Earnings
Sales and EPS growth are expected to decelerate in Q2 from Q1, but if normal beat occurs, it will be just a minor drop.
Resource and industrial sectors have best estimates in both the S&P 500 and S&P 600. Technology and Health Care more moderate in both; Retail strong in large but weak in small.
Market Setup
Indices are back at highs, led by the Nasdaq, but sector rotation has favored defense over eight weeks (has backed off this week some).
While somewhat counterintuitive, this is partially because, despite defensive outperformance, mega-cap growth continues its dominance.
The 15 USFL names on the S&P 500 with greater than $45B market cap make up two-thirds of year-to-date gains for the S&P 500.
Focus List
A healthy number of stocks, at 68, although off January highs of 80, is above the long-term average. Would like to see more actionable names, but of extended names all should be held, not trimmed. This is clearly a positive sign.
Actionable Ideas ( buy ): Activision ( ATVI ), Alphabet ( GOOGL ), Arista Networks ( ANET ), Calavo Growers ( CVGW ), Diamondback Energy ( FANG ), Edwards Lifesciences ( EW ), Fleetcor Technologies ( FLT ), Global Payments ( GPN ), Home Depot ( HD ), Nextera Energy ( NEP ), Paypal ( PYPL ), PRA Health Sciences ( PRAH ), Ring Central ( RNG ), SS&C Technologies ( SSNC ), Unitedhealth ( UNH ), Vertex Pharmaceuticals ( VRTX ), and Worldpay ( WP ).
Extended Ideas ( hold ): Amazon.com ( AMZN ), Five Below ( FIVE ), Idexx Laboratories ( IDXX ), Ilumina ( ILMN ), Lululemon ( LULU ), Mastercard ( MA ), Monolithic Power ( MPWR ), Netflix ( NFLX ), Ollie’s Bargain Outlet ( OLLI ), Planet Fitness ( PLNT ), Q2 Holdings ( QTWO ), Salesforce.com ( CRM ), Servicenow ( NOW ), Square ( SQ ), and Visa ( V ).
