Report
Dave Nicoski ...
  • Ross LaDuke
EUR 238.68 For Business Accounts Only

Vermilion Compass: Weekly Equity Strategy

The S&P 500 is beginning to come off of short-term overbought extremes, consolidating near the confluence of key overhead resistance and the 200-day moving average. This level is roughly 2,817 on the S&P 500 and roughly 1,000 on the S&P 600 Small Cap index. Some consolidation or a mild pullback is possible in the near-term, which we believe would help alleviate current overbought readings and allow for a more orderly and meaningful move higher. This constructive outlook is supported by the themes highlighted below:

• Internals are healthy. The S&P 500 advance/decline line is advancing to new highs, signaling healthy breadth.

• Defensives exhibit deteriorating RS. Utilities and Consumer Staples Sectors along with REIT and Pharma Groups have deteriorated and are no longer leadership.

• Cyclical/risk-on segments of the market are developing positively. Semiconductors (SOXX, SMH), Technology (RYT, XLK), homebuilders (XHB, ITB), biotech (XBI, IBB), and China (FXI, MCHI) have all emerged as leadership. Additionally, major autos (CARZ), EM (EEM), and foreign equities (ACWX) exhibit bottoming price action.

• Recession concerns have subsided. High yield spreads have narrowed substantially and continue to stabilize. Additionally, the 10- vs. 2-year Treasury yield spread is near 3-month highs.

• 10-year Treasury yield, USD consolidating. The 10-year yield remains confined to a range between 2.60% and 2.80% while the U.S. dollar (DXY) remains below 97.70-98 resistance. Decisive new highs in either may create headwinds for equity markets.
In today's report we highlight attractive Groups and stocks within Consumer Discretionary, Health Care, and Services: CD-19 Education Services, Small-Cap, HC-07 Biotech, Mid-Cap, and SV-08 Human Resources & Employment Svcs., Small-Cap... see pages 8-23.
Underlyings
Agios Pharmaceuticals Inc.

Agios Pharmaceuticals is a biopharmaceutical company focused on areas of hematologic malignancies, solid tumors and rare genetic diseases. The company's product, TIBSOVO? (ivosidenib) is for the treatment of adult patients with relapsed or refractory acute myeloid leukemia (R/R AML) with a susceptible isocitrate dehydrogenase (IDH) 1 mutation. The company's other product is IDHIFA? (enasidenib) for patients with R/R AML and an IDH2 mutation. The company's pre-commercial clinical cancer product candidates include: vorasidenib, a brain-penetrant pan-IDH mutant inhibitor; and AG-270, an orally available selective inhibitor of methionine adenosyltransferase 2a.

Barrett Business Services Inc.

Barrett Business Services is a provider of business management solutions for small-and mid-sized companies. The company has two categories of services: Professional Employer Services, in which the company enters into a client services agreement to establish a co-employment relationship with each client company, assuming responsibility for payroll, payroll taxes, workers' compensation coverage and certain other administrative functions for the client's existing workforce; and Staffing, which includes on-demand or short-term staffing assignments, contract staffing, direct placement, and long-term or indefinite-term on-site management.

BeiGene Ltd. Sponsored ADR

BG STAFFING INC

BG Staffing is a provider of temporary staffing services. The company provides field talent to a range of client partners that are seeking to match their workforce requirements to their business needs. The company's real estate segment provides office and maintenance field talent to various apartment communities and commercial buildings. The company's professional segment provides IT personnel with knowledge in SAP, Workday, Olik View, Hyperion, Oracle, project management and other IT staffing skills to client partners on a national basis. The company's light industrial segment provides field talent to manufacturing, distribution, and logistics client partners needing a flexible workforce.

Bio-Techne Corporation

Bio-Techne and its subsidiaries develop, manufacture and sell biotechnology life science reagents, instruments and services for the research and clinical diagnostic markets.Co.'s segments: Protein Sciences, which developes and manufactures purified proteins and reagent solutions, cytokines and growth factors, antibodies, immunoassays, biologically active small molecule compounds, tissue culture reagents and T-Cell activation technologies; and Diagnostics and Genomics, which develops and manufactures diagnostic products, including Food and Drug Administration-regulated controls, calibrators, blood gas and clinical chemistry controls and other reagents for Original Equipment Manufacturer.

DHI Group

DHI Group is a provider of data, insights and employment connections through services for technology personnel. The company provides its talent acquisition and career development products and tools through the following main brands: Dice, which is a destination for technology and engineering talent in the United States; ClearanceJobs, which is an Internet-based career network dedicated to matching security-cleared personnel with hiring companies searching for employees; and eFinancialCareers, which is a financial services careers website, operating websites in multiple markets in four languages mainly across the United Kingdom, Continental Europe, Asia, Australia, the Middle East and North America.

Exact Sciences Corporation

Exact Sciences is a molecular diagnostics company, focused on the early detection and prevention of cancer. The company has developed a non-invasive screening test called Cologuard? for the early detection of colorectal cancer and pre-cancer. The company's Cologuard test is a non-invasive stool-based DNAscreening test that utilizes a multi-target approach to detect DNA and hemoglobin biomarkers associated with colorectal cancer and pre-cancer. The company is also working on the development of additional tests for other types of cancer. The company is also focusing its research and development efforts on building a pipeline of potential future products and services with a focus on blood-based tests.

