E Small Cap Best And Worst Report - September 18, 2014

Since 2010, the average return for our weekly best scoring small caps has outpaced the R2K by an average    bps in the following year. The top performers from our report one year ago include DYAX up 92%, UEIC up 64%, CBK up 50%, and OZRK up 46%.

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

The average small cap score is 51.24 this week, below the four week moving average score of 52.96. The average small cap stock is trading -26.83% below its 52 week high, -2.81% below its 200 dma, and has 8.37 days to cover held short.

Utilities are the top scoring small cap sector. Consumer, financials, industrial goods, and technology also score above average. Healthcare scores inline. Services and basic materials score below average.

Specialized semiconductor (SIGM, MPWR) is the top scoring small cap industry this week. Management services (HSII, CRAI) score highly. Diversified electronics (BELFB, SIMO, KOPN) offer upside. Rail (RAIL, GBX, ARII) carload volume growth continues to support demand for suppliers. Communication equipment (INFN, CMTL, NTGR) rounds out our best industry ranking this week.

No small cap basics industries score above average this week -- trade up in market cap. In consumer goods, focus on processed & packaged foods (BDBD) and textiles (PERY, OXM). The top scoring financials groups include P&C insurers (UFCS, HMN), savings and loans (BRKL, WIBC, PROV, COLB), and regional banks (CFNL, SNBC, LKFN). Banking continues to climb our ranking as loan demand strength supports profit growth. In healthcare, focus on home healthcare (GTIV, CHE, AMED) and medical appliances (ZLTQ, BABY, SPNC, RTIX, ARTC).  In industrial goods, only aerospace/defense (TASR, AIR) score above average. The top scoring services baskets are management services, rails, and specialty retail (MED, BKS, HZO). Retail headwinds shift to tailwinds into yearend -- plan accordingly.  Specialized semi, diversified electronics, and communication equipment are top scoring in technology.

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