The best ranked large-cap sector is industrial goods.
The top-scoring industry is trucking.
The highest scoring stocks include AbbVie, Teradyne, and C.H. Robinson Worldwide.
In a bid to spark inflation by boosting loan activity and business investment, the Federal Reserve lowered its target rate this week by an additional 25 basis points to a range of 1.50% to 1.75%. The lowered rates could make this a good time to buy stocks, but stock picking is more important than ever given ongoing trade uncertainty and slower global growth. Read on to discover the best sectors, industries, and stocks to buy now.
A ranking of large cap sectors
Weekly, we aggregate our ranking of over 1,600 stocks by sector to gain insight into market leadership. Our scoring methodology is explained in more depth here, but as a refresher, scores are based on forward earnings growth, historical trends in reporting earnings that beat Wall Street estimates, insider buying, short term and long-term institutional money flow, forward valuation relative to historical valuation, contra-trend short interest analysis, and quarterly seasonality over the past decade.
This week, our sector ranking continues to favor traditionally dividend-oriented baskets. Industrial goods (Illinois Tool Works Inc. (ITW), Eaton Corporation (ETN), Parker-Hannifin Corp (PH)), REITs (HCP, Inc (HCP), Realty Income Corp (O), National Retail Properties (NNN), and financials ( SunTrust Banks (STI), U.S. Bancorp (USB), JPMorgan Chase (JPM) are the top-ranked large cap sectors.
Meanwhile, consumer goods and services score neutral and healthcare, technology, utilities, and basic materials are rated below average. In these groups, our industry or stock specific scores could be your best bet for market-beating returns (see further below).
Source: Limelight Alpha.
The best and worst scoring stocks
The next table shows the highest and lowest scoring large-cap stocks in our universe. Because stocks historically follow earnings over time, insiders only buy for one reason; money flow reflects institutional optimism or pessimism, and seasonal patterns often rhyme, these individual stocks have characteristics that are likely to be rewarded or punished from here.
|LG CAP||10/31/2019||4 Week MA|
|AbbVie Inc.||(ABBV)||HEALTHCARE||DRUG MANUFACTURERS||110||88.75|
|Teradyne||(TER)||TECHNOLOGY||SEMICONDUCTOR EQUIPMENT & MATERIALS||110||107.5|
|C H Robinson Worldwide||(CHRW)||SERVICES||AIR DELIVERY & FREIGHT SERVICES||105||85|
|Carlisle Co's||(CSL)||CONSUMER GOODS||RUBBER & PLASTICS||105||85|
|Eaton Corp||(ETN)||INDUSTRIAL GOODS||INDUSTRIAL ELECTRICAL EQUIPMENT||105||81.25|
|H C P Inc.||(HCP)||REITS||REITS||105||108.75|
|Illinois Tool Works||(ITW)||INDUSTRIAL GOODS||DIVERSIFIED MACHINERY||105||91.25|
|Hunt J B||(JBHT)||SERVICES||TRUCKING||105||102.5|
|Jacobs Engineering||(JEC)||SERVICES||TECHNICAL SERVICES||105||103.75|
|Suntrust Bks Inc||(STI)||FINANCIALS||MONEY CENTER BANKS||105||101.25|
|Amerisource Bergen||(ABC)||SERVICES||DRUGS WHOLESALE||100||78.75|
|Ameriprise Finl Inc||(AMP)||FINANCIALS||ASSET MANAGEMENT||100||80|
|Amphenol Corp||(APH)||TECHNOLOGY||DIVERSIFIED ELECTRONICS||100||87.5|
|Autozone||(AZO)||SERVICES||AUTO PARTS STORES||100||80|
|The Bank of Nova Scotia||(BNS)||FINANCIALS||MONEY CENTER BANKS||100||92.5|
|Cincinnati Finl Corp||(CINF)||FINANCIALS||PROPERTY & CASUALITY INSURANCE||100||101.25|
|Cintas Corp||(CTAS)||SERVICES||BUSINESS SERVICES||100||98.75|
|Entegris||(ENTG)||TECHNOLOGY||SEMICONDUCTOR EQUIPMENT & MATERIALS||100||98.75|
