Insights: Bullish Large-Cap Stocks
Today's report is a bottom-up compilation of technically attractive, U.S. large caps, with one fundamental kicker: each name is accompanied by positive momentum in their FY EPS estimates... see screen on pages 2-5• We screened for stocks whose latest EPS estimate is higher than last week's, which in turn is greater than the prior month's estimate. From this list, which was rich in relative leaders, we picked out the names that were either (1) breaking out from, or (2) pulling back to base support levels... see charts on pages 6-17
• Group themes present in this screen:
o Heavy on the Manufacturing Sector: Plenty of Manufacturing companies made the cut in this week's screen, ranging from aero/defense (BA, SPR) to agricultural equipment (AGCO) to trucks & components (ALSN).
o Strong Showing by Energy: We view recent weakness in energy as a buying opportunity. WTI remains above the $50 level, the U.S. Dollar Index is threatening to violate support (near 100), and most energy stocks, especially E&P names, have retraced to identifiable support levels. Attractive charts in today's screen: DVN & KOS.
o Light on Defensive Sectors: Only a handful of defensive stocks made the cut: two consumer staples names (CPB, PF) and four utilities (D, EXC, CNP, HE). This is confirmation of a risk-on environment.
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AGCO is a manufacturer and distributor of agricultural equipment and related replacement parts. The company sells a range of agricultural equipment, including tractors, combines, self-propelled sprayers, hay tools, forage equipment, seeding and tillage equipment, implements, and grain storage and protein production systems. The company's products are used in the agricultural equipment industry and are marketed under the Challenger?, Fendt?, GSI?, Massey Ferguson? and Valtra? brands. The company distributes its products through independent dealers and distributors. In addition, the company provides retail and wholesale financing through its finance joint ventures with Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A.
Vermilion Research delivers timely, actionable, and unique research inputs to professional investors. Our research strategists highlight securities which we believe are at major inflection points, based on our various proprietary technical indicators, and offer asymmetric risk/return profiles. We believe our research methodology, which is not limited by industry sector or market capitalization, enables us to deliver superior investment recommendations.
Our process begins by organizing all actively traded stocks into coherent sectors, then into logical industry groups. We then apply our proprietary relative strength tools to identify developing price trends. Once attractive trends are identified within a selected sectors or groups, we screen for individual stocks which we believe offer the best risk/reward profile. Vermilion offers U.S. and global equity market research products. Vermilion’s research team, which has received numerous awards and accolades, has a combined 70 year of experience in the analysis of investment securities.
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