Small Cap Report
The highest scoring names in small cap from 1 year ago (5/2/2013) returned 347 bps more than the Russell 2000. The best performers have been CIR up 71%, MRTN up 69%, SAM up 68%, HOMB up 62%, and ODFL up 61%.
- The best small cap sectors are utilities and industrial goods
- The top industry is trucking.
The average score across our small cap universe is 44.67, below the 4 week moving average score of 46.75. The average small cap is trading -26.28% below its 52 week high, -3.69% below its 200 dma, and has 6.77 days to cover held short.
The best scoring small cap sectors are utilities, industrial goods, consumer goods, and basic materials. Services stocks score in line, but consumer discretionary stocks face tough seasonal headwinds. Technology, healthcare, and financials score below average -- trade up in market cap where possible.
SMALL CAP | 5/1/2014 | 4 Week MA | |||
Company Name | Symbol | Sector | INDUSTRY | SCORE | SCORE |
BEST | |||||
Dxp Enterprises Inc | DXPE | SERVICES | INDUSTRIAL EQUIPMENT WHOLESALE | 105 | 98.75 |
ExamWorks | EXAM | SERVICES | BUSINESS SERVICES | 100 | 98.75 |
Smith & Wesson Hldg. | SWHC | CONSUMER GOODS | SPORTING GOODS | 100 | 98.75 |
Circor International Inc | CIR | INDUSTRIAL GOODS | INDUSTRIAL EQUIPMENT & COMPONENTS | 95 | 75 |
Greatbatch Inc. | GB | HEALTHCARE | MEDICAL APPLIANCES & EQUIPMENT | 95 | 97.5 |
Arthrocare Corp. | ARTC | HEALTHCARE | MEDICAL APPLIANCES & EQUIPMENT | 90 | 92.5 |
Cavco Industries | CVCO | INDUSTRIAL GOODS | MANUFACTURED HOUSING | 90 | 87.5 |
American Ecology | ECOL | INDUSTRIAL GOODS | WASTE MANAGEMENT | 90 | 86.25 |
American Healthways | HWAY | HEALTHCARE | SPECIALIZED HEALTH SERVICES | 90 | 87.5 |
Twin Disc | TWIN | INDUSTRIAL GOODS | DIVERSIFIED MACHINERY | 90 | 70 |
Aceto Corp. | ACET | HEALTHCARE | DRUG MANUFACTURERS | 85 | 70 |
Alimera Sciences | ALIM | HEALTHCARE | DRUG MANUFACTURERS | 85 | 86.25 |
Anaren Inc. | ANEN | TECHNOLOGY | WIRELESS COMMUNICATIONS | 85 | 85 |
EPL Oil & Gas | EPL | BASIC MATERIALS | INDEPENDENT OIL & GAS | 85 | 83.75 |
Federal Signal | FSS | CONSUMER GOODS | TRUCKS & OTHER VEHICLES | 85 | 81.25 |
Quicksilver Res Inc | KWK | BASIC MATERIALS | INDEPENDENT OIL & GAS | 85 | 72.5 |
Medifast | MED | SERVICES | SPECIALTY RETAIL, OTHER | 85 | 88.75 |
S C S Transport | SAIA | SERVICES | TRUCKING | 85 | 82.5 |
Albany Molecular | AMRI | HEALTHCARE | BIOTECHNOLOGY | 80 | 81.25 |
Natus Medical | BABY | HEALTHCARE | MEDICAL APPLIANCES & EQUIPMENT | 80 | 77.5 |
Diodes Inc | DIOD | TECHNOLOGY | SEMICONDUCTOR- INTEGRATED CIRCUITS | 80 | 85 |
Diamond Foods, Inc. | DMND | CONSUMER GOODS | PROCESSED & PACKAGED GOODS | 80 | 81.25 |
Greenbrier Companies Inc | GBX | SERVICES | RAILROADS | 80 | 78.75 |
