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A Year-End Review Of ROBO, The Robotics And Automation ETF

Summary The ETF’s percentage of large-cap holdings has declined by 9% since February 2014. Since February 2014, there has been an increase in riskier mid-cap, small-cap and micro-cap holdings within this ETF. Kuka AG and Krones AG are leading performers of the Robo Global Robotics and Automation Index ETF while Omron Corporation and Oceaneering International Inc. are leading laggards. The Robo Global Robotics and Automation Index ETF’s high expense ratio and increased exposure to riskier stocks makes the fund a risky investment. Just like Robin Roberts performs a year-end wrap-up of the year 2015, it is only appropriate that I perform a year-end analysis of the Robo-Stox Global Robotics And Automation Index ETF (NASDAQ: ROBO ) This exchange-traded fund was fortunate enough not to suffer the same fate as the now liquidated 3D Printing, Robotics and Technology Fund (MUTF: TDPIX ). As of the date of this article, the Robo Global Robotics and Automation Index ETF’s total YTD Performance was -4.73%. However, the funds has picked up momentum over the past three months with a gain of 10.54% over that span. Without further ado, it is time for me to perform an in-depth dissection of this fund. The Robo Global Robotics and Automation Index ETF has a high expense ratio of 0.95%. This is 0.30% higher than the expense ratio category average . The following chart illustrates the fund’s weight in terms of giant, large, mid, small and micro-cap stocks when I analyzed this fund in February 2014 . Size % of Portfolio Benchmark Category Average Giant 12.02 56.05 46.73 Large 17.80 21.14 13.74 Medium 40.85 17.44 25.91 Small 13.39 5.24 10.90 Micro 15.94 0.13 2.73 As you can see by the following chart, the percentage of large-cap holdings in the fund has declined by over 9% from nearly two years ago and is well below its category average. Meanwhile, you can see that there has been a percentage increase in the mid-cap, small cap and micro-cap stocks of this fund. These statistics are as of 12/23/2015. Size % of Portfolio Benchmark Category Average Giant 11.22 42.29 3.56 Large 8.79 31.26 28.17 Medium 44.89 19.80 52.11 Small 18.09 6.24 12.66 Micro 17.01 0.41 3.50 LEADERS OF ROBO GLOBAL ROBOTICS AND AUTOMATION INDEX ETF In terms of coming up with the top performers in the fund, I took into account both the portfolio weight and YTD Return of the holdings. KUKA AG ( OTCPK:KUKAF ) = KUKA AG is an automation firm that develops and gives sells robotic systems internationally under the KUKA brand. KUKA AG has the 8th best portfolio weight at 2.14%, yet had an YTD return of 37.10%. Currently, KUKA AG is trading at $87.74 and is coming off of a solid third quarter performance . KUKA AG’s garnered a 25% in orders received and a 34% increase in sales revenues. These increases included totals from the Swisslog division, which was not consolidated in the previous year. The firm’s robotics division increased by 20% in terms of orders received, yet its sales revenues declined by 7% for the quarter. According to its report, KUKA AG have benefited from increased car sales in its three biggest markets, Western Europe, China and the U.S. Car sales in Western Europe, China and The U.S grew by 8.7%, 5.5% and 5% respectively for the first nine months in 2015. KUKA expects to benefit from further growth in these markets. KRONES AG ( OTC:KRNNF ) – Krones AG is responsible for the planning, developing and manufacturing machinery and systems for the process technologies and intralogistics arena in Germany as well as worldwide. Krones AG has a 2.06% portfolio weight and has an YTD return of 34.35%. Krones is trading at $108.25. Its latest report revealed that Krones AG was right on target in terms of meeting its target objectives. Krones AG’s revenue and net orders has increased by 4.9% and 5.2% respectively. The firm’s EBIT, EBT and Net Income increased by 14.8%, 14.2% and 13.9% respectively. LAGGARDS OF ROBO GLOBAL ROBOTICS AND AUTOMATION INDEX ETF It would be easy for me to point the finger at the struggling 3-D Printing stalwarts of 3D Systems Corp (NYSE: DDD ) and Stratasys (NASDAQ: SSYS ). Both have YTD Returns of -69.29% and -69.12%. However, both holdings hold portfolio weights of less than 1%. Thus, both holdings do not hold enough significance to the fund at this point. However, Omron Corporation (OMR) has a hefty portfolio weight of 2.12% and has a negative YTD Return of -22.50%. In their latest half-year report, Omron Corporation’s revenue increased year-over-year by 2.2%. Yet, the company’s net income declined by -27.3% to $24.5 million dollars. Omron’s operating income was dragged down by a mix of increased SG&A and R&D and lower added value. Oceaneering International Inc. (NYSE: OII ) has a sizable portfolio weight of 1.74% and has a YTD return of -33.79%. Oceaneering International Inc. just hit a new one-year low on Dec 21st. This came on the heels of Oceaneering International Inc. being downgraded to a Strong Sell by Zacks. In the company’s latest report, Oceaneering International Inc’s reported a 31% decrease in net revenues and an 81% decline in net income. BOTTOM LINE: I still cannot give this ETF my full endorsement as an investment as it is still overly exposed to riskier stocks as shown by the chart comparisons above. In addition, Morningstar rates this fund zero stars and has an F rating by ETF.com. The fund’s high expense ratio of 0.95% is an even bigger turnoff. Editor’s Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.

