The Best Large-Cap Stocks To Buy Now

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The Best Large-Cap Stocks To Buy Now

Market volatility is increasing and that’s resulting in some interesting opportunities investors can consider. There’s no telling what stocks will pop or drop the most from here; however, it’s clear from our most recent research that investors are increasingly focusing on defensive stocks, rather than the more aggressive stocks that were high-flyers earlier this year.

Best and worst large-cap sectors

Weekly, we aggregate our ranking of over 1,600 stocks by sector to gain insight into shifting trends in market leadership. This week’s sector ranking is particularly defensive given that the top-ranked large-cap sectors are traditionally dividend-oriented, rather than growth-oriented groups.

The top sector is REITs, led by HCP, Inc. (HCP), Essex Property (ESS), and Prologis (PLD). Industrial goods and utilities, led by Southern Co. (SO), Consolidated Edison (ED) and American Electric Power (AEP) are also top-rated.

Alternatively, technology, healthcare, and basic materials – sectors historically more associated with growth – score below average, suggesting investors ought to be cautious about committing new money for now.

Limelight


Source: Limelight Alpha Management Partners/E.B. Capital Markets.

Best and worst large-cap stocks to buy

The following are the top and bottom-ranked mid-cap stocks across our 1,600 stock universe this week. An overview of our scoring methodology is available here, but as a quick 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.

Because stocks tend to follow earnings over time, insiders only buy one reason; money flow indicates institutional optimism or pessimism, and seasonal patterns often rhyme, these individual stocks have characteristics that are likely to be rewarded or punished in the future.

CAP

10/10/2019

4 Week MA

Company Name

Symbol

Sector

INDUSTRY

SCORE

SCORE

BEST

HCP Inc.

HCP

REITs

REITs

110

101.25

Celgene

CELG

HEALTHCARE

BIOTECHNOLOGY

105

103.75

Cincinnati Finl Corp

CINF

FINANCIALS

PROPERTY & CASUALITY INSURANCE

105

103.75

Lennar Corp

LEN

INDUSTRIAL GOODS

RESIDENTIAL CONSTRUCTION

105

90

Teradyne

TER

TECHNOLOGY

SEMICONDUCTOR EQUIPMENT & MATERIALS

105

92.5

Cognex

CGNX

TECHNOLOGY

SCIENTIFIC & TECHNICAL INSTRUMENTS

100

86.25

Chicago Mercantile Exchange Holdings Inc

CME

SERVICES

BUSINESS SERVICES

100

98.75

Campbell Soup

CPB

CONSUMER GOODS

PROCESSED & PACKAGED GOODS

100

85

Entegris

ENTG

TECHNOLOGY

SEMICONDUCTOR EQUIPMENT & MATERIALS

100

88.75

Essex Ppty Trust

ESS

REITs

REITs

100

83.75

Jacobs Engineering

JEC

SERVICES

TECHNICAL SERVICES

100

101.25

Nike

NKE

CONSUMER GOODS

TEXTILES

100

86.25

NVR Inc

NVR

INDUSTRIAL GOODS

RESIDENTIAL CONSTRUCTION

100

82.5

Southern Company

SO

UTILITIES

ELECTRIC UTILITIES

100

92.5

Suntrust Bks Inc

STI

FINANCIALS

MONEY CENTER BANKS

100

102.5

Berkley W R Corp

WRB

FINANCIALS

PROPERTY & CASUALITY INSURANCE

100

90

American Elec Pwr Inc

AEP

UTILITIES

ELECTRIC UTILITIES

95

92.5

Alexandria R E Equities

ARE

REITs

REITs

95

77.5

Avalonbay Comm.