Meritor | MTOR | CONSUMER GOODS | AUTO PARTS | 80 | 81.25 |
PharMerica | PMC | SERVICES | DRUG STORES | 80 | 82.5 |
Prothena Corp | PRTA | HEALTHCARE | BIOTECHNOLOGY | 80 | 71.25 |
Silicon Motion Tech ADS | SIMO | TECHNOLOGY | DIVERSIFIED ELECTRONICS | 80 | 81.25 |
WORST | |||||
CytRX | CYTR | HEALTHCARE | BIOTECHNOLOGY | 10 | 11.25 |
Durect Corp | DRRX | HEALTHCARE | DRUG MANUFACTURERS | 10 | 12.5 |
Entravision Communications Corp | EVC | SERVICES | BROADCASTING | 10 | 12.5 |
Gigamedia LTD | GIGM | TECHNOLOGY | INTERNET SOFTWARE & SERVICES | 10 | 36.25 |
Mannatech | MTEX | HEALTHCARE | DRUG RELATED PRODUCTS | 10 | 11.25 |
Novavax | NVAX | HEALTHCARE | BIOTECHNOLOGY | 10 | 11.25 |
Progenics Pharmaceuticals Inc | PGNX | HEALTHCARE | BIOTECHNOLOGY | 10 | 11.25 |
Rediff.com | REDF | TECHNOLOGY | INTERNET INFORMATION PROVIDER | 10 | 12.5 |
Sify Ltd | SIFY | TECHNOLOGY | INTERNET SERVICE PROVIDERS | 10 | 18.75 |
The following chart shows historical small cap scores since 2010.
Over the next three months, equity markets tend to underperform bonds. The IWM has finished July higher than it starts May just 4 out of the past 10 times, returning a median -2.05%. Meanwhile, TIPs (TIP) have gained in 8 of the past 10 years during the period.
The best scoring small cap industry is trucking (SAIA, MRTN). Railroads (GBX) also score highly as traffic volume supports railcar orders. Business services (EXAM, KONG) offer upside. Independent oil & gas (KWK, GDP) benefit from seasonal strength in natural gas prices and rising production rates. Auto parts (MTOR, SMP) demand offers opportunity as European production headwinds shift to tailwinds.EU commercial and passenger vehicle registrations rose 11.1% and 10.6% year-over-year, respectively.
In small cap basic materials, buy independent oil & gas and drillers (WTI). The best consumer goods baskets are auto parts and processed & packaged goods (DMND, BDBD). In financials, focus on P&C insurers (UFCS) and investment brokers (CLMS). P&C insurers tend to offer upside through hurricane season. In healthcare, medical appliances (GB, ARTC, BABY, CNMD) and specialized health (HWAY) score best. The top industrial goods groups are heavy construction (AEGN) and aerospace/defense (ORB, AVAV). Aerospace/defense stocks tend to outperform ahead of the summer air show season. In services, buy truckers, rails, and business services. In technology, concentrate on semi ICs (DIOD), diversified electronics (SIMO), and printed circuit boards (SANM).
The following compares average monthly returns for R2K (IWM) and the S&P 500 (IWM). Small cap tends to outperform through June.
The following table breaks out the best seasonal small cap performers over the past decade for the three month period ending July 31st.
