The Top Spots And Top Stocks

6/19/2017


Using a handful of key metrics, we identified the top sectors and industries in the S&P 1500 Index by operating growth, valuation, and stock performance, shown at right. Additionally, we split the index into deciles by stock-market value to isolate these trends by company size.

The largest stocks have generated the strongest operating growth over the past 12 months, also translating into high returns. Small and midcap stocks appear to be the most attractively valued. 

Although technology stocks have suffered a sharp selloff this month, there was not a hotter sector entering June, given 12-month growth, profit outlook, and share-price action over the past several months. Conversely, investors aren't giving the financial sector much credit for its operating momentum or prospects. Financial stocks have the lowest average P/E ratios based on trailing earnings and estimated current-year earnings.

Recommended stocks from the top industries based on operating growth are: Applied Materials ($44; AMAT), Centene ($78; CNC), Citizens Financial Group ($37; CFG), D.R. Horton ($34; DHI), Lam Research ($153; LRCX), ON Semiconductor ($16; ON), and Zions Bancorp ($43; ZION).

Recommended stocks from the top industries based on value are: Alaska Air Group ($89; ALK), CBS ($61; CBS), and Southwest Airlines ($60; LUV).

Recommended stocks from the top industries based on performance are: Applied Materials, Carnival ($65; CCL), Centene ($78; CNC), Lam, and Royal Caribbean Cruises ($112; RCL).

HOT POCKETS
We identified top pockets of the S&P 1500 Index from three different angles. Ranks for each sector (out of 11), industry (96), and market-value decile (10) are in parenthesis. All numbers other than company counts and ranks are averages. Averages exclude P/E ratios above 75 or below zero, and growth rates above 75% or below -75%.
------ 12-Month Change ------
Estimated
EPS Change,
Curr. Year
(%)
Quadrix
Momentum
Score
Operating growth
EPS
(%)
Sale
(%)
Top sectors (number of stocks)
Financials (210)
7
(3)
9
(3)
10
(1)
58
(2)
Technology (220)
8
(2)
11
(1)
7
(2)
59
(1)
Top industries (number of stocks)
Internet & direct mktg. (10)
8
(37)
13
(10)
21
(5)
59
(19)
Homebuilding (16)
22
(4)
20
(1)
22
(3)
69
(6)
Managed health care (10)
25
(3)
11
(21)
16
(10)
67
(10)
Regional banks (80)
11
(21)
12
(13)
11
(22)
61
(16)
Semiconductor equip. (15)
34
(1)
15
(3)
23
(1)
86
(1)
Top market-value decile (average market value in billions)
Largest decile ($111.8)
8
(4)
7
(5)
10
(1)
57
(2)
Second-largest decile ($24.7)
10
(2)
7
(4)
10
(2)
60
(1)
S&P 1500 Index average
4
6
5
51
------------- P/E Ratio -------------
---------- Quadrix Scores ----------
Valuation
Trailing
Estimated
Curr. Year
Value
Overall
Top sectors (number of stocks)
Cons. discretionary (254)
20
(2)
19
(2)
70
(1)
67
(2)
Financials (210)
19
(1)
18
(1)
68
(2)
70
(1)
Top industries (number of stocks)
Airlines (9)
12
(2)
12
(4)
83
(7)
86
(3)
Apparel retail (24)
14
(5)
14
(8)
91
(2)
60
(45)
Broadcasting (6)
14
(4)
11
(3)
88
(4)
75
(12)
Department stores (5)
11
(1)
11
(1)
96
(1)
63
(38)
Life & health insur. (11)
12
(3)
11
(2)
91
(3)
86
(4)
Top market-value deciles (average market value in millions)
7th-largest decile ($2,057)
23
(3)
21
(1)
59
(3)
58
(8)
Smallest decile ($454)
22
(2)
23
(8)
62
(1)
45
(10)
S&P 1500 Index average
23
22
56
59
------------------- Total Return -------------------
Performance
Last 3 Months
------ (%) ------
Year-To-Date
------ (%) ------
Last 12 Months
------ (%) ------
Quadrix
Performance
------ Score ------
Top sectors (number of stocks)
Health care (172)
9
(1)
16
(1)
24
(5)
62
(3)
Technology (220)
7
(4)
13
(2)
37
(1)
62
(1)
Top industries (number of stocks)
Casinos & gaming (6)
26
(1)
46
(1)
68
(4)
86
(1)
Health-care supplies (13)
16
(9)
24
(7)
75
(2)
70
(12)
Hotels, resorts & cruises (8)
21
(2)
27
(4)
64
(5)
85
(3)
Managed health care (10)
17
(7)
22
(9)
37
(21)
78
(6)
Semiconductor equip. (15)
11
(15)
25
(6)
74
(3)
85
(2)
Top market-value deciles (average market value in billions)
Largest decile ($112.4)
4
(7)
12
(2)
25
(4)
58
(1)
Sixth-largest decile ($3.0)
6
(2)
8
(4)
29
(1)
52
(4)
S&P 1500 Index average
4
6
23
49
Note: Quadrix scores are percentile ranks, with 100 the best.

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