AVB

REITs

REITs

95

66.25

Bio-Rad Labs

BIO

HEALTHCARE

MEDICAL LABORATORIES AND RESEARCH

95

85

Chubb

CB

FINANCIALS

PROPERTY & CASUALITY INSURANCE

95

96.25

Costar Group

CSGP

SERVICES

BUSINESS SERVICES

95

86.25

Cintas Corp

CTAS

SERVICES

BUSINESS SERVICES

95

97.5

Consolidated Edison

ED

UTILITIES

DIVERSIFIED UTILITIES

95

81.25

First Tennessee

FHN

FINANCIALS

REGIONAL BANKS

95

86.25

Hormel Foods

HRL

CONSUMER GOODS

MEAT PRODUCTS

95

86.25

Hunt J B

JBHT

SERVICES

TRUCKING

95

88.75

Kellogg Company

K

CONSUMER GOODS

PROCESSED & PACKAGED GOODS

95

86.25

KLA Corp.

KLAC

TECHNOLOGY

SEMICONDUCTOR EQUIPMENT & MATERIALS

95

83.75

Knight Transportation Inc

KNX

SERVICES

TRUCKING

95

71.25

Medtronic

MDT

HEALTHCARE

MEDICAL APPLIANCES & EQUIPMENT

95

87.5

McCormick & Co.

MKC

CONSUMER GOODS

PROCESSED & PACKAGED GOODS

95

66.25

Marketaxess Hldgs Inc

MKTX

FINANCIALS

INVESTMENT BROKERAGE

95

86.25

Micron Tech

MU

TECHNOLOGY

SEMICONDUCTOR- MEMORY CHIPS

95

76.25

Nat’l Retail Ppty

NNN

REITs

REITs

95

75

Realty Income

O

REITs

REITs

95

77.5

Prologis

PLD

REITs

REITs

95

95

Seagate Technology

STX

TECHNOLOGY

DATA STORAGE DEVICES

95

82.5

Stryker Corp

SYK

HEALTHCARE

MEDICAL INSTRUMENTS & SUPPLIES

95

88.75

Transdigm Group Inc.

TDG

INDUSTRIAL GOODS

AEROSPACE/DEFENSE PRODUCTS & SERVICES

95

92.5

Whirlpool

WHR

CONSUMER GOODS

APPLIANCES

95

83.75

WORST

Sprint Nextel

S

TECHNOLOGY

WIRELESS COMMUNICATIONS

10

15

Under Armour

UA

CONSUMER GOODS

TEXTILES

10

11.25

Banco Bradesco SA

BBD

FINANCIALS

FOREIGN REGIONAL BANKS

15

31.25

Companhia Energetica de Minas Gerais

CIG

UTILITIES

FOREIGN UTILITIES

15

16.25

Best and worst large-cap industries

In addition to aggregating our research by sector, we also crunch the numbers by industry to help make sure we’re fishing in the right pond.

This week, the best large-cap industries are trucking (Knight-Swift (KNX), J.B. Hunt (JBHT), and Old Dominion (ODFL); semi equipment (Teradyne (TER)), Entegris (ENTG), and KLA Corp. (KLAC)); residential construction (Lennar (LEN), NVR, Inc. (NVR) and Toll Brothers (TOL)); general building materials (Vulcan Materials (VMC), MDU Resources (MDU)); and processed & packaged goods (Campbell Soup (CPB), McCormick & Co. (MKC), and Kellogg (K)).

The best and worst ranked industries.



Source: Limelight Alpha Management Partners.

