For Stocks These Days, Bigger Is Betterby
Investors are getting very picky as the bull market enters its 64th month. The S&P 500 Index has rallied 184 percent from its closing low on March 9, 2009, and the rising tide is no longer lifting all boats.
We're beginning to see some significant differentiation within stocks, especially across market cap. Eighty-four percent of the country's largest public companies are trading above their respective 50-day moving averages, compared to just 37 percent for the smallest U.S.-listed companies. Technical strategist Chris Verrone of Strategas Research Partners shared the data in his daily note. He says it provides clear evidence of investors becoming more selective. At this point in the cycle, bigger is better.
We've also noticed growth-oriented stocks are outperforming more traditional value stocks. As Wells Fargo equity strategist John Manley explained yesterday over lunch: "There's very little value left this far into the bull market. Now, you're better off betting on growth."
Combining these two observations, we screened the Standard & Poor's 100 Index of the largest publicly traded U.S. companies based upon sales growth of at least 5 percent and earnings growth of at least 20 percent. The ten companies which met our criteria are up an average of 13.3 percent this year, more than three times the S&P 500 Index. Go Big. Go Growth.
Anadarko Petroleum Corporation (APC), Biogen Idec Inc. (BIIB), Devon Energy Corporation (DVN), Facebook Inc. (FB), Gilead Sciences, Inc. (GILD), Halliburton Co. (HAL), The Home Depot, Inc. (HD), Lowe's Companies, Inc. (LOW), Texas Instruments Incorporated (TXN), The Walt Disney Company (DIS).