Blog Feed Post

Today’s Worst Small Caps Could Be Tomorrow’s as Well - CHSI, UFPI, SKYW

Don’t hear me wrong - all sectors, sizes, and industries stunk today. A few small caps, however, really got whacked. In some cases, I think today’s pounding is parts of a longer-term punishment that’s best left untouched unless you’re looking to short some of these tickers. Here’s today’s bottwom dwellers… the five worst small cap (from the S&P 600) groups.

5/27/09 - Worst Small Cap Industries

5/27/09 - Worst Small Cap Industries

The distributors I’m not concerned about. Tey’ve had a good week, and a  good year to boot, so I’ll give ‘em a break. I’ll also give the office REITs a break too, since the intermediate-term results are decent.

The rest of these small cap industries though…. well, from a technical standpoint, it looks like they’re poised to sink some more before rebounding

Each take is labeled, so if there’s a certain group you’re curious about, feel free to go straight there.

Life & Health Insurance

05/27/09 - Small Cap Life & Health

05/27/09 - Small Cap Life & Health

The S&P Small Cap Life & Health Index peaked a few weeks ago after a solid March/May rally. I don’t see any hints on this chart that we’re going to make a rebound in the near future.

The stocks that make up the index include AmeriGroup Corp. (AGP), Catalyst Health Solutions Inc. (CHSI), Healthspring Inc., (HS), just to name a few. All their charts look the same though - overextended, and now entering a corrective period.

Could solid fundamental results stop this technical pullback before it gets started?

You could make a decent case for a couple of exceptions, but I don’t see results improvement that would actually matter… the stocks are cheap at current levels, and forward-looking P/Es look even cheaper. What’s left to improve? And, that’s the problem.

Perhaps nobody trusts the estimates. Or, maybe investors are just sick of one-time charges that appear to not just be one-time charges. It doesn’t matter either way… the stocks are falling despite decent valuations.

05/27/09 - Life and Health Insurance Stats

05/27/09 - Life and Health Insurance Stats

That said, I’ve still got insurance names on my list of long-term (very long term) undervalued picks

Forestry and Wood

05/27/09 - Small Cap Forestry

05/27/09 - Small Cap Forestry

Owning small cap forestry and timber stocks like Deltic Timber Corp. (DEL) and Universal Forest Products Inc. (UFPI) hasn’t been easy in May. The S&P Small Cap Forest Products Index is down 21.4% so far, and the month doesn’t end for two more days.

Like the life and health insurance group pullback, there’s not much technical evidence a rebound is in the works. This was one of those tortoise-like humps that usually put things into motion for weeks.

As far as valuations go, honestly, I’m surprised any of these stocks managed to rise at all. Analyst estimates - if they’re right - show these stocks are ridiculously expensive. And, I think the estimates are closer to being right than not.

05/27/09 - Small Cap Forestry Stats

05/27/09 - Small Cap Forestry Stats

Point being, Deltic and Universal Forest could be trouble for a while.


05/27/09 - Small Cap Airlines Stats

05/27/09 - Small Cap Airlines

Another bad month for airlines - what a surprise.

The S&P Small Cap Airline Index is off by more than 14% for May so far - and is one of the biggest losers year to date as well. As you can see on the chart, the index is also trapped in a bearish trading range  (and recently retreated from the upper edge of that range).

Nope, it’s not looking too good here in terms of the technicals.

It’s sad, too. Many of these airlines are very well run, and a few have remained profitable. Also, with oil hovering at palatable prices, I’d like to believe these companies and their stocks would get some love at last. That’s what I get for thinking.

SkyWest is the only true airline that’s an S&P 600 constituent, so to make the industry analysis meaningful, I’ve dissected all the small caps tagged as airlines.

The numbers tell the harsh tale.

05/27/09 - Small Cap Airlines Stats

05/27/09 - Small Cap Airlines Stats

Could the economy be the problem? Maybe, but some airlines managed to turn a profit, so I don’t want to generalize too much. Like I said earlier, some of these companies are well run, while others aren’t. It looks like the well-run airlines are being dragged down by the poorly-run airlines. Seeing as how they usually move as a group, I can’t be optimistic about any of these airlines until the majority of them start to improve… and that’s an economic function.

If you still want to jump into an airline stock though, Allegiant Travel Co. (ALGT), SkyWest, and Atlas Air Group Inc. (AAWW) have the right fundamentals, though two of them fall short in the technical category. Atlas Air Group looks like it’s rising more than falling though.

Hawaiian Holdings Inc. (HA) is also on the rise, but there’s only a minimal amount of information regarding the company. That can make it tough to keep tabs on.

Read the original blog entry...

More Stories By James Brumley

James Brumley is a freelance writer and registered investment advisor. He began his career as a broker with a major Wall Street firm, where fundamentals and long-term holding periods were core strategies. After that, he switched gears completely, becoming an analyst at a short-term trading newsletter that focused on technical analysis. He now manages client money using the best of both philosophies. His company, Bluegrass Portfolio Management, offers investors an opportunity to reap superior returns with minimized risk.