3 ETF Winners Post Fed Rate Hike

For the first time in nearly a decade, the Fed opted for a lift-off last week indicating that the economy has gained enough strength to bear future increases in borrowing costs. Significant improvements in the key sections of the economy including that in the labor market were the main reasons behind the hike. Expressing confidence in the U.S. economy, Fed Chair Janet Yellen announced the beginning of a slow-but-steady series of rate increases. The Fed increased its short-term borrowing rate to a range of 0.25% to 0.50% as policy makers unanimously voted in favor of a hike. The long wait for the hike was what Janet Yellen labelled an “extraordinary period.” During this period, ultra-low interest rates aided economic recovery, lending a bull run to the markets. Following the lift-off decision, Yellen stated that the decision “reflects our confidence in the U.S. economy.” The Fed also indicated that “solid” consumer spending, a rebound in the housing market and strong business fixed investment played an important role in the decision. How the Markets Moved Post Hike? Though the highly anticipated hike helped the broader benchmarks to move northward, markets failed to extend the gains due to concerns including the slump in oil prices. Despite yesterday’s gains, the Dow, S&P 500 and Nasdaq lost 2.4%, 1.8% and 1.3%, respectively. Oil was the main reason behind the benchmarks slipping into negative territory following the rate-hike decision. Concerns regarding weak global demand, absence of production cuts from OPEC and North American shale suppliers, and a stronger dollar continued to weigh on oil prices, which in turn affected energy shares during the period. The broader energy index – Energy Select Sector SPDR ETF (NYSEARCA: XLE ) – declined nearly 5.4% in this time frame. However, the alternative energy sector moved in the opposite direction thanks to some important developments. The historic Paris Climate Deal and news on tax credit extension boosted the sector during this period. The Paris deal, in which about 195 countries agreed to a landmark treaty to curb global warming to a significant extent, will invariably motivate renewable energy companies to step up their investments in new technologies, boosting the industry’s growth prospects. Meanwhile, the unexpected approval of a five-year extension to the Investment Tax Credit (ITC) and Production Tax Credit (PTC) for solar and wind companies by the U.S. government also boosted the stocks. 3 ETF Winners In this scenario, we have highlighted three ETFs that registered healthy gains in the post rate-hike period. Guggenheim Solar ETF (NYSEARCA: TAN ) This ETF follows the MAC Global Solar Energy Index, holding 31 stocks in the basket. American firms dominate the fund’s portfolio with nearly 50.9% share, followed by Hong Kong (19.8%) and China (17.5%). The product has amassed $323.8 million in its asset base and trades in moderate volume of around 226,000 shares a day. It charges investors 70 bps in fees per year. The fund has returned 7.7% in the post rate-hike period. Market Vectors Mortgage REIT Income ETF (NYSEARCA: MORT ) The ETF tracks the Market Vectors Global Mortgage REITs Index, measuring the performance of companies primarily engaged in the purchase or service of commercial or residential mortgage loans. The fund consists of 24 stocks and charges 41 bps in investor fees per year. The fund is relatively less popular with an asset base of $102.2 million and average volume of roughly 31,000 shares per day. The commitment of a gradual increase in the key interest rate helped the fund to return 4.6% in the post rate-hike period. SPDR S&P Biotech ETF (NYSEARCA: XBI ) This ETF follows the S&P Biotechnology Select Industry Index, holding 105 stocks in the basket. The fund has a well-diversified portfolio as none of the firms has more than 1.7% of assets. The fund is quite popular with an asset base of $2.8 billion and strong average volume of more than 4 million shares per day. It charges investors 35 bps in fees per year. The fund has returned 4.7% in the post rate-hike period. Original Post