Exelixis Inc.

Exelixis is an oncology-focused biotechnology company that involved in the discovery, development and commercialization of new medicines for cancers. The company's marketd products are: CABOMETYX? (cabozantinib) tablets for renal cell carcinoma and previously treated hepatocellular carcinoma; and COMETRIQ? (cabozantinib) capsules for progressive, metastatic medullary thyroid cancer. The company's products resulting from its discovery efforts are: COTELLIC? (cobimetinib), an inhibitor of MEK approved as part of a combination regimen to treat melanoma; and MINNEBRO? (esaxerenone), an oral, non-steroidal, selective blocker of the mineralocorticoid receptor approved for the treatment of hypertension in Japan.

FibroGen Inc.

FibroGen is a biopharmaceutical company engaged in discovering, developing and commercializing a pipeline of therapeutics. The company applies its capability in hypoxia-inducible factor (HIF) and connective tissue growth factor (CTGF) biology to develop medicines for the treatment of anemia, fibrotic disease, and cancer. Roxadustat, the company's primary product, is an inhibitor of HIF prolyl hydroxylase that acts by stimulating the body's natural pathway of erythropoiesis, or red blood cell production. Pamrevlumab is the company's human monoclonal antibody that inhibits the activity of CTGF, a central mediator and key common element in the progression of fibrotic and fibro-proliferative diseases.

GP Strategies

GP Strategies is a performance improvement solutions provider of training, digital learning solutions, management consulting and engineering services by providing services and products that are customized to meet the specific needs of clients. The company operates through two reportable business segments: Workforce Excellence, which advises and partners with organizations in designing, implementing, operating and supporting their talent management and workforce strategies; and Business Transformation Services, which works with organizations to execute business strategies by linking business systems, process and people's performance to clear and measurable results.

Heidrick & Struggles International Inc.,

Heidrick & Struggles International is a leadership advisory firm providing executive search and consulting services to businesses and business leaders worldwide. The company's service offerings include the following: Executive Search, which include two categories: retained search and contingency search; and Heidrick Consulting, which is an offering of the firm's leadership advisory services that include leadership assessment and development, executive coaching and on-boarding, succession planning, team and, organizational performance acceleration, workforce planning and culture shaping. The company operates its Executive Search services in three geographic regions: the Americas, Europe, and Asia Pacific.

Insperity Inc.

Insperity provides a range of human resources (HR) and business solutions. The company's HR services offerings are provided through its Workforce Optimization? and Workforce Synchronization? solutions, which encompass a range of human resources functions, including payroll and employment administration, employee benefits, workers' compensation, government compliance, performance management, and training and development services, along with its cloud-based human capital management platform, its Insperity Premier?. In addition to its Professional Employer Organization HR Outsourcing solutions, the company provides Workforce Acceleration?, a payroll and human capital management solution.

Ionis Pharmaceuticals Inc.

Ionis Pharmaceuticals is engaged in discovering and developing RNA-targeted therapeutics. The company has two commercial medicines, SPINRAZA and TEGSEDI. SPINRAZA (nusinersen) injection for intrathecal use is a survival motor neuron-2, directed antisense oligonucleotide indicated for the treatment of spinal muscular atrophy in pediatric and adult patients. TEGSEDI (inotersen) injection is a Generation 2+ antisense medicine and an approved subcutaneous RNA-targeting medicine designed to treat people with polyneuropathy caused by hereditary transthyretin amyloidosis.

Kelly Services Inc. Class A

Kelly Services provides workforce solutions to customers in the Americas, Europe, the Middle East, and Africa, and Asia Pacific regions. The company's segments include: Americas Staffing, which delivers temporary staffing, as well as direct-hire placement services, in a number of staffing services such as office, education, marketing, and electronic assembly; International Staffing, which provides a similar range of staffing services as its Americas Staffing segment, including office, engineering, finance and accounting, information technology, and science; and Global Talent Solutions, which combines the delivery structure of its and consulting group and centrally delivered staffing business.

Kforce Inc.

Kforce is a provider of staffing services and solutions. The company's operating segments are: Technology, which provides both staffing temporary (Flex) and permanent (Direct Hire) services to its clients, focusing primarily on areas of information technology such as systems/applications architecture and development; Finance and Accounting, which provides both Flex and Direct Hire services to its clients in areas such as general accounting, business analysis, and accounts payable; and Government Solutions, which provides staffing services and solutions to the U.S. Federal Government as both a prime contractor and a subcontractor in the fields of information technology and finance and accounting.

Pluralsight (A)

Pluralsight is a holding company. Through its subsidiaries, the company is a provider of technology skill development solutions. The company's cloud-based technology skills platform provides a range of tools, including skill and role assessments, a curated library of courses, directed learning paths, interactive labs, and business analytics. The company's applications are delivered across a range of devices and operating systems, including iOS, Android, Windows, and Mac. In addition, the company's applications are available for TV applications, including Amazon Fire TV, Apple TV, Chromecast, and Roku.