Latest Stories
DX World EXPO, LLC, a Lighthouse Point, Florida-based startup trade show producer and the creator of "DXWorldEXPO® - Digital Transformation Conference & Expo" has announced its executive management team. The team is headed by Levent Selamoglu, who has been named CEO. "Now is the time for a truly global DX event, to bring together the leading minds from the technology world in a conversation about Digital Transformation," he said in making the announcement.
"Space Monkey by Vivent Smart Home is a product that is a distributed cloud-based edge storage network. Vivent Smart Home, our parent company, is a smart home provider that places a lot of hard drives across homes in North America," explained JT Olds, Director of Engineering, and Brandon Crowfeather, Product Manager, at Vivint Smart Home, in this SYS-CON.tv interview at @ThingsExpo, held Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA.
SYS-CON Events announced today that Conference Guru has been named “Media Sponsor” of the 22nd International Cloud Expo, which will take place on June 5-7, 2018, at the Javits Center in New York, NY. A valuable conference experience generates new contacts, sales leads, potential strategic partners and potential investors; helps gather competitive intelligence and even provides inspiration for new products and services. Conference Guru works with conference organizers to pass great deals to gre...
DevOps is under attack because developers don’t want to mess with infrastructure. They will happily own their code into production, but want to use platforms instead of raw automation. That’s changing the landscape that we understand as DevOps with both architecture concepts (CloudNative) and process redefinition (SRE). Rob Hirschfeld’s recent work in Kubernetes operations has led to the conclusion that containers and related platforms have changed the way we should be thinking about DevOps and...
The Internet of Things will challenge the status quo of how IT and development organizations operate. Or will it? Certainly the fog layer of IoT requires special insights about data ontology, security and transactional integrity. But the developmental challenges are the same: People, Process and Platform. In his session at @ThingsExpo, Craig Sproule, CEO of Metavine, demonstrated how to move beyond today's coding paradigm and shared the must-have mindsets for removing complexity from the develop...
In his Opening Keynote at 21st Cloud Expo, John Considine, General Manager of IBM Cloud Infrastructure, led attendees through the exciting evolution of the cloud. He looked at this major disruption from the perspective of technology, business models, and what this means for enterprises of all sizes. John Considine is General Manager of Cloud Infrastructure Services at IBM. In that role he is responsible for leading IBM’s public cloud infrastructure including strategy, development, and offering m...
The next XaaS is CICDaaS. Why? Because CICD saves developers a huge amount of time. CD is an especially great option for projects that require multiple and frequent contributions to be integrated. But… securing CICD best practices is an emerging, essential, yet little understood practice for DevOps teams and their Cloud Service Providers. The only way to get CICD to work in a highly secure environment takes collaboration, patience and persistence. Building CICD in the cloud requires rigorous ar...
Companies are harnessing data in ways we once associated with science fiction. Analysts have access to a plethora of visualization and reporting tools, but considering the vast amount of data businesses collect and limitations of CPUs, end users are forced to design their structures and systems with limitations. Until now. As the cloud toolkit to analyze data has evolved, GPUs have stepped in to massively parallel SQL, visualization and machine learning.
"Evatronix provides design services to companies that need to integrate the IoT technology in their products but they don't necessarily have the expertise, knowledge and design team to do so," explained Adam Morawiec, VP of Business Development at Evatronix, in this SYS-CON.tv interview at @ThingsExpo, held Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA.
To get the most out of their data, successful companies are not focusing on queries and data lakes, they are actively integrating analytics into their operations with a data-first application development approach. Real-time adjustments to improve revenues, reduce costs, or mitigate risk rely on applications that minimize latency on a variety of data sources. In his session at @BigDataExpo, Jack Norris, Senior Vice President, Data and Applications at MapR Technologies, reviewed best practices to ...
Widespread fragmentation is stalling the growth of the IIoT and making it difficult for partners to work together. The number of software platforms, apps, hardware and connectivity standards is creating paralysis among businesses that are afraid of being locked into a solution. EdgeX Foundry is unifying the community around a common IoT edge framework and an ecosystem of interoperable components.
"ZeroStack is a startup in Silicon Valley. We're solving a very interesting problem around bringing public cloud convenience with private cloud control for enterprises and mid-size companies," explained Kamesh Pemmaraju, VP of Product Management at ZeroStack, in this SYS-CON.tv interview at 21st Cloud Expo, held Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA.
Large industrial manufacturing organizations are adopting the agile principles of cloud software companies. The industrial manufacturing development process has not scaled over time. Now that design CAD teams are geographically distributed, centralizing their work is key. With large multi-gigabyte projects, outdated tools have stifled industrial team agility, time-to-market milestones, and impacted P&L stakeholders.
"Akvelon is a software development company and we also provide consultancy services to folks who are looking to scale or accelerate their engineering roadmaps," explained Jeremiah Mothersell, Marketing Manager at Akvelon, in this SYS-CON.tv interview at 21st Cloud Expo, held Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA.
Enterprises are adopting Kubernetes to accelerate the development and the delivery of cloud-native applications. However, sharing a Kubernetes cluster between members of the same team can be challenging. And, sharing clusters across multiple teams is even harder. Kubernetes offers several constructs to help implement segmentation and isolation. However, these primitives can be complex to understand and apply. As a result, it’s becoming common for enterprises to end up with several clusters. Thi...