Equity Strategies Group-Level Analysis Of The Equity Markets
Internet Retail: Beyond Amazon
Amazon has become synonymous with the Internet Retail industry, however, this group is comprised of a diverse mix of companies ranging across the market spectrum, and strength is being exhibited throughout the group.
Sector Rankings; Attractive & Unattractively-Rated Industry Groups
The top-three-rated sectors are Communication Services, Information Technology, and Financials. As recently as March, Financials ranked in 9th place out of 11 sectors; it has now placed among the top four since May. Real Estate dropped out of the top three after a two-month visit and is situated in 5th place this round. For the fifth consecutive month, the three lowest-ranked sectors are Utilities, Materials, and Energy.
Financials Strengthen Among GS Scores; Specialized Finance Purchased
The Financials’ Group Selection (GS) Score sector-composite rating has incrementally improved over the past five months, rising to rank #2 out of 11 sectors in late June.
Sector Rankings
The top-three-rated sectors are Communication Services, Financials, and Real Estate.
Homebuilding Stocks Take Flight
Homebuilding rose to rank #1 among our universe in our latest monthly Group Selection (GS) Scores. The industry has staged an impressive turnaround, beginning in October 2018, with strong returns outpacing the S&P 500 by more than 2.5x YTD.
Sector Rankings
The top-three-rated sectors are Information Technology, Real Estate, and Financials.
Information Technology Sector Now Highest Rated
For the first time since late 2017, Information Technology moved into the top-rated spot. This sector has historically produced especially strong results during periods after which it took over the #1 seat.
Sector Rankings
The top-three rated sectors are Information Technology, Communication Services, and Consumer Discretionary.
Movies & Entertainment & Broadcasting Revisited
Performance has been robust for this group, rising on a relative strength basis since the end of 2017. Its diverse mix of constituents equates to a group that, overall, is middle-of-road in terms of beta and volatility relative to other industries. These dynamics have contributed to its solid relative returns across diverging market environments of late.
Sector Rankings
The top-three rated sectors are Communication Services, Health Care, and Information Technology. Scoring at the bottom of the ranks are Energy, Materials, and Utilities. Financials improved from ninth place to sixth, springing ahead of the Industrials and Consumer Staples sectors.
Beta & Volatility On The Move
We explore these factors’ behaviors from the stance of our proprietary equity group universe and present industry ideas—across sectors—that fit each of these investment viewpoints. The intent is to offer new investment ideas from a different analysis perspective.
Sector Rankings
The top-three rated sectors are Health Care, Communication Services, and Consumer Discretionary. Scoring lowest in the latest rankings are Energy, Materials, and Financials.
Airlines Travel To Attractive In The GS Scores
We look at our domestic Airlines’ GS Score and examine the historical relationship between oil prices and Airline stocks. Additionally, we explore several other data sets to determine where the industry’s supply/demand picture stands heading into 2019.
Sector Rankings
The top-three rated sectors are Communication Services, Health Care, and Consumer Discretionary. Scoring lowest with the latest ratings were Materials, Energy, and Industrials.
Sector Rankings
The top-three rated sectors are Health Care, Communication Services, and Consumer Discretionary, with Information Technology dropping from the top-three. Rounding out the bottom end of the rankings, for the second consecutive month, are Materials, Energy, and Consumer Staples.
Housing Affordability & Homebuilding Stocks
The Homebuilding stocks represent another Consumer Discretionary group ranking Attractive via our GS Scores; we have held the Homebuilding group for the last year and a half. Homebuilders is an extremely rate-conscious industry group given mortgage rates’ impact on housing affordability (and thus, demand).
Restaurants Group Dishes Up Defense
The Restaurants industry is another Consumer Discretionary group ranking Attractive via our GS Scores; we purchased it in the Select Industries (SI) portfolio in November. This group has exhibited defensive qualities of late.
Sector Rankings
For the sixth consecutive month, the top-three rated sectors are Health Care, Consumer Discretionary, and Info Tech. Rounding out the bottom end of the rankings are Materials, Energy, and Consumer Staples.
Brick & Mortar Retail Evades October Sell-Off
Although Discretionary stocks broadly underperformed during October’s market decline, prominent amongst the very top industry group performers was a rather unexpected genre of industries—brick & mortar retail. Not only did this cohort hold up during October’s tumult, but many of the underlying stocks have been posting strong returns all year.
Leuthold Sector Rankings; Attractive & Unattractive-Rated Industry Groups
For the fifth consecutive month, the top-three rated sectors are Health Care, Consumer Discretionary, and Info Tech. The newly launched Communication Services sector (which replaces Telecom Services) debuts with a strong ranking in fourth place. Rounding out the bottom end of the rankings are Utilities, Materials, and Real Estate.