|Eaton Vance||(EV)||FINANCIALS||ASSET MANAGEMENT||100||86.25|
|Fastenal Corp||(FAST)||INDUSTRIAL GOODS||GENERAL BUILDING MATERIALS||100||96.25|
|Honda Motor||(HMC)||CONSUMER GOODS||AUTO MANUFACTURERS- MAJOR||100||80|
|Ingersoll Rand||(IR)||INDUSTRIAL GOODS||DIVERSIFIED MACHINERY||100||78.75|
|J P Morgan||(JPM)||FINANCIALS||MONEY CENTER BANKS||100||86.25|
|Kellogg Company||(K)||CONSUMER GOODS||PROCESSED & PACKAGED GOODS||100||97.5|
|Knight Transportation Inc||(KNX)||SERVICES||TRUCKING||100||98.75|
|Lennar Corp||(LEN)||INDUSTRIAL GOODS||RESIDENTIAL CONSTRUCTION||100||105|
|Medtronic||(MDT)||HEALTHCARE||MEDICAL APPLIANCES & EQUIPMENT||100||97.5|
|Micron Tech||(MU)||TECHNOLOGY||SEMICONDUCTOR- MEMORY CHIPS||100||96.25|
|Oshkosh Truck||(OSK)||CONSUMER GOODS||TRUCKS & OTHER VEHICLES||100||73.75|
|Parker Hannifin||(PH)||INDUSTRIAL GOODS||INDUSTRIAL EQUIPMENT & COMPONENTS||100||86.25|
|Southern Company||(SO)||UTILITIES||ELECTRIC UTILITIES||100||98.75|
|Stryker Corp||(SYK)||HEALTHCARE||MEDICAL INSTRUMENTS & SUPPLIES||100||91.25|
|US Bancorp||(USB)||FINANCIALS||REGIONAL BANKS||100||85|
|China Unicom||(CHU)||TECHNOLOGY||WIRELESS COMMUNICATIONS||15||25|
|Companhia Energetica de Minas Gerais||(CIG)||UTILITIES||FOREIGN UTILITIES||15||15|
|Cooper Companies||(COO)||HEALTHCARE||MEDICAL INSTRUMENTS & SUPPLIES||15||13.75|
|Sprint Nextel||(S)||TECHNOLOGY||WIRELESS COMMUNICATIONS||15||21.25|
The best and worst industries
The best large cap industries this week are trucking (J.B. Hunt Transport Services (JBHT)), wholesale drugs (AmerisourceBergen (ABC)), trucks (Oshkosh Corp. (OSK)), general building materials (Fastenal Company (FAST)), and auto parts stores (AutoZone (AZO)).
Source: Limelight Alpha.
Taking this analysis further, we can determine the best and worst industries for investment ideas by sector.
- The best basics baskets are major chemicals (The Sherwin-Williams Company (SHW), Eastman Chemical (EMN)) and gold (Agnico Eagle Mines (AEM).
- Concentrate on trucks, appliances (Whirlpool (WHR)), and major autos (Honda Motor (HMC), Toyota Motor (TM)) in consumer goods.
- Focus on money center banks (SunTrust Banks (STI), JP Morgan Chase (JPM), The Bank of Nova Scotia (BNS)), regional banks (US Bancorp (USB), Fifth Third Bancorp (FITB), First Horizon National (FHN), Citigroup (C), B B & T Corp (BBT)), and asset managers (Eaton Vance (EV), Ameriprise Financial (AMP), T. Rowe Price (NASDAQ:TROW)) in financials.
- Healthcare plans (UnitedHealth Group (UNH), Humana (HUM), Cigna (CI)) and generic drugs (Zoetis (ZTS)) are top rated in healthcare.
- The best industrial goods groups are general building materials, industrial equipment & components (Parker-Hannifin Corp. (PH), Pentair (PNR), Emerson Electric (EMR)), and diversified machinery (Illinois Tool Works (ITW), Ingersoll-Rand (IR), Dover Corp. (DOV), Brunswick Corp. (BC)).
- In services, the strongest scoring industries include trucking, wholesale drugs, and auto parts stores.
- Semi equipment (Teradyne (TER), Entegris (ENTG), KLA Corp. (KLAC), Lam Research (LRCX), Applied Materials (AMAT)), scientific & technical instruments (Garmin (GRMN), Cognex (CGNX), FLIR Systems (FLIR)), and domestic telecom (AT&T Inc. (T) are top rated in technology.
- Electric utilities (The Southern Company (SO), Entergy Corp. (ETR), Dominion Energy (D) can also be bought.
Source: Limelight Alpha.
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Disclosure: I am/we are long CELG. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.