Market Commentary

October 21st, 2017

Total earnings for the 52 S&P 500 members that have reported already are up +13.3% from the same period last year on +6.9% higher revenues, with 76.9% beating EPS estimates and 73.1% beating revenue estimates. The growth pace and beats proportion was very strong in the Q2 earnings season relative to historical periods, but the aggregate picture emerging from the Q3 earnings season is keeping up with the preceding quarters strong showing. There is plenty of momentum on the revenue side this earnings season, with the revenue growth pace accelerating and an above-average proportion of companies beating top-line estimates.

Including the Finance sector, Q3 earnings growth is expected to be in negative territory for 8 of the 16 FATI sectors, with double-digit declines for the Autos, Aerospace and Transportation sectors.

Earnings growth is expected to turn positive in Q3 for the FATI Small Cap index, with total earnings for the index expected to be up +8.3% from the same period last year on +5.2% higher revenues. This would follow persistent earnings declines for the small-cap index FATI Small Cap earnings growth was negative in 3 of the last 4 quarters. Strong growth from the Finance, Technology and Energy sectors is driving the small-cap growth. The Finance sectors role is particularly notable in the small-cap index, with Q3 earnings growth dropping to +0.9% (from +8.3%) on an ex-Finance basis.

Featured Recommendation

HudBay Minerals, Inc.   $7.80   (HBM)

HudBay Minerals Inc. is a mining company and engages in discovery, production and marketing of base metals in North and Central America. It owns zinc and copper mines, concentrators and metal production facilities in northern Manitoba and Saskatchewan, zinc oxide production facility in Ontario, copper refinery in Michigan and nickel project in Guatemala. In addition to its primary products, zinc and copper, HudBay also produces gold, silver and zinc oxide. HudBay Minerals Inc. is headquartered in Toronto, Canada.

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Target Price $8.58

FATI® Market Cap Rankings

Ranking Market Cap 1 Mth 3 Mth 6 Mth 9 Mth 12 Mth RSR % Stocks Up % Stocks Dwn YTD Return
1 Small Caps 2.0% 5.0% 9.0% 15.0% 25.0% 3 5.0% 22.0% 16.30%
2 Mega Caps 1.0% 5.0% 10.0% 15.0% 19.0% 3 17.0% 18.0% 17.59%
3 Micro Caps 3.0% 4.0% 8.0% 13.0% 23.0% 3 10.0% 27.0% 13.45%
4 Large Caps 2.0% 3.0% 8.0% 13.0% 19.0% 2 19.0% 16.0% 16.07%
5 Mid Caps 2.0% 4.0% 7.0% 12.0% 21.0% 2 16.0% 21.0% 14.97%
6 Nano Caps 1.0% 1.0% 2.0% 5.0% 12.0% 2 22.0% 13.0% 5.06%
FATI® S&G Index 12.34%

FATI® Sector Rankings

Ranking Sector 1 Mth 3 Mth 6 Mth 9 Mth 12 Mth RSR % Groups Up % Groups Dwn YTD Return
1 Auto/Truck 4% 14% 21% 23% 40% 7 0.0% 100.0% 25.48%
2 Aerospace 3% 12% 21% 29% 44% 6 0.0% 33.0% 29.31%
3 Industrial Products 3% 6% 10% 13% 25% 4 0.0% 100.0% 16.73%
4 Multi-Conglomerates 3% 5% 11% 14% 27% 4 0.0% 50.0% 13.30%
5 Computer/Technology 4% 4% 12% 22% 32% 4 0.0% 14.0% 24.31%
6 Construction 5% 7% 7% 15% 29% 3 33.0% 16.0% 16.15%
7 Medical 1% 1% 13% 23% 23% 3 0.0% 0.0% 25.44%
8 Basic Materials 5% 9% 8% 7% 23% 3 33.0% 16.0% 12.07%
9 Consumer Discretionary 2% 3% 7% 14% 20% 3 20.0% 40.0% 14.70%
10 Finance 3% 4% 6% 9% 21% 2 50.0% 50.0% 10.12%
11 Transportation 3% 4% 4% 7% 22% 2 50.0% 0.0% 11.79%
12 Business Services 4% 5% 0% 1% 11% 2 0.0% 57.0% -3.01%
13 Utilities 2% 3% 7% 12% 15% 2 0.0% 0.0% 12.90%
14 Oil & Energy 0% 1% -2% -9% -5% 0 50.0% 0.0% -9.20%
15 Retail/Wholesale 0% 0% -4% 0% 2% 0 50.0% 0.0% -3.02%
16 Comsumer Staples 1% -3% -2% 3% 2% 0 14.0% 14.0% 4.62%
FATI® S&G Index 12.34%