SMALL CAP INDUSTRY SCORE | 5/1/2014 | |
Sector | INDUSTRY | Score |
BASIC MATERIALS | INDEPENDENT OIL & GAS | 62.50 |
BASIC MATERIALS | OIL & GAS DRILLING & EXPLORATION | 48.33 |
BASIC MATERIALS | STEEL & IRON | 45.00 |
BASIC MATERIALS | GOLD | 42.00 |
BASIC MATERIALS | INDUSTRIAL METALS & MINERALS | 36.00 |
CONSUMER GOODS | AUTO PARTS | 61.00 |
CONSUMER GOODS | PROCESSED & PACKAGED GOODS | 57.50 |
CONSUMER GOODS | TEXTILES | 41.67 |
CONSUMER GOODS | HOME FURNISHING & FIXTURES | 31.67 |
FINANCIALS | PROPERTY & CASUALITY INSURANCE | 49.00 |
FINANCIALS | INVESTMENT BROKERAGE | 46.25 |
FINANCIALS | REGIONAL BANKS | 44.29 |
FINANCIALS | SAVINGS & LOANS | 36.67 |
FINANCIALS | CREDIT SERVICES | 31.25 |
HEALTHCARE | MEDICAL APPLIANCES & EQUIPMENT | 47.33 |
HEALTHCARE | SPECIALIZED HEALTH SERVICES | 46.43 |
HEALTHCARE | DRUG RELATED PRODUCTS | 43.75 |
HEALTHCARE | MEDICAL INSTRUMENTS & SUPPLIES | 43.10 |
HEALTHCARE | BIOTECHNOLOGY | 40.48 |
HEALTHCARE | DRUG MANUFACTURERS | 37.33 |
HEALTHCARE | HOME HEALTH CARE | 36.43 |
INDUSTRIAL GOODS | HEAVY CONSTRUCTION | 57.50 |
INDUSTRIAL GOODS | AEROSPACE/DEFENSE PRODUCTS & SERVICES | 51.00 |
INDUSTRIAL GOODS | GENERAL BUILDING MATERIALS | 43.75 |
INDUSTRIAL GOODS | INDUSTRIAL ELECTRICAL EQUIPMENT | 38.33 |
SERVICES | TRUCKING | 76.67 |
SERVICES | RAILROADS | 65.00 |
SERVICES | BUSINESS SERVICES | 63.00 |
SERVICES | CATALOG & MAIL ORDER HOUSES | 48.33 |
SERVICES | MANAGEMENT SERVICES | 47.50 |
SERVICES | RESTAURANTS | 47.00 |
SERVICES | EDUCATION & TRAINING SERV | 45.00 |
SERVICES | SPECIALTY RETAIL, OTHER | 45.00 |
SERVICES | STAFFING & OUTSOURCING SERVICES | 42.00 |
SERVICES | MARKETING SERVICES | 35.00 |
SERVICES | BROADCASTING | 33.00 |
SERVICES | RESORTS AND CASINOS | 32.50 |
SERVICES | APPAREL STORES | 30.42 |
TECHNOLOGY | SEMICONDUCTOR- INTEGRATED CIRCUITS | 60.00 |
TECHNOLOGY | DIVERSIFIED ELECTRONICS | 53.00 |
TECHNOLOGY | PRINTED CIRCUIT BOARDS | 50.00 |
TECHNOLOGY | NETWORKING & COMMUNICATION DEVICES | 47.50 |
TECHNOLOGY | BUSINESS SOFTWARE & SERVICES | 46.88 |
TECHNOLOGY | SEMICONDUCTOR EQUIPMENT & MATERIALS | 46.25 |
TECHNOLOGY | WIRELESS COMMUNICATIONS | 45.00 |
TECHNOLOGY | APPLICATION SOFTWARE | 41.00 |
TECHNOLOGY | COMPUTER PERIPHERALS | 38.33 |
TECHNOLOGY | COMMUNICATION EQUIPMENT | 38.13 |
TECHNOLOGY | INFORMATION TECHNOLOGY SERVICES | 37.50 |
TECHNOLOGY | SEMICONDUCTOR-SPECIALIZED | 36.67 |
TECHNOLOGY | SCIENTIFIC & TECHNICAL INSTRUMENTS | 35.00 |
TECHNOLOGY | INTERNET SOFTWARE & SERVICES | 33.89 |
TECHNOLOGY | INTERNET INFORMATION PROVIDER | 28.75 |
TECHNOLOGY | INTERNET SERVICE PROVIDERS | 25.00 |
None.