Tag Archives: datetime-local

After Earnings, How Are Oil Service ETFs Shaping?

A lot is being said about oil for the last one-and-a-half years. Almost every day, the commodity is hitting headlines for all wrong reasons. The acute and persistent plunge in oil prices and no hope for immediate recovery is actually pushing down the global market. The worry has reached such a delirious stage that jittery investors are fervently keeping an eye on the earnings performance of the oil service companies before taking their call on any investment in energy stocks. After all, the investing world is busy figuring out whether oil has hit a bottom after a horrendous sell-off and is due to turn around soon, benefitting the broader energy sector. The Zacks Industry Rank for the said space is presently in the bottom 17%. Thanks to this outright bearish backdrop, the sector tops investors’ attention list this earnings season as everyone will be interested in the health of the oil companies. Let’s delve a little deeper into the earnings scenario and see how things are shaping up for the space. In this piece, we have considered two stocks, namely – Schlumberger Ltd. (NYSE: SLB ) and Halliburton Company (NYSE: HAL ) . Among the duo, Schlumberger reported earnings results on January 21 after the market closed while Halliburton reported on January 25 before the market opened. Results in Detail Halliburton – the second largest oil service company – came up with an earnings beat though revenues missed in Q4. Earnings of $0.31 per share from continuing operations beat the Zacks Consensus Estimate of $0.24. Improved stimulation works in Kuwait and Australia helped the company to beat on the bottom line despite rock-bottom oil prices. The bottom line fell considerably from fourth-quarter 2014 earnings of $1.19. However, Halliburton’s revenues of $5.08 billion reflected a 42.1% year-over-year improvement but a 0.3% miss the Zacks Consensus Estimate. Shares were down 4.1% in the two trading sessions following the declaration of results. Schlumberger – the world’s largest oilfield services provider – came up with a mixed Q4. Adjusted earnings of $0.65 per share (excluding special items) edged past the Zacks Consensus Estimate of $0.63 but fell from the year-ago number of $1.50. Continued decline in rig activity amid the oil price carnage was behind the year-over-year decline. Total revenue of $7.7 billion declined 38.9% year over year but was in line with the Zacks Consensus Estimate. SLB advanced more than 6% in the trading day following the results. Market Impact The space got mixed signals thanks to not-extremely-downbeat performances as many expected from these oil service giants. We would like to note that both companies currently have a Zacks Rank #5 (Sell), solely because of poor industry fundamentals. Still investors might want to know the impact on ETFs that are heavily invested in these popular oil service companies. Below, we have highlighted three oil-services ETFs with considerable allocation to SLB and HAL that could be in focus following oil-service earnings: iShares US Oil Equipment & Services ETF (NYSEARCA: IEZ ) This ETF – tracking the Dow Jones U.S. Select Oil Equipment & Services Index – invests about $195.7 million of assets in 41 securities, focusing solely on the energy world. In-focus SLB takes up the first position here with 19.41% of holdings. Generally, when one stock accounts for as much as 19% of an ETF’s weight, its individual performance decides much of the fund’s price movement. HAL takes up the second position with about 9.26% of total assets. The fund gained about 1.2% in the last three trading sessions (as of January 26, 2016) following the release of the earnings by the duo. IEZ charges 0.45% for its expense ratio. The fund has a Zacks ETF Rank #5 with a High risk outlook. Market Vectors Oil Services ETF (NYSEARCA: OIH ) OIH tracks the Market Vectors US Listed Oil Services 25 Index. The index invests $924.7 million of assets in 26 holdings. OIH devotes as much as 20.44% of the portfolio weight to SLB, followed by 11.66% in HAL. OIH is cheap in the space with an expense ratio of 0.35%. The fund returned about 0.9% in the last three trading sessions (as of January 26, 2016). OIH has a Zacks ETF Rank #5 with a High risk outlook. PowerShares Dynamic Oil & Gas Services Fund (NYSEARCA: PXJ ) This product offers exposure to 30 energy stocks with SLB and HAL at the second and fourth positions, respectively, allocating 5.5-6% of total assets to each. PXJ tracks the Dynamic Oil & Gas Services Intellidex