Defensive Health Care Outpaces The Market
Recently, Health Care stocks have been making headlines as the sector rallies to new all-time highs. However, when we look at the sector via Leuthold’s proprietarily-built industry group composition—which has a more realistic market-cap weighting approach—the Health Care sector has been outperforming since the end of 2017, and YTD it is the #1 performing sector in our work.
Sector Ranking
Health Care remains the highest-rated sector followed by Info Tech and Consumer Discretionary. These sectors have ranked among the top three since June. At the low end of the rankings are Utilities, Telecom Services, and Materials, all of which have been among the bottom three positions for three consecutive months.
A Phoenix Rises: The New Communication Services Sector
Herein we include an executive summary previewing our forthcoming, in-depth special report on September’s GICS sector changes. The full report, “A Prehistory of the Communication Services Sector” will be distributed soon.
Attractively-Rated “Movies & Entertainment & Broadcasting” Group
Movies & Entertainment & Broadcasting’s Group Selection (GS) Score has been steadily improving of late; it rose to High Neutral in March and pushed up to Attractive two months ago. Currently a member of the Consumer Discretionary sector, this is a less-correlated option to the many retail industries also currently ranking strongly among the Discretionary components.
Sector Rankings
Following a seven-month stint as the highest-rated sector overall, Consumer Discretionary relinquished the throne to Health Care.
Discretionary Defies Gravity; Dept. Stores Purchased
Brick-and-mortar retail, not to mention antiquated Department Stores, have pretty much been declared dead in the age of Amazon. Often, this is when our GS Scores shine brightest... by picking industries that, at the time, are not intuitive and hard to stomach.
GS Score Sector Rankings With Attractive & Unattractive Rated Industry Groups
Consumer Discretionary can’t be topped; it has held on to the highest-rated spot for seven consecutive months. Utilities and Telecom continue to close out the bottom two.
Transports Gain Momentum Amidst Struggling Industrials Sector; Railroads Purchased
Despite Industrials’ underperformance versus the broad equity market, the sector’s Transportation subset has been on the rise recently. In the latest round of our Group Selection (GS) Scores, four of the five Transportation groups rank Attractive, and the fifth one is rated High Neutral.
Sector Rankings
Consumer Discretionary has held on to the highest-rated spot for six consecutive months. Coming in last (again) is Utilities. After rating among the lowest two positions between April 2017 and April 2018, Energy finally improved and now sits in 6th place—the middle of the pack.
Consumer Discretionary Holds At #1
This year we’ve written several notes surrounding the Consumer Discretionary sector’s prominence among our top Group Selection (GS) Scores. This pattern persisted for a fifth consecutive month in April.
Health Care Facilities Purchased In Select Industries
YTD, out of the 110 industries, HC Facilities is the fourth best performing group
Highlighted Attractive Groups
Consumer Discretionary is the highest-rated sector for the fifth consecutive month; Info Tech and Financials have been trading places between #2 and #3 for five months. Coming in last (again) is Utilities.
Discretionary Reigns: Hotels & Leisure Revisited
The Consumer Discretionary index has also managed to outperform the S&P 500 by about 100 bps since the market’s January 26th peak, and in late March it was just a hair away from surpassing its previous relative strength performance high recorded in late 2015.
Highlighted Attractive Groups
Air Freight & Logistics is now Attractive for the first time in two years; Managed Health Care has scored in the top tier dating back to 2009; Trading Companies/Distributors provides an option with oil exposure at a time when the GS Scores remain decidedly anti-oil overall.
Health Care Services Purchased In Select Industries
Our Group Selection (GS) Scores ranked Health Care as one of the top two sectors for a majority of 2011-2015; sector relative strength soared over that period.
Highted Attractive Groups
Department Stores have rallied the last four months; Health Care Distributors is one of the cheapest groups we track; Paper & Forest Products is the only Materials group in the Attractive range of the GS Scores.
GS Scores: Industrial Metals Stocks Heating Up
While the Materials sector overall still isn’t looking stellar based on our work, we think with the Metals theme heating up, it’s a trend worth watching.
Highlighted Attractive Groups
Airlines rebounded after a brief dip to High Neutral; Health Care Distributors is scoring well across the board (other than Technical factors); Specialty Stores is cheap due to the changing retail landscape.
Consumer Discretionary Back On Top
Of the 110 industries in our framework, the top seven are all Consumer Discretionary.