Long Trades

Ticker %Chg EPS F1 EPS Grth % F1 EPS Grth % F2 # Anlst in F1  Con. Est. P/E using  F1 Est Mkt Cap Millions FATI Score Next EPS Report Date
Market
SPX 0 22.66 36.46 6 19.76 1.66
Mega Cap
UNH 1.16 24.06 34.14 9 20.78 $200,614 0.21 20180116
MS 2.77 21.68 36.94 7 14.27 $93,078 1.78 20180116
Large Cap
LRCX 14.54 44.76 46.43 7 14.21 $33,295 6.02 20180124
CMA 2.54 60.99 78.68 5 16.26 $13,758 0.87 20180116
Small Cap
EXPO 7.38 31.24 31.45 3 34.67 $1,866 0.55 20180207
HBM 15.98 308.33 704.17 4 15.92 $1,851 8.66 20171101
Micro Cap
CAI 1.13 419.57 630.44 3 15.59 $718 3.27 20180213
Nano Cap
HIIQ 2.83 43.46 68.97 3 13.38 $354 5.78 20171101

Short Trades

Ticker %Chg EPS F1 EPS Grth % F1 EPS Grth % F2 # Anlst in F1  Con. Est. P/E using  F1 Est Mkt Cap Millions FATI Score Next EPS Report Date
Market
SPX 0 22.66 36.46 6 19.76 1.66
Large Cap
MGM -3.63 -5.74 15.74 6 26.98 $17,848 10.24 20171108
TXT -1.04 -5.78 8.78 7 21.77 $14,226 1.06 20180124
Mid Caps
FNSR -8.3 -38.32 -15.9 7 21.58 $2,623 9.57 20171214
GCP -20 -56.5 -29.08 3 47.77 $2,098 3.77 20171102
Nano Caps
PBPB -1.57 -30.56 -17.78 4 38.72 $304 4.03 20171103

GREEN – Favored Stock
RED – EPS Report ALERT

FATI Score – Measures the dispersion of earnings estimates of analysts. The lower the score the the lower the earnings uncertainty. Scores of 12 or lower are only considered for long trades.

 

