If readers can get on your cheaters and look at the attached spreadsheet, you’ll see the expected 2019 EPS growth for both the top 10 weights in the SP 500 and the Top 10 Financial stocks in the SP 500.
All but Apple and Exxon and are expected to show positive EPS growth in 2019, with the average for the Top 10 stocks by market cap in the SP 500 expected to grow 8% in the coming year.
If you remove Apple and Exxon’s drag on the Top 10, the expected growth is still 9%.
Financial sector revisions show that since 9/30, the top 10 Financial weights have shown negative revisions which is pretty understandable given the 4th quarter’s market action. However if you look at the absolute “exepcted growth” for 2019, the Financial sector is expected to show EPS growth of 9% for the Top 10 names, with only Goldman expected to show negative growth this year.
Summary / conclusion: Microsoft (MSFT) remains client’s #1 position within accounts which has been the case since ValueAct took the 1% stake in April, 2013. (It’s better to be born lucky than smart.) Schwab (SCHW), Amazon (AMZN), JP Morgan (JPM) and a few others round out the Top 10 positions for clients. Obviously looking at the above spreadsheet, Microsoft and Amazon are showing the highest “expected” EPS growth for 2019 per the numbers.
However the fastest runner doesn’t always win the race.
The small and mid-cap underperformance for the last few years night be starting to change, as this blog wrote about this weekend.
Norm Conley of JAG Capital, a long-time friend from TheStreet years ago, wrote this today as well, possibly supporting the idea that maybe large-caps lag in here for a while and we get a year where small-cap’s and mid-cap value generate better returns than the large-cap space.
True, the fastest runner doesn’t always win the race, but the old saying says it’s a good way to bet.
Its unlikely that the Top 10 client holdings will change much in 2019 but it will likely pay to add an “equal-weight” or small-cap “tilt” to the portfolios.
Thanks for reading.