Our weekly best and worst reports show you stocks with the best potential returns over the coming 6 to 12 months.  The score is calculated by fusing together the key drivers of price movement including, earnings beats, earnings growth, at-the-market insider buys, institutional activity, short ratio analysis, price to earnings analysis and calendar quarter seasonality.  Those stocks appearing in our best list should be bought while those appearing in our worst list should be sold.

The best scoring mid caps from one year ago (3/7/2013) averaged 207 bps of excess over the S&P 400, with 0% turnover.  The top performers include ILMN up 221%, NFLX up 145%, GMCR up 114%, VRX up 107%, HBI up 90%, and SIVB up 85%.


 

• The best mid cap sector is industrial goods
• The top mid cap industry is residential construction

The average mid cap score is 67.25, below the four week moving average score of 67.49. The average mid cap is trading -11.95% below its 52 week high, 6.14% above its 200 dma, has 5.95 days to cover short, and is expected to grow EPS by 18.3% next year.
 
Industrial goods, consumer goods, and financials score above average. Healthcare, and technology score in line. Services, basics, and utilities score below average.
 

Commentary:

The following chart shows average mid cap sector scores since 2010.

The following table shows market seasonality through May. The S&P 400 Mid Cap index offers solid seasonality, returning a median 4.05% in the period.

The next table reflects the best mid cap seasonality plays.  Each has finished May higher than its started March in 10 of the past 10 years.

The best mid cap industry is residential construction (NVR, KBH, RYL). Trucking (HTLD, ODFL, KNX) is strong scoring as capacity supports pricing alongside improving GDP.  Education (DV, LOPE) stocks are under-owned and offer upside. Business equipment (DBD, PAY) is strong scoring. Accident & health insurance (CNO, AIZ) benefit from improving pricing, equity market appreciation, and job growth.

In mid cap basics, buy oil & gas equipment & services (PDS, EXH, HLX), drillers (NBR, PTEN), and synthetics (CMP, POL). The top consumer groups include business equipment, textiles (COLM, SKX), and auto parts (TEN, FDML). In financials, buy accident & health insurers, surety & title insurance (AGO), and REITs (NNN, RWT, BDN, KRC, ARE).  The top healthcare industry is medical instruments (TFX, PKI, NUVA, DXCM). Every industrial goods group scores above average. Focus on residential construction, industrial electrical equipment (LFUS, BDC), and aerospace/defense (ESL, CW, HXL, TDY). The top services groups are trucking, education, and restaurants (WEN, PZZA, EAT, BWLD).  In technology, buy semi equipment (TER), computer peripherals (ZBRA, LXK), and semi ICs (IRF).