A Look Back And Ahead
A buoyant market in 2013 surprised even the most steadfast
From an industry perspective, the year's advance was broad --
186 out of 197 industry groups moved higher. Some 51 groups
climbed more than 50%.
The top four industries posted triple-digit gains for the
year: Auto makers (up 173%), solar energy (168%), consumer
electronics retailers (140%) and Media-Radio/TV (126%).
Among the other key leaders for the year, the
Machinery-Material Handling/Automation group sprang up 98%,
largely on the strength of 3D printer makers including3D Systems
) andStratasys (
Leisure-Movies and Related vaulted 92%, lifted not only
byNetflix 's (
) 298% gain across the year, but also byDreamWorks Animation (
) andDiscovery Communications (
), which soared more than 100% each.
As the new year begins, industries accelerating near the end
of the year are often more telling than those that saw the
largest gains across the full year.
In the last four weeks of 2013, eight industries posted
double-digit gains. Two of those, Media-Newspapers and
Finance-Bank Check, climbed 23% and 14% respectively, but offer
no potential leading stocks. The Commercial Services Staffing
group ended the year ahead 75%, with a 10% gain in late December.
It served up a pair of stocks on the borderline of leadership
status,ManpowerGroup (MAN) andKorn Ferry International (KFY).
Computer - Data Storage
Stocks in the data storage industry collectively advanced only
22% for 2013, but surged 15% in the last four weeks of the year.
The group still ranked a weak No. 143, but was edging higher in
IBD's industry rankings.
A critical factor in its climb wasNimble Storage (NMBL), a
Dec. 13 IPO that vaulted 116%. The maker of in-demand hybrid
flash chip/disk drive storage systems has yet to report a
profitable quarter. But analysts expect EPS of 16 cents and a 74%
advance in revenue in fiscal 2015 vs. forecasts of a 58-cent loss
for the 2014 fiscal year ending Jan. 31.
Computer hard drive makersWestern Digital (WDC) andSeagate
Technology (STX) were the group's Clydesdales. Seagate added 9%
in the final four weeks of December, bringing its gain for the
year to 85%. Western Digital's final four-week gain was 6%,
putting it ahead 97% for 2013.
Citi upgraded both Seagate and Western to buy from neutral on
Dec. 13. Analyst Joe Woo noted flagging PC industry sales had
begun to improve in the U.S. and appeared to have stabilized in
emerging markets. He estimated the companies' exposure to PC
sales at 50% of revenue, and wrote the pair would "be one of the
major beneficiaries of an improving PC market in 2014."
Alternative energy, a catchment for companies reaching from
ethanol refiners to fuel cell developers to wind, water and
geothermal power producers, gained 64% in 2013. Fourteen percent
of that climb came in the last four weeks.
The group's most attractive stocks tend also to be borderline
in terms of leadership status: either thinly traded or with
struggling fundamentals. But the companies also tend to be
relatively young, giving them the cachet of IPO strength.
ClearSign Combustion (CLIR), maker of emissions-scrubbing
technologies used in power plants, rocketed 78% in 2013's final
weeks. That hoisted the April 2012 new issue to a fresh high
above an 11.31 buy point in a seven-month base.Pattern Energy
Group (PEGI), which went public in September, rose 12% in the
closing weeks of the year, ending 38% above its IPO price. The
wind energy utility cleared a brief IPO base early in
The group's top-ranked stock,NRG Yield (NYLD), is a portfolio
of renewable and conventional power generation operations. It
edged up 5% late in the year after clearing a flat base early in
December. It ended Tuesday 82% above its July initial offering
A Late Sprint By 2013 Leaders
The year's top-gaining group, automakers, dropped 16% in the
fourth quarter, but turned to climb 4% in the year's last four
weeks. Much of that action was dictated by luxury battery-powered
car makerTesla (TSLA), which rose a blistering 474% for the year
through September. It then dropped 40% from the start of the
fourth quarter to Nov. 26, turning to gain 9% in the last four
weeks.Volkswagen (VLKAY) andDaimler (DDAIF) both rose 7% in the
same period, with Volkswagen ending the year at a new high. The
group had fallen to a No. 102 ranking.
The Energy-Solar group plowed forward 35% in Q4, the quarter's
second-best gain among industries, then dropped a fraction in the
final four weeks. Most of
the group's top stocks
ended the year in consolidations, with many working to build
Arizona-basedFirst Solar (FSLR) continued to trend lower in
light trade, ending the year 17% below its Nov. 14 high.
Needham analyst Edwin Mok forecasts China's solar module
suppliers will see continued growth in China and Japan, but also
face rising costs as prices weaken. Prospects are good for U.S.
solar markets, he noted in a Jan. 3 forecast. But based on the
year's run-up in share prices, he counsels investors to focus on
companies with strong development pipelines.
Booming production at U.S. shale oil and natural gas fields
was a leading news story throughout 2013. But oil and natural
gas-related industry groups largely underperformed the
Of the 10 oil and gas groups tracked by IBD, only one --
oilfield services -- was able to narrowly outperform the Nasdaq.
The group's heavyweights,Halliburton (HAL) andSchlumberger (SLB),
start the year in consolidations and with analysts calling for
stronger sales and earnings in 2014.
Oil and gas prices will be key to those results. We began 2013
with a number of analysts forecasting a collapse to $80 oil, and
such a reality might not be far off.
A partnership betweenEnterprise Products Partners (EPD)
andEnbridge (ENB) reversed the Seaway Pipeline to move oil 500
miles from Cushing, Okla., to Freeport, Tex., just south of
The line ramped up to its 400,000 barrels-per-day capacity in
2013, easing a long-standing glut in Cushing and pouring new
product into Gulf Coast facilities. The Enbridge/Enterprise
partnership expects to complete construction of a twinned line in
the first half of this year, raising Seaway's capacity to 850,000
In December,TransCanada (TRP) began filling its Gulf Coast
pipeline, a conduit from Cushing to Port Arthur, Tex. Regulatory
filings marked Jan. 3 as the line's official launch date. The
company puts the 36-inch-diameter line's initial capacity at
700,000 bpd, with potential for 850,000 bpd.
An outlook for a rising glut along the Gulf Coast, and for
ongoing downward pressure on oil prices, sent oil refining stocks
into 2014 on a wave of momentum. The refiners group gained 17% in
the fourth quarter vs. single-digit gains for all other oil and
gas groups. Phillips 66 (PSX),Marathon Petroleum (MPC) andValero
(VLO) posted some of the industry's top gains.
The few industries that lost ground near the end of the year
saw mild losses, with no declines beyond mid-single digits.
Retail-based industries represented four, and medical industries
five, of the 10-worst losses among industry groups in the final
four weeks of the year.
The specialty retail and discount and variety groups each fell
hardest, down 5%. The only real meltdown in the two groups came
fromUlta Beauty (ULTA), which collapsed 22% between Dec. 3 and
On the medical side, managed care providers, diversified
medical, outpatient/home care providers and drug wholesalers all
slipped 1% in December's final four weeks. But the leading stocks
in those groups showed generally constructive chart action,
withHealthSouth (HLS) being the only leading stock to visibly
weaken toward the end of the year.
IBD's Industry Snapshot articles run on Mondays and provide
detailed reporting on industries ranked in the top 50 among 197
groups. IBD's daily Industry Themes articles provide a running
commentary on industry group action.