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Screen of the Week

With November soon coming to a close, I wanted to see what the month of December looked like for the market over the last 10 years.

From 2003 thru 2012, 8 of those years (80%) saw the market up in December. The average return for those Decembers was 2.53%.

Only 2 years saw the month of December down. The average move in those two December months was -0.48%.

The best December month was just a few years ago in 2010 with a 6.53% increase.

Below is a table showing the Total Return for the S&P and the percentage change for each respective December.



The above statistics makes me feel pretty good about being bullish going into the end of the year.

But how best to take advantage of it?

Conventional wisdom says small caps are the way to go. And in general, it's hard to disagree. But, over the last 10 years, large-caps, mid-caps and small-caps each had their day in the sun taking the leadership position over all the others.

Small-caps have been the top performer so far this year with a YTD return of 33.6% vs. mid-caps at 31.99% and large-caps at 28.42%.

But for the last 4 weeks, large-caps have beaten all the other classes with a 3.03% gain. Mid-caps and small-caps only did 1.47% and 1.46%, respectively.

And I think the large-caps will be the victors again next month as well.

A lot of portfolio managers are feeling forced to get fully vested in stocks for the end of the year and play catch-up to the market, given how many have been lagging the S&P. For this reason, I'm believing this money will pour into the larger, seemingly more stable equities.

In fact, I think that has already begun and is being reflected in the above stats, showing the large-caps outperforming the small-caps by more than 2 to one last month.


Screen

The screen I'm running today is simple:

  • Market Cap greater than or equal to $5 billion
    (This is the threshold for a large-cap stock.)

  • Projected Growth Rate greater than or equal to S&P 500
    (If we're looking for outperforming stocks, let's make sure they're growing faster than the market as well.)

  • Positive EPS and Sales Surprise their last time out
    (I don't want any weak spots. The positive surprises solidify that.)

  • Upward Earnings Estimate Revisions for Q1 and F1 over the last 4 weeks
    (I want to make sure the analysts are upping their outlook as recently as the last 4 weeks for both the current quarter and the full year.)

  • Zacks Rank less than or equal to 2
    (There's no better way to find the best stocks with the highest probability of success than making sure they are a #1 or #2, Buy or Strong Buy.)


Stocks

There were 37 stocks from a very diverse list that passed this screen today. Here are five of them:

(FBHS - Snapshot Report) Fortune Brands
(FLT - Snapshot Report) FleetCor Technologies
(MCK - Analyst Report) McKesson Corp.
(PII - Snapshot Report) Polaris Industries
(TRV - Analyst Report) Travelers Companies

All of these stocks are large-cap companies with a coveted Zacks Rank #1 or #2, Strong Buy or Buy. They are also in strong industries that should be in high demand throughout the end of the year and beyond.

Get the rest of the stocks on this list and finish 2013 with a bang.

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Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.

Disclosure: Performance information for Zacks’ portfolios and strategies are available at: http://www.zacks.com/performance.

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