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Quick — which stock sectors have been the best performers over the past month? The information technology sector is not among them.
Here’s how the 11 sectors of the benchmark S&P 500 Index SPX, -1.15% have fared over the past month and for all of 2020 through Sept. 18:
| Index | Price change – Aug. 18 through Sept. 18 | Price change – 2020 |
| Materials | 4.6% | 6.8% |
| Industrials | 2.5% | -3.5% |
| Financials | 0.0% | -20.1% |
| Real Estate | -1.7% | -8.4% |
| Consumer Staples | -1.8% | 0.6% |
| Health Care | -1.9% | 3.2% |
| Utilities | -2.9% | -10.2% |
| Information Technology | -2.9% | 21.9% |
| Communication Services | -3.0% | 6.4% |
| Consumer Discretionary | -4.0% | 18.5% |
| Energy | -10.6% | -45.1% |
| S&P 500 Index | -2.1% | 2.7% |
| Source: FactSet | ||
All price changes in this article exclude dividends.
You may be surprised to see the materials and industrials sectors leading over the past month, especially because so much of the financial media’s focus has been on the FAANG stocks and Microsoft Corp. MSFT, +1.07%, whose combined market capitalization is $6.6 trillion, or 24% of the index’s combined market cap, according to FactSet.
Most of the FAANG + Microsoft group members have had a fantastic year, even with the declines over the past month:
You may have to scroll the table to the right to see all the data.
Among these six companies, only Apple Inc. AAPL, +3.03% and Microsoft are in the technology sector, while Facebook Inc. FB, -1.73%, Netflix Inc. NFLX, +3.70% and Alphabet Inc. GOOG, -1.97% GOOGL, -1.44% are in the communications services sector (also having a banner year) and Amazon.com Inc. AMZN, +0.18% is in the consumer discretionary sector.
But the cap-weighting of the S&P 500 means investors might not realize that 58% of those 500 stocks have actually declined during 2020.
Turning back to the materials and industrials sectors, Jefferies analyst Steven DeSanctis wrote in a note to clients on Monday that he was confident about his “overweight” recommendation for both because of improving macroeconomic conditions.
He cited a weakening dollar, greater demand from China and rising commodity prices for the materials sector, and improving industrial-supply numbers as well. He added that recent earnings-estimate revisions among analysts for the two sectors were positive and that tech-stock valuations were looking ripe.
DeSanctis is actually focused on small-cap and mid-cap stocks. If we expand beyond the S&P 500 to the S&P 1500 Composite Index (which also includes the S&P Small Cap 600 Index SML, -3.45% and the S&P Mid Cap 400 Index), there are 324 stocks in the materials and industrials sectors. Narrowing the list, there are 223 companies with market capitalizations of at least $1 billion that are covered by at least five sell-side analysts. Among these 223, 35 have “buy” or equivalent ratings among at least 75% of analysts.
Here they are, sorted by implied 12-month upside potential, based on consensus price targets (scroll the table at the bottom, to the right, to see all the data):
| Company | Ticker | Industry | Share ‘buy’ ratings | Closing price – Sept. 18 | Cons. Price target | Implied 12-month upside potential | Price change – Aug. 18 through Sept. 18 | Price change – 2020 |
| Patrick Industries Inc. | PATK, -4.63% | Homebuilding | 100% | $51.74 | $80.67 | 56% | -19.5% | -1.3% |
| Harsco Corp. | HSC, -8.73% | Metal Fabrication | 83% | $15.34 | $20.75 | 35% | 4.7% | -33.3% |
| Applied Industrial Technologies Inc. | AIT, -4.88% | Wholesale Distributors | 100% | $55.85 | $75.40 | 35% | -11.6% | -16.3% |
