Emerging Industry Leader - Small Cap Metal and Glass Container Stocks

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October 23, 2008

Talk about obscure. But, results are results….the small cap metal and glass container stocks have emerged as a new leading group. The ‘drill down’ process says go look here first if you’re looking for a few bullish trading ideas.

Before we get too far ahead of ourselves though, let’s go ahead and lay out all the recent small cap leaders…

Small Cap Industry	%Chg: 1 day	WTD Pct Chg	2-Week Pct Chg	%Chg: 4 wk
Metal & Glass Container	4.32%	6.13%	14.55%	-19.89%
Gas Utilities Industry	3.58%	5.91%	11.08%	-9.33%
Multi-Utilities Industry	2.22%	6.40%	10.74%	-10.91%
Oil, Gas & Consumable Fuels	2.83%	-1.43%	10.64%	-38.30%
Utilities Sector	3.68%	6.13%	9.86%	-10.38%
Personal Products Industry	0.33%	2.39%	9.41%	-12.97%
Oil & Gas Explore & Prod	2.92%	-2.47%	9.07%	-42.37%
Electric Utilities Industry	4.33%	7.87%	8.56%	-11.46%
Oil & Gas Refining & Mkt	1.14%	0.65%	6.90%	-27.38%
Energy Sector	2.31%	-2.85%	5.48%	-40.86%
Oil & Gas Drilling	2.70%	-1.10%	4.85%	-40.81%
Computer Storage & Perph	0.48%	4.27%	4.83%	-15.56%

It’s an interesting (though not entirely surprising) clan this time around. We’ve actually seen the small cap container group lead before. They were the leaders in August and September, before the market fell apart. To see them lead once, and then reclaim that top spot? I think it’s worth a look.

As for utility stocks, take your pick - it looks like all small cap utilities are doing fine.

My only question mark is energy. I attribute most of today’s gain and last week’s gain to volatility. If you want to know why I’m not bullish based on the above results, just look at the week-to-date numbers….why are they down?

Anyway, as far as the glass/metal container stocks are concerned, I like the upside potential, but I don’t really trust it to last too long. I’ll be pleasantly surprised to be wrong though. The chart of the S&P Small Cap Metal & Glass Container Index will illustrate why. In a nutshell, the renewed strength is the result of being well oversold. With that in mind, the chart is still just range-bound between 211 and 403.

Of course, even a trade from the current price of 281 to 403 is still a 43% move….which isn’t bad. Take a look at the chart, and we’ll wrap up with a quick look at all the small cap stocks in the industry. (click the image to enlarge)

Here are all the stocks in the glass and metal container arena (which isn’t many). There were 11 that qualified as ’small’, but only a total of 17. So, you may find the bigger brothers are the better choices, even though the smaller frye are putting up the bigger numbers right now.

If I had to pick, I’d look at AptarGroup (ATR), Crown Holdings (CCK), and Northern Technologies (NTIC). However, it’s Pactiv (PTV) doing the heavy lifiting today. If you look closely at the charts you’ll see a lot of ugly, leaving you to wonder how the group is up today. Most of the group isn’t. This is one of those scenarios where the men are separating from the boys.

Most of these stocks are pointed lower for the same reason any stock is pointed lower…fear of a recession. Understandable, though I think overdone at this point. There are some real values lurking here in the metal and glass container group, if you can find one that would make a decent bottom and start working on a rebound. Pactiv may be it.