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

  • In basic materials, the top baskets are ag chemicals (CF Industries (CF)) and gold (Agnico Eagle Mines (AEM)).
  • Processed & packaged goods, personal products (Kimberly-Clark (KMB)), Procter & Gamble (PG)), and Estee Lauder (EL)), and appliances (Whirlpool (WHR)) are top-rated in consumer goods.
  • Focus on P&C insurers (Cincinnati Fin’l (CINF)), W. R. Berkley (WRB)), Chubb (CB)), Arch Capital (ACGL)), money center banks (SunTrust Banks (STI), PNC Financial (PNC)), and diversified investments (CBOE Global (CBOE)) in financials.
  • The best healthcare industries are generic drugs (Zoetis (ZTS)), medical labs (Bio-Rad Labs (BIO), Quest Diagnostics (NYSE:DGX)), and medical instruments (Stryker (SYK), West Pharma (WST), and Insulet (PODD)).
  • Residential construction, general building materials, and aerospace/defense (TransDigm (TDG), Teledyne (TDY), Raytheon (RTN), Northrop Grumman (NOC)) offer upside in industrial goods.
  • The strongest scoring services groups are trucking, discount/variety stores (Target (TGT), Walmart (WMT), and Costco (COST)), and business services (CME Group (CME), Cintas (CTAS), Costar Group (CSGP), intercontinental Exchange (ICE)).
  • Semi equipment, data storage devices (Seagate (STX)), and broadline semi (Texas Instruments (TXN) are top-ranked in technology.
  • Electric utilities stocks are also top-scoring.

The following table shows the strongest and weakest industries by sector, providing additional insight for sector-specific investors into what baskets may perform best and worst from here.

