Year to date, the S&P 500 is up about 8%. However, the gains are poorly distributed. In technical terms, one might say the market has bad breadth. To that point, over three-quarters of this year’s S&P 500 gains are attributable to only ten stocks. Apple, one of the ten stocks, now has a market cap greater than the entire Russell 2000! The graph below shows the Nasdaq (QQQ), with the most weighting toward the market leaders, has been in a nice uptrend all year. At the same time, the equal-weighted S&P 500 (RSP) has been trending lower since February.
Investors are questioning whether the market can continue to rally on the back of so few stocks.
This week’s scan provides a few ideas if you think the answer is yes. What if the trends of the last few months persist? What if some of the larger cap stocks in the S&P 500, with robust growth potential and high betas, continue to lead the market higher?
Screening Criteria
- Market capitalization >$25B
- Index = S&P 500
- EPS growth next five years >15%
- Beta >1.25
- YTD performance > +10%
- Price above its 50 and 200 days moving average
Company Summaries
NVIDIA Corporation (NVDA)
General Electric Company (GE)
Chipotle Mexican Grill, Inc. (CMG)
Lennar Corporation (LEN)
Intuitive Surgical, Inc. (ISRG)
Disclosure
This report is not a recommendation to buy or sell the named securities. We intend to elicit ideas about stocks meeting specific criteria and investment themes. Please read our disclosures carefully and do your own research before investing.
Michael Lebowitz, CFA is an Investment Analyst and Portfolio Manager for RIA Advisors. specializing in macroeconomic research, valuations, asset allocation, and risk management. RIA Contributing Editor and Research Director. CFA is an Investment Analyst and Portfolio Manager; Co-founder of 720 Global Research.
Follow Michael on Twitter or go to 720global.com for more research and analysis.
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