Recent Featured Recommendations

Rec. Date Ticker LONG / SHORT % G/L S&P 500 % +/- S&P 500 H/L Price Target Price 8% Stop Price Next EPS Date
12/31/16 VNTV $59.62 22.68% 15.02% 7.65% $73.14 $65.58 $54.85 2/1/17
1/7/17 AMAT $32.04 75.53% 13.10% 62.43% $56.24 $35.24 $29.48 2/17/17
1/14/17 BAC $23.01 18.12% 11.67% 6.45% $27.18 $25.31 $21.17 4/13/17
1/21/17 FSLR $34.75 26.45% 13.38% 13.07% $25.56 $31.28 $38.23 2/28/17
1/28/17 FB $132.18 33.71% 12.22% 21.49% $176.74 $145.40 $121.58 2/1/17
2/4/17 ANF $11.69 26.60% 12.09% 14.51% $14.80 $12.86 $10.75 3/1/17
2/11/17 KEX $72.00 17.71% 10.06% 7.65% $59.25 $53.33 $63.99 4/26/17
2/18/17 COTY $19.89 19.81% 8.70% 11.11% $15.95 $17.90 $21.48 5/2/17
2/25/17 PGR $39.05 26.53% 8.07% 18.46% $49.41 $42.96 $35.93 4/13/17
3/4/17 TDC $31.46 14.02% 7.46% 6.56% $27.05 $28.31 $33.97 5/4/17
3/11/17 LGF-A $26.00 -8.00% 7.87% -15.87% $28.08 $23.45 $28.08 5/24/17
3/18/17 ADI $83.26 8.01% 7.65% 0.36% $89.93 $91.59 $76.60 5/17/17
3/25/17 UAA $19.66 -8.00% 8.98% -16.98% $21.23 $17.69 $21.23 4/20/17
4/1/17 MU $28.90 45.92% 8.25% 37.67% $42.17 $31.79 $26.59 6/29/17
4/8/17 INCY $140.11 29.98% 8.53% 21.45% $107.79 $126.10 $151.30 5/8/17
4/15/17 SWFT $22.10 -8.01% 9.56% -17.57% $23.87 $19.89 $23.87 4/24/17
4/22/17 UNH $171.16 17.79% 8.80% 9.00% $208.21 $188.16 $157.47 7/18/17
4/29/17 KMT $41.58 -8.01% 7.42% -15.43% $38.25 $45.73 $38.25 8/7/17
5/5/17 WDC $90.72 5.19% 7.86% -2.66% $95.69 $99.79 $83.46 7/27/17
5/12/17 SEE $42.53 10.02% 7.16% 2.86% $38.27 $38.27 $45.93 7/27/17
5/19/17 NCMI $7.63 32.90% 7.51% 25.38% $5.12 $6.87 $8.24 8/10/17
5/26/17 ULTA $302.40 -8.00% 6.60% -14.60% $278.21 $332.64 $278.21 8/24/17
6/2/17 MRVL $17.59 -8.02% -5.58% -2.43% $16.18 $19.35 $16.18 9/5/17
6/9/17 CX $9.27 11.87% -5.90% 17.76% $10.37 $10.20 $8.53 7/26/17
6/16/17 AMAT $43.11 30.46% 5.84% 24.62% $56.24 $47.42 $39.66 8/17/17
6/24/17 BURL $86.41 11.83% 5.53% 6.30% $96.63 $95.05 $79.49 8/24/17
7/1/17 LNCE $34.62 14.07% 6.26% 7.80% $39.49 $31.16 $37.39 8/8/17
7/8/17 GTLS $35.21 24.20% 6.19% 18.01% $43.73 $37.73 $32.39 7/27/17
7/15/17 VSH $17.50 24.00% 4.71% 19.29% $21.70 $19.25 $16.10 8/3/17
7/22/17 WYNN $134.14 12.12% 4.15% 7.97% $150.40 $147.55 $123.41 7/25/17
7/29/17 SHW $342.28 14.12% 4.17% 9.95% $390.60 $376.51 $314.90 10/24/17
8/4/17 LRCX $150.05 37.50% 3.97% 33.53% $206.32 $165.00 $138.00 10/18/17
8/11/17 MCHP $82.21 15.10% 5.48% 9.61% $94.62 $90.43 $75.63 11/5/17
8/18/17 BABA $167.50 7.98% 6.17% 1.81% $180.87 $184.25 $154.10 11/1/17
8/26/17 DLTR $80.39 15.08% 5.41% 9.67% $92.51 $88.43 $73.96 11/28/17
9/2/17 CCE $43.76 -8.00% 3.98% -11.98% $40.26 $48.14 $40.26 11/14/17
9/9/17 TRTN $31.87 25.67% 4.62% 21.04% $40.05 $35.06 $29.32 11/9/17
9/16/17 BURL $90.13 7.21% 2.97% 4.24% $96.63 $99.14 $82.92 11/28/17
9/23/17 RH $72.22 17.28% 2.92% 14.36% $84.70 $79.44 $66.44 12/14/17
9/30/17 RHT $110.86 10.37% 2.45% 7.92% $122.36 $121.95 $101.99 12/20/17
10/7/17 KEM $23.94 14.24% 1.02% 13.23% $27.35 $26.33 $22.02 11/7/17
10/14/17 WLK $82.42 3.53% 0.86% 2.67% $85.33 $90.66 $75.83 11/7/17
10/21/17 HBM $7.80 0.00% 0.00% 0.00% $7.80 $8.58 $7.18 11/1/17
Avg. TSA Featured Recomm. beat the S&P 500 by +9.48%

YELLOW – Target Attained