From trade wars to blockchain to cannabis stocks, 2018 was a complicated year for growth stocks in the stock market. The Dow Jones industrial average, the Nasdaq and the S&P 500 all gave up ground during the year. But the year was far from a shutout for growth stocks. As of Monday afternoon, five industry groups had posted gains of 20% or more for 2018.
Medical-Outpatient Homecare had moved to the top of that list, up 25.9%. Some big gains last week from stocks including Amedisys(AMED) and LHC Group (LHCG) helped boost the group past Computer Software — Desktop, which had been the leader last week. The desktop software group was up 24.9% for the year on Monday.
Two other software groups — database and security — were up more than 22% for the year. The fifth group, holding about a 21% gain, was auto parts retailers. Because rankings are determined by a formula of various factors, the foremost being performance over the last six months, auto parts retailers ended the year with the top ranking among the 197 industry groups tracked by IBD.
Growth Stocks, Stock Charts, Earnings
The database group ends the year with a number of stocks forming possible bases. But there is a bit of a disconnect between fundamental and technical performance. Most stocks in the group with stronger EPS outlooks, such as CommVault Systems (CVLT), Box (BOX) and Varonis Systems (VRNS), have a good deal of chart work to do before being watch-list worthy. Others with weaker EPS outlooks, like MongoDB (MDB) and Workiva (WK), have much better looking charts.
Tableau Software (DATA) is the leading exception. Analyst consensus projects the equivalent of a 560% rebound in earnings per share for 2019, to $1.61 a share vs. an expected net loss of 35 cents in 2018. Chart-wise, the stock is in the third week of a consolidation that could either become an actionable chart pattern or result in a rebound off its 10-week moving average.
In the security group, Palo Alto Networks (PALO) has just started the right side of a possible base pattern. Mimecast (MIME) has a big EPS growth outlook of the year, but has considerable chart work before presenting a buy opportunity. Zscaler (ZS) may be a stock to watch, if earnings continue to run positive and bring the March IPO out of its wild and volatile youth.
Weakest Industries: Food, Cannabis, RVs
The worst groups for the year? As of Monday afternoon, dairy product stocks held the worst loss in a difficult year. The group's three stocks, Dean Foods (DF), Danone (DANOY) and Lifeway(LWAY), had given up more than 71%.
Specialty consumer products was next in line, down almost 42%. That a bit of a surprise, because the group hosts almost the entire cannabis complex, including Tilray (TLRY), which ended the year 320% above its IPO price.
The third worst performance went to the very cyclical Building — Mobile, Manufactured and Recreational Vehicle group. The seven-stock group also lost nearly 42% for the year. Group leaders Thor Industries (THOR) and Winnebago Industries (WGO) spent almost the entire year in declines.