Seeking Alpha

The Top Large-Cap Sectors, Industries, And Stocks To Buy Now

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Includes: A, ABBV, ACGL, ACN, AIV, AMAT, AME, AMP, ANSS, APD, APH, ARE, AZO, BAH, BIO, BK, BNS, BWA, C, CAH, CBOE, CELG, CGNX, CHU, CIG, CNC, CNQ, CODI, CPB, CRM, CSL, D, DIS, ENTG, ETN, EV, FHN, FISV, FITB, FMC, GNTX, GRMN, GRUB, HMC, HUM, IGT, IR, ITW, JBHT, JEC, JKHY, JLL, JPM, K, KLAC, KNX, KRC, KSS, LEN, LRCX, MCK, MDT, MDU, MGA, MKTX, MS, MU, NDAQ, NKE, NVR, ODFL, OSK, PEAK, PH, PLD, PNR, ROK, S, SCHW, SIVB, SO, STT, STX, T, TDG, TER, TFC, TRN, TROW, TSS, TWLO, UA, USB, WBA, WCG, ZM
by: Limelight Alpha Management Partners
Limelight Alpha Management Partners
Long/short equity, Growth, medium-term horizon, registered investment advisor
Summary

The best-ranked large-cap sector is industrial goods.

The top-rated industry is trucking.

The strongest-scoring stocks include AbbVie, Eaton Vance, and Carlisle Companies.

Stocks have rallied sharply higher since the early October lows because of perceived progress on China trade talks and dovish Federal Reserve policy. However, that doesn't necessarily mean every stock is worth buying today. A trade deal could still get derailed, and the Fed many not provide further rate cuts if inflation reaches its 2% target and unemployment rates remain low. Furthermore, with the S&P 500 flirting with record highs, risk is increasing for a short-term pullback, making stock-picking even more important. Read on to see what sectors, industries, and stocks are best to buy now based on the research we provide to our Top Stocks For Tomorrow subscribers.

A large-cap sector ranking

We rank over 1,600 stocks every week, and aggregating those rankings by sector provides valuable insight into market leadership that can increase returns. We explain our methodology in more depth here, but as a reminder, 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, the best-ranked large cap sectors are industrial goods (Lennar Corp. (LEN), NVR, Inc. (NVR), Illinois Tool Works (ITW), Parker-Hannifin Corp. (PH), Eaton Corp. (ETN), MDU Resources Group Inc., Ingersoll-Rand (IR), Compass Diversified Holdings (CODI), and TransDigm Group (TDG)), financials (Eaton Vance (EV), T. Rowe Price (TROW), U.S. Bancorp, SVB Financial Group (SIVB)), and REITs (Kilroy Realty Corp. (KRC), Healthpeak Properties (PEAK), Alexandria Real Estate Equities (ARE), Prologis (PLD), and Apartment Investment and Management Company (AIV)).

Meanwhile, services and consumer goods are neutral, and healthcare, technology, utilities, and basic materials score below average. In these groups, focus on the strongest industries and individual stocks (see below).

A ranking of large cap sectors from best to worst.

(Source: Top Stocks For Tomorrow)

The best- and worst-rated large-cap stocks

The next table shows the highest- and lowest-scoring large-cap stocks in our universe. Since stocks historically follow earnings over time, insiders only buy for one reason: money flow reflects institutional optimism or pessimism, and seasonal patterns often rhyme, and these individual stocks have characteristics that are likely to be rewarded or punished from here. Stocks making the biggest jump in score to join the best list this week include Alexandria Real Estate Equities, Nike (NKE), NVR, Inc., Apartment Investment and Management Company, Centene Corp. (CNC), International Game Technology (IGT), McKesson Corp. (MKC), MarketAxess Holdings (MKTX)

Large Cap

11/21/2019

4 Week MA

Company Name

Symbol

Sector

INDUSTRY

SCORE

SCORE

BEST

AbbVie Inc.

ABBV

HEALTHCARE

DRUG MANUFACTURERS

110

110.00

Eaton Vance

EV

FINANCIALS

ASSET MANAGEMENT

110

107.50

Celgene

CELG

HEALTHCARE

BIOTECHNOLOGY

105

105.00

Carlisle Companies

CSL

CONSUMER GOODS

RUBBER & PLASTICS

105

103.75

Walt Disney Company

DIS

SERVICES

ENTERTAINMENT- DIVERSIFIED

105

85.00

Fiserv

FISV

TECHNOLOGY

BUSINESS SOFTWARE & SERVICES

105

98.75

Kilroy Realty Corp.

KRC

REITS

REITS

105

96.25

Lennar Corp.