LG CAP INDUSTRY SCORE BY SECTOR

10/10/2019

Sector

Industry

SCORE

BASIC MATERIALS

AGRICULTURAL CHEMICALS

72.50

BASIC MATERIALS

GOLD

68.33

BASIC MATERIALS

CHEMICALS- MAJOR DIVERSIFIED

67.50

BASIC MATERIALS

OIL & GAS REFINING & MARKETING

52.00

BASIC MATERIALS

MAJOR INTEGRATED OIL AND GAS

47.50

BASIC MATERIALS

OIL & GAS DRILLING & EXPLORATION

46.00

BASIC MATERIALS

COPPER

45.00

BASIC MATERIALS

STEEL & IRON

43.75

BASIC MATERIALS

INDEPENDENT OIL & GAS

38.85

BASIC MATERIALS

OIL & GAS EQUIPMENT & SERVICES

36.00

CONSUMER GOODS

PROCESSED & PACKAGED GOODS

81.43

CONSUMER GOODS

PERSONAL PRODUCTS

77.50

CONSUMER GOODS

APPLIANCES

75.00

CONSUMER GOODS

PACKAGING & CONTAINERS

67.50

CONSUMER GOODS

BEVERAGES

66.43

CONSUMER GOODS

AUTO PARTS

63.33

CONSUMER GOODS

CLEANING PRODUCTS

60.00

CONSUMER GOODS

AUTO MANUFACTURERS- MAJOR

58.57

CONSUMER GOODS

FOOD – MAJOR DIVERSIFIED

52.50

CONSUMER GOODS

TRUCKS & OTHER VEHICLES

52.50

CONSUMER GOODS

TEXTILES

51.50

FINANCIALS

PROPERTY & CAUSALITY INSURANCE

75.00

FINANCIALS

MONEY CENTER BANKS

70.50

FINANCIALS

DIVERSIFIED INVESTMENTS

68.33

FINANCIALS

REGIONAL BANKS

63.85

FINANCIALS

INSURANCE BROKERS

63.75

FINANCIALS

INVESTMENT BROKERAGE

61.11

FINANCIALS

ASSET MANAGEMENT

59.44

FINANCIALS

CREDIT SERVICES

57.50

FINANCIALS

LIFE INSURANCE

48.33

FINANCIALS

FOREIGN MONEY CENTER BANKS

46.00

FINANCIALS

PROPERTY MANAGEMENT

41.67

HEALTHCARE

DRUGS-GENERIC

68.75

HEALTHCARE

MEDICAL LABORATORIES AND RESEARCH

66.25

HEALTHCARE

MEDICAL INSTRUMENTS & SUPPLIES

63.67

HEALTHCARE

MEDICAL APPLIANCES & EQUIPMENT

58.08

HEALTHCARE

HEALTH CARE PLANS

57.14

HEALTHCARE

DRUG MANUFACTURERS

51.84

HEALTHCARE

BIOTECHNOLOGY

46.39

INDUSTRIAL GOODS

RESIDENTIAL CONSTRUCTION

85.00

INDUSTRIAL GOODS

GENERAL BUILDING MATERIALS

82.50

INDUSTRIAL GOODS

AEROSPACE/DEFENSE PRODUCTS & SERVICES

75.00

INDUSTRIAL GOODS

INDUSTRIAL EQUIPMENT & COMPONENTS

62.50

INDUSTRIAL GOODS

WASTE MANAGEMENT

61.25

INDUSTRIAL GOODS

INDUSTRIAL ELECTRICAL EQUIPMENT

61.00

INDUSTRIAL GOODS

DIVERSIFIED MACHINERY

58.89

INDUSTRIAL GOODS

FARM & CONSTRUCTION MACHINERY

58.75

REITs

REITs

76.54

SERVICES

TRUCKING

93.33

SERVICES

DISCOUNT, VARIETY STORES

73.00

SERVICES

BUSINESS SERVICES

72.50

SERVICES

STAFFING & OUTSOURCING SERVICES

68.33

SERVICES

RESTAURANTS

68.00

SERVICES

AIR DELIVERY & FREIGHT SERVICES

66.25

SERVICES

AUTO DEALERSHIPS

65.00

SERVICES

GENERAL ENTERTAINMENT

65.00

SERVICES

RENTAL & LEASING SERVICES

65.00

SERVICES

PERSONAL SERVICES

62.00

SERVICES

DRUGS WHOLESALE

61.67

SERVICES

AUTO PARTS STORES

60.00

SERVICES

MANAGEMENT SERVICES

60.00

SERVICES

RAILROADS

56.67

SERVICES

APPAREL STORES

53.33

SERVICES

CATV SYSTEMS

48.00

SERVICES

DEPARTMENT STORES

45.00

SERVICES

ENTERTAINMENT-DIVERSIFIED

45.00

SERVICES

RESORTS AND CASINOS

45.00

SERVICES

CATALOG & MAIL ORDER HOUSES

36.67

TECHNOLOGY

SEMICONDUCTOR EQUIPMENT & MATERIALS

87.14

TECHNOLOGY

DATA STORAGE DEVICES

68.33

TECHNOLOGY

SEMICONDUCTOR- BROAD LINE

67.50

TECHNOLOGY

TELECOM SERVICES – DOMESTIC

66.67

TECHNOLOGY

SCIENTIFIC & TECHNICAL INSTRUMENTS

66.43

TECHNOLOGY

SEMICONDUCTOR-SPECIALIZED

66.00

TECHNOLOGY

TECHNICAL & SYSTEM SOFTWARE

66.00

TECHNOLOGY

INFORMATION TECHNOLOGY SERVICES

62.50

TECHNOLOGY

MULTIMEDIA & GRAPHICS SOFTWARE

60.00

TECHNOLOGY

BUSINESS SOFTWARE & SERVICES

57.73

TECHNOLOGY

SEMICONDUCTOR- INTEGRATED CIRCUITS

55.00

TECHNOLOGY

INTERNET SOFTWARE & SERVICES

53.08

TECHNOLOGY

APPLICATION SOFTWARE

51.39

TECHNOLOGY

INTERNET INFORMATION PROVIDER

45.56

TECHNOLOGY

COMMUNICATION EQUIPMENT

45.00

TECHNOLOGY

WIRELESS COMMUNICATIONS

43.50

TECHNOLOGY

NETWORKING & COMMUNICATION DEVICES

41.25

TECHNOLOGY

HEALTHCARE INFORMATION SERVICES

35.00

UTILITIES

ELECTRIC UTILITIES

73.08

UTILITIES

DIVERSIFIED UTILITIES

60.63

UTILITIES

GAS UTILITIES

58.33

Disclosure: I/we have no positions in any stocks mentioned, but may initiate a long position in COST, PODD, MKTX 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.

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