| Curtiss-Wright Corp. | CW, -2.43% | Aerospace and Defense | 100% | $98.70 | $127.00 | 29% | -4.3% | -29.9% |
| Cubic Corp. | CUB, +34.23% | Aerospace and Defense | 88% | $44.37 | $56.86 | 28% | -3.4% | -30.2% |
| L3Harris Technologies Inc. | LHX, -4.12% | Aerospace and Defense | 95% | $185.21 | $236.45 | 28% | 2.3% | -6.4% |
| Raytheon Technologies Corp. | RTX, -3.73% | Aerospace and Defense | 75% | $62.35 | $79.00 | 27% | 0.4% | -29.4% |
| MasTec Inc. | MTZ, -6.60% | Engineering and Construction | 100% | $43.46 | $54.82 | 26% | -4.4% | -32.3% |
| Ashland Global Holdings Inc. | ASH, -3.41% | Chemicals: Specialty | 82% | $71.07 | $88.60 | 25% | -6.9% | -7.1% |
| Ingevity Corp. | NGVT, -8.87% | Chemicals: Major Diversified | 78% | $55.58 | $68.89 | 24% | -5.5% | -36.4% |
| SkyWest, Inc. | SKYW, -6.54% | Airlines | 100% | $33.75 | $41.67 | 23% | 10.7% | -47.8% |
| Mercury Systems Inc. | MRCY, +1.23% | Electronic Equipment/ Instruments | 82% | $75.27 | $92.80 | 23% | -2.0% | 8.9% |
| Univar Solutions Inc. | UNVR, -7.56% | Wholesale Distributors | 78% | $18.38 | $22.22 | 21% | 1.8% | -24.2% |
| Carlisle Cos. Inc. | CSL, -3.00% | Miscellaneous Manufacturing | 89% | $122.41 | $147.75 | 21% | -2.9% | -24.4% |
| SPX Corp. | SPXC, -2.78% | Industrial Conglomerates | 83% | $43.50 | $52.00 | 20% | -0.8% | -14.5% |
| Minerals Technologies Inc. | MTX, -4.79% | Chemicals: Specialty | 100% | $49.67 | $59.00 | 19% | -4.1% | -13.8% |
| Dycom Industries Inc. | DY, -4.36% | Engineering and Construction | 86% | $55.39 | $65.00 | 17% | 17.3% | 17.5% |
| Atlas Air Worldwide Holdings Inc. | AAWW, -3.55% | Air Freight/ Couriers | 83% | $61.23 | $71.83 | 17% | 4.6% | 122.1% |
| Aecom | ACM, -4.82% | Engineering and Construction | 80% | $39.97 | $46.44 | 16% | 4.7% | -7.3% |
| Teledyne Technologies Inc. | TDY, -3.83% | Aerospace and Defense | 100% | $325.07 | $376.00 | 16% | 1.6% | -6.2% |
| Northrop Grumman Corp. | NOC, -4.57% | Aerospace and Defense | 77% | $341.50 | $394.95 | 16% | 1.2% | -0.7% |
| Timken Co. | TKR, -3.76% | Metal Fabrication | 90% | $55.77 | $64.00 | 15% | 2.6% | -1.0% |
| Arcosa Inc. | ACA, -3.19% | Trucks/ Construction/ Farm Machinery | 100% | $45.40 | $51.80 | 14% | 0.5% | 1.9% |
| Jacobs Engineering Group Inc. | J, -5.12% | Engineering and Construction | 94% | $94.11 | $104.92 | 11% | 4.7% | 4.8% |
| FMC Corp. | FMC, -3.71% | Chemicals: Agricultural | 86% | $110.56 | $123.11 | 11% | 1.3% | 10.8% |
| DuPont de Nemours Inc. | DD, -5.24% | Chemicals: Major Diversified | 83% | $59.29 | $65.20 | 10% | 4.0% | -7.6% |
| Chart Industries Inc. | GTLS, -6.04% | Industrial Machinery | 87% | $71.31 | $78.07 | 9% | -1.1% | 5.7% |
| Builders FirstSource Inc. | BLDR, -5.22% | Building Products | 90% | $31.71 | $34.40 | 9% | 7.5% | 24.8% |
| Ametek Inc. | AME, -4.43% | Electrical Products | 76% | $100.71 | $108.87 | 8% | -0.9% | 1.0% |
| Generac Holdings Inc. | GNRC, -0.79% | Electrical Products | 77% | $182.68 | $195.90 | 7% | 0.6% | 81.6% |
| Quanta Services Inc. | PWR, -5.16% | Engineering and Construction | 100% | $51.90 | $55.54 | 7% | 3.1% | 27.5% |
| XPO Logistics Inc. | XPO, -3.33% | Trucking | 75% | $86.69 | $92.17 | 6% | 7.1% | 8.8% |
| Vicor Corp. | VICR, -6.58% | Electronic Components | 80% | $79.90 | $83.00 | 4% | -1.5% | 71.0% |
| IAA Inc. | IAA, -0.68% | Specialty Stores | 100% | $51.05 | $52.25 | 2% | 5.9% | 8.5% |
| Sunrun Inc. | RUN, -1.08% | Electric Utilities | 89% | $60.86 | $50.61 | -17% | 31.4% | 340.7% |
| Source: FactSet | ||||||||
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