Income Hunters Left Salivating At Dominion Resources’ Future Growth Prospects

Summary On-track, long-term growth-oriented renewable energy generation projects will fuel revenues and earnings growth. Company’s timely and on-budget execution of ongoing projects will create secure and sustainable cash flow base. Strong growth opportunities will bode well for the stock valuation. Sale growth expectation of 5.13% for D is well above the industry median sales growth expectation. Utility stocks have remained a popular investment option for investors, as utilities usually have large exposure to regulated business operations. Additionally, the predictable cash flow base allows utilities to make healthy cash returns, and makes them attractive dividend stocks. Dominion Resources (NYSE: D ) is one of the largest utilities in the U.S., which serves a broader U.S. area with its wider portfolio of energy generation assets. Owing to the company’s on-track, growth-centric projects like regular expansion of renewable energy generation asset portfolio through acquisitions and construction projects, and steady growth of midstream business will drive its future financial growth. Moreover, D’s on time and on budget Cove Point Facility and Atlantic Coast Pipeline (ACP) project will support its long-term growth. The company’s dividend growth has also remained strong, as it generates strong and sustainable cash flows. Additionally, D’s strong balance sheet position supports its dividend growth plan and future growth ventures. The company’s policy of allocating a decent portion of its cash flows for funding growth plans has been helping it apply for constant rate hikes, thereby adding well towards D’s financial numbers. As per the company’s long-term growth plans, average annual capital spending over the next five years will be $3.2 billion , which signals at a bright outlook for the stock. Of all its targeted growth areas, renewables remain most attractive. Over the years, the company has developed itself as a leader in renewables space, with its wider portfolio of renewable energy generation portfolio. To keep its solar energy generation portfolio strong, D is still making solar energy generation deals; the company acquired an 80MW solar energy generation portfolio in VA, which is expected to start construction by the end of 2015, whereas operation of the project will begin in fall 2016. Therefore, this acquisition will help D achieve its target of having established total 425MW of solar energy generation capacity set-up by the end of 2015. Additionally, plans to build a 400MW solar plant in Virginia has been announced, which is expected to begin operations in the next five years. Given the fact that the company will be able to recover the cost of these ongoing hefty solar energy generation-based projects by rate case increases, I think D will witness a boost in its future sales and earnings growth. Moreover, the construction of the company’s Cove Point facility is on track. By the end of 3Q’15, the Cove Point Terminal facility was 47% complete, and remains on time and on budget. After its completion by the end of 2017, the Cove Point Terminal will expand the company’s operations; D will be able to export 5.75 million metric tons of LNG, at its full capacity, every year after its completion in 2017. Furthermore, the company’s another important project, ACP, which is expected to come in operation in 2018, is well on track thus far. Additionally, there are 13 ongoing projects worth $1.2 billion, which will move more than 2 billion cubic feet per day for customers by the end of 2018. Given their ability to expand D’s operations; I believe these 13 ongoing projects combined with Cove Point and ACP projects will aid the company in meeting its long-term earnings growth target and will augur well to improve its profit margins. Furthermore, the company’s investments for the expansion of its Midstream business are on track to supplement its long-term earnings growth plan. Lately, D’s Midstream business acquired a 25.9% stake in the Iroquois pipeline, in order to issue 8.6 million limited partnership units to New Jersey Resources and National Grid. Also, the company’s board has authorized $50 million investment over a period of the next 12 months to buy LP units of Dominion Midstream Partners in open markets. I believe D’s sizeable investments in Midstream business will unlock a substantial return on the entering service. D’s operations have been providing a stable source of cash flows to help it fund its hefty dividend payment plan. The company offers a healthy yield of 3.85% . Given the strong strategic growth prospects of its long-term energy generation projects, well-headed for witnessing earnings and profit margin growth, I believe D’s dividend growth outlook is pretty impressive. Additionally, the expected continuation in the company’s balance sheet strength, shown in the graph below, supports my view about its ability to meet dividend commitments in the longer run without any stress of deterioration in the balance sheet position. And I think D’s management’s targeted dividend growth rate of 8%, from 2015 to 2020, looks highly achievable. Source: 4-traders.com Summation D’s on-track, long-term growth-oriented renewable energy generation projects are rightly headed to fueling its revenues and earnings growth, and to boost its free cash flows in the years ahead. The company’s timely and on-budget execution of ongoing projects like ACP and Cove Point indicate that its efforts to create a secure and sustainable cash flow base will positively affect its stock price by enabling it to meet its dividend commitments in the longer run. Also, strong growth opportunities will bode well for the stock valuation. D is currently trading at a higher forward PE ratio of 17.46x , in contrast to its peers’ forward P/Es (American Electric Power Inc. (NYSE: AEP ) has a forward P/E of 15.04x and Exelon (NYSE: EXC ) has a forward P/E of 10.83x ). D’s higher forward P/E is justified I think, because it has a higher future growth potential than its peers. D’s earnings in the future are expected to grow at an average annual rate of 6.23% . Moreover, the sale growth expectation of 5.13% for D is also well above the industry median sales growth expectation of 1.04% . Therefore, I think D stays a good investment prospect for income hunting investors.