Since 2010, our top scoring weekly has outpaced the SPX by a median 319 bps in the following year.
- Healthcare is the top scoring large cap sector.
- Wholesale drugs are the best industry.
The average large cap score is 66.28, which is above the four week moving average score of 63.75. The average large cap stock is trading -12.24% below its 52 week high, 2.03% above its 200 dma, has 4.17 days to cover held short, and is expected to post EPS growth of 8.03% next year.
Healthcare is the top scoring large cap sector. Services, utilities, and industrial goods also score above average. Technology and consumer goods score in line with the average large cap stock. Financials and basic materials score below average.
The best scoring large cap industry is drugs wholesale (CAH, MCK, ABC). Drug demand continues to benefit from increasing utilization tied to aging America and an increasingly insured population. Enrollment growth across exchanges, Medicare, and Medicaid continue to offer revenue and profit support to insurers (AETAET, ANTM, CI, HUM, UNH) in 2015. Aerospace/defense (BA, TDG, LMT, HON, GD, COL) stocks are high scoring and benefit from budget clarity and improving production rates. Department stores (M, KSS, TJX) offer upside through the fourth quarter EPS reporting season. Rising capacity has yet to dent effective rents, lending support to REITs (HCN, VTR, PSA, DLR, AVB, SLG, SPG, O, BXP).
Across large cap basic materials, only ag chemicals (AGU, CF, DD) and major chemicals (APD, SHW, ASH) score above average. Falling commodity input costs lend margin support. Cigarettes (RAI, MO, LO), processed & packaged foods (K, CAG, CPB, MKC), and textiles (HBI, NKE, LULU, VFC, UA) are top scoring in consumer goods. Only REITs score above average in financials. In healthcare, concentrate portfolios on health insurers, biotech (GILD, ILMN, BIIB, REGN, MDVN, INCY, CELG), and medical instruments (BDX, BCR, COO). The top scoring industrial goods basket is aerospace/defense. Wholesale drugs, department stores, and drug stores (OCR, CVS, RAD) are best in services. Technology investors should focus on broadline semiconductors (NXPI, FSL, TXN, ADI), semi ICs (TSM, SWKS, SUNE), and business software (FISV, JKHY, WIT, DOX).