LEN

INDUSTRIAL GOODS

RESIDENTIAL CONSTRUCTION

105

102.50

Teradyne

TER

TECHNOLOGY

SEMICONDUCTOR EQUIPMENT & MATERIALS

105

107.50

T. Rowe Price Group

TROW

FINANCIALS

ASSET MANAGEMENT

105

102.50

Air Products and Chemicals

APD

BASIC MATERIALS

CHEMICALS- MAJOR DIVERSIFIED

100

86.25

Amphenol Corp.

APH

TECHNOLOGY

DIVERSIFIED ELECTRONICS

100

98.75

Alexandria Real Estate Equities

ARE

REITS

REITS

100

88.75

AutoZone

AZO

SERVICES

AUTO PARTS STORES

100

100.00

Campbell Soup Company

CPB

CONSUMER GOODS

PROCESSED & PACKAGED GOODS

100

96.25

Healthpeak Properties

PEAK

REITS

REITS

100

98.75

Illinois Tool Works

ITW

INDUSTRIAL GOODS

DIVERSIFIED MACHINERY

100

103.75

J.B. Hunt Transport Services

JBHT

SERVICES

TRUCKING

100

102.50

Jacobs Engineering

JEC

SERVICES

TECHNICAL SERVICES

100

102.50

Kellogg Company

K

CONSUMER GOODS

PROCESSED & PACKAGED GOODS

100

100.00

Kohl's Corp.

KSS

SERVICES

DEPARTMENT STORES

100

81.25

Medtronic

MDT

HEALTHCARE

MEDICAL APPLIANCES & EQUIPMENT

100

98.75

Micron Tech

MU

TECHNOLOGY

SEMICONDUCTOR- MEMORY CHIPS

100

98.75

Nike

NKE

CONSUMER GOODS

TEXTILES

100

78.75

NVR Inc.

NVR

INDUSTRIAL GOODS

RESIDENTIAL CONSTRUCTION

100

83.75

SVB Financial Group

SIVB

FINANCIALS

REGIONAL BANKS

100

98.75

Southern Company

SO

UTILITIES

ELECTRIC UTILITIES

100

101.25

Seagate Technology

STX

TECHNOLOGY

DATA STORAGE DEVICES

100

95.00

Trinity Industries Inc

TRN

SERVICES

RAILROADS

100

86.25

U.S. Bancorp

USB

FINANCIALS

REGIONAL BANKS

100

100.00

Walgreens Boots Alliance

WBA

SERVICES

DRUG STORES

100

90.00

Arch Capital Group Ltd.

ACGL

FINANCIALS

PROPERTY & CASUALITY INSURANCE

95

92.50

Apartment Investment and Management Company

AIV

REITS

REITS

95

83.75

Ameriprise Financial Inc

AMP

FINANCIALS

ASSET MANAGEMENT

95

98.75

ANSYS Inc.

ANSS

TECHNOLOGY

TECHNICAL & SYSTEM SOFTWARE

95

90.00

Bio-Rad Labs

BIO

HEALTHCARE

MEDICAL LABORATORIES AND RESEARCH

95

93.75

Bank of NY Mellon

BK

FINANCIALS

MONEY CENTER BANKS

95

88.75

The Bank of Nova Scotia

BNS

FINANCIALS

MONEY CENTER BANKS

95

97.50

Centene Corp.

CNC

HEALTHCARE

HEALTH CARE PLANS

95

77.50

Canadian Natural Resources Ltd.

CNQ

BASIC MATERIALS

INDEPENDENT OIL & GAS

95

81.25

Compass Diversified Holdings

CODI

INDUSTRIAL GOODS

CONGLOMERATES

95

95.00

Salesforce.com

CRM

TECHNOLOGY

INTERNET SOFTWARE & SERVICES

95

82.50

Eaton Corp.

ETN

INDUSTRIAL GOODS

INDUSTRIAL ELECTRICAL EQUIPMENT

95

102.50

FMC Corp.

FMC

BASIC MATERIALS

CHEMICALS- MAJOR DIVERSIFIED

95

88.75

Garmin Ltd.

GRMN

TECHNOLOGY

SCIENTIFIC & TECHNICAL INSTRUMENTS

95

95.00

Honda Motor

HMC

CONSUMER GOODS

AUTO MANUFACTURERS- MAJOR

95

98.75

Humana

HUM

HEALTHCARE

HEALTH CARE PLANS

95

92.50

International Game Technology

IGT

TECHNOLOGY

DIVERSIFIED COMPUTER SYSTEMS

95

75.00

Ingersoll-Rand

IR

INDUSTRIAL GOODS

DIVERSIFIED MACHINERY

95

98.75

Jack Henry & Associates

JKHY

TECHNOLOGY

BUSINESS SOFTWARE & SERVICES

95

81.25

Jones Lang LaSalle Incorporated

JLL

FINANCIALS

PROPERTY MANAGEMENT

95

91.25

JPMorgan Chase

JPM

FINANCIALS

MONEY CENTER BANKS

95

98.75

KLA Corp

KLAC

TECHNOLOGY

SEMICONDUCTOR EQUIPMENT & MATERIALS

95

95.00

Knight-Swift Transportation Holdings Inc

KNX

SERVICES

TRUCKING

95

97.50

McKesson Corp.