SAGE Therapeutics Inc.

Sage Therapeutics is a clinical-stage biopharmaceutical company focused on developing and commercializing medicines to treat life-altering central nervous system disorders. The company's principal product candidate is ZULRESSO? (brexanolone) injection, a proprietary intravenous formulation of brexanolone for the treatment of postpartum depression (PPD). The company's other product candidate is SAGE-217, an oral compound that is being developed for PPD and major depressive disorder. The company also has a portfolio of other compounds that target GABAA receptors, which include SAGE-324 and SAGE-689. The company's second area of focus is the development of compounds that target the NMDA receptor, which include SAGE-718.

Sarepta Therapeutics Inc.

Sarepta Therapeutics is a commercial-stage biopharmaceutical company focused on the discovery and development of RNA-targeted therapeutics, gene therapy and other genetic therapeutic modalities for the treatment of diseases. The company is developing therapeutic candidates for a range of diseases and disorders, including Duchenne muscular dystrophy (DMD), Limb-girdle muscular dystrophies, Mucopolysaccharidosis type IIIA and other neuromuscular and central nervous system. The company's commercial product, EXONDYS 51? (eteplirsen) Injection is indicated for the treatment of DMD in patients who have a confirmed mutation of the DMD gene that is amenable to exon 51 skipping.

Seagen Inc.

Seattle Genetics is a biotechnology company that develops and commercializes therapies targeting cancer. The company is commercializing ADCETRIS?, or brentuximab vedotin, for the treatment of several types of lymphoma. The company is also developing a pipeline of therapies for solid tumors and blood-related cancers designed to address unmet medical needs and improve treatment outcomes for patients. Many of the company's programs, including ADCETRIS, are based on its antibody-drug conjugate (ADC), technology. The company's late-stage pipeline includes two ADCs and an oral tyrosine kinase inhibitor, for solid tumors that are in clinical trials designed to support applications for potential regulatory approvals.

Strategic Education Inc.

Strategic Education is an education services company. The company provides campus-based and online post-secondary education offerings through two subsidiaries, Strayer University and Capella University. Strayer University provides undergraduate and graduate degree programs in business administration, accounting, information technology, education, health services administration, nursing, public administration, and criminal justice at physical campuses, primarily located in the eastern U.S., and online. Capella University is an online post-secondary education company that provides a variety of bachelor's, master's and doctoral degree programs primarily delivered to working adults.

Stride Inc.

K12 is a technology-based education company and provides proprietary and third party curriculum, software systems and educational services designed to facilitate individualized learning for students primarily in kindergarten through 12th grade. The company provides products and services to three lines of business, including Managed Public School Programs, Institutional, and Private Pay Schools and Other. The company's career readiness education solution provides online curriculum and career services to middle and high school students, under the Destinations Career Academy brand name. The company's services can be categorized into: academic support services and administrative and technology services.

TriNet Group Inc.

TriNet Group is a provider of human resources (HR) solutions, payroll services, employee benefits and employment risk mitigation services for small to midsize businesses. The company delivers a suite of products and services, that facilitates the administration and management of various HR-related functions for its clients, including compensation and benefits, payroll processing, employee data, health insurance and workers' compensation programs, and other transactional HR needs using its technology platform. The company's products include TriNet Financial Services, TriNet Life Sciences, TriNet Main Street, TriNet Nonprofit, TriNet Professional Services, and TriNet Technology.

United Therapeutics Corporation

United Therapeutics is a biotechnology company. The company markets and sells four commercial therapies to treat pulmonary arterial hypertension (PAH): Remodulin? (treprostinil) Injection; Tyvaso? (treprostinil) Inhalation Solution; Orenitram? (treprostinil) Extended-Release Tablets; and Adcirca? (tadalafil) Tablets. The company also markets and sells an oncology product, Unituxin? (dinutuximab) Injection for treatment of high-risk neuroblastoma. The company also engages in research and development of new indications and formulations and delivery devices for its existing products, as well as new products to treat PAH and other conditions. The company also engages in organ transplantation-related technologies.

Volt Information Sciences Inc

Volt Information Sciences is a provider of staffing services (time and materials-based as well as project-based). The company's staffing services consist of workforce solutions that include providing contingent workers, personnel recruitment services, and managed staffing services programs supporting primarily administrative and light industrial as well as technical, information technology and engineering positions. The company's managed service programs involves managing the procurement and on-boarding of contingent workers from multiple providers. The company's corporate services provide general and administrative functions that support all of its segments.

Zovio

Bridgepoint Educations is a provider of postsecondary education services through its academic institutions. Ashford University? offers associate's, bachelor's and master's degree programs online and is comprised of four colleges: the Forbes School of Business and Technology?, the College of Education, the College of Health, Human Services and Science and the College of Liberal Arts. University of the Rockiessm provides master's and doctoral degree programs in the social and behavioral sciences. Classes are presented in an online format, and students at University of the Rockies attend via the institution's accessible online platform, which is also available through its mobile applications.

Provider
Vermilion Research
Vermilion Research

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.

Analysts
Dave Nicoski

Ross LaDuke

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