

Since 2010, the average return for our weekly best scoring small caps has outpaced the R2K by a median 759 bps over the following year. The best performers from one year ago are HA up 111%, GTIV up 57%, UEIC up 55%, and ARII up 55%.

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

The average small cap score is 55.20, above the four week moving average score of 54.98. The average small cap stock is trading -26.69% below its 52 week high, 0.17% above its 200 dma, and has 8.05 days to cover held short.

The best scoring small cap sector is utilities. Industrial goods, technology, and services also score above average.  Consumer goods and financials score in line. Healthcare and basics score below average.

Specialized semiconductor (MPWR, QLGC) is the best small cap industry. Staffing demand historically peaks into year end, providing upside for related staffing stocks (CCRN, KFRC, CDI). Home healthcare (AFAM, GTIV, CHE, AMED) consolidation and ageing America demographic trends offset risk of falling reimbursement. Rising airline production rates and optimism over budget upside opportunity for the DoD and Homeland Security support aerospace/defense stocks (TASR, ORB, AVAV).  Business and consumer travel growth are driving resort and casino (PENN, MCRI) occupancy and average room rates higher; offsetting capacity additions.

Across small cap basic materials, only oil & gas drilling & exploration (GIFI, PKD) score above average. The top consumer goods groups are home furnishings (ETH) and auto parts (MTOR). In financials, buy investment brokers (GFIG, KCG) and P&C insurers (GLRE). Home healthcare and medical instruments (CMN, MMSI, ANGO, OSUR, HBIO) are best in healthcare. Aerospace/defense, industrial electrical equipment (DAKT, BGC), and heavy construction (GVA) score high across industrial goods. The top services baskets include staffing, resorts, and management services (HURN, CRAI). In technology, concentrate your attention on specialized semi, semi ICs (TQNT, OVTI, OPLK), and diversified electronics (BELFB, MEI).

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