MCK

SERVICES

DRUGS WHOLESALE

95

81.25

MDU Resources Group Inc.

MDU

INDUSTRIAL GOODS

GENERAL BUILDING MATERIALS

95

93.75

MarketAxess Holdings Inc.

MKTX

FINANCIALS

INVESTMENT BROKERAGE

95

82.50

Oshkosh Corp.

OSK

CONSUMER GOODS

TRUCKS & OTHER VEHICLES

95

98.75

Parker-Hannifin Corp.

PH

INDUSTRIAL GOODS

INDUSTRIAL EQUIPMENT & COMPONENTS

95

98.75

Prologis

PLD

REITS

REITS

95

92.50

Charles Schwab Corp.

SCHW

FINANCIALS

INVESTMENT BROKERAGE

95

85.00

TransDigm Group Inc.

TDG

INDUSTRIAL GOODS

AEROSPACE/DEFENSE PRODUCTS & SERVICES

95

93.75

Total System Services

TSS

SERVICES

BUSINESS SERVICES

95

95.00

WellCare Health Plans

WCG

HEALTHCARE

HEALTH CARE PLANS

95

92.50

WORST

China Unicom

CHU

TECHNOLOGY

WIRELESS COMMUNICATIONS

15

16.25

Companhia Energetica de Minas Gerais

CIG

UTILITIES

FOREIGN UTILITIES

15

16.25

Grubhub

GRUB

TECHNOLOGY

INTERNET INFORMATION PROVIDER

15

21.25

Sprint Nextel

S

TECHNOLOGY

WIRELESS COMMUNICATIONS

15

16.25

Twilio Inc.

TWLO

TECHNOLOGY

APPLICATION SOFTWARE

15

17.50

Under Armor

UA

CONSUMER GOODS

TEXTILES

15

16.25

Zoom Video Communications

ZM

TECHNOLOGY

APPLICATION SOFTWARE

15

20.00

The best and worst industries

The best large-cap industries this week are trucking (J.B. Hunt Transport Services, Knight-Swift Transportation Holdings Inc., Old Dominion Freight (ODFL)), major chemicals (Air Products and Chemicals, FMC Corp.), diversified investments (CBOE Global Markets (CBOE), NASDAQ Inc. (NDAQ), Morgan Stanley (MS)), healthcare (Wellcare Health Plans, Humana, Centene Corp.), and semi equipment & materials (Teradyne, KLA Corp., Lam Research (LRCX), Entegris (ENTG), Applied Materials (AMAT)).

A ranking of the best and worst large cap industries.

(Source: Limelight Alpha)

Taking this analysis further, we can determine the best and worst industries for investment ideas by sector.

  • The best basic materials basket is major chemicals.
  • In consumer, concentrate on trucks (Oshkosh Corp.), auto parts (Magna International (MGA), Gentex Corp. (GNTX), BrogWarner (BWA)), and processed & packaged goods (Kellogg Co., Campbell Soup Company).
  • Focus on diversified investments, money center banks (JPMorgan Chase, Bank of Nova Scotia, Bank of NY Mellon), and regional banks (U.S. Bancorp., SVB Financial Group, State Street Corp. (STT), Fifth Third Bancorp (FITB), First Horizon Nat'l (FHN), Citigroup (C), BB&T (BBT)) in financials.
  • The best healthcare industries are healthcare plans and generic drugs.
  • Residential construction (Lennar Corp., NVR, Inc.), industrial equipment (Parker-Hannifin Corp., Pentair (PNR)), and industrial electrical (Eaton Corp., Rockwell Automation (ROK), Ametek (AME)) offer upside in industrial goods.
  • The strongest services groups are trucking, wholesale drugs (McKesson Corp., Cardinal Health (CAH)), and management services (Booz Allen (BAH), Accenture (ACN)).
  • Semi equipment, domestic telecom (AT&T (T)), and scientific & technical instruments (Garmin Ltd., Cognex (CGNX), Agilent (A)) are top-rated in technology.
  • Electric utilities (Southern Company, Dominion Energy (D)) can also be bought.

Disclosure: I/we have no positions in any stocks mentioned, but may initiate a long position in JPM, C, LRCX, KLAC, MKTX, NKE over the next 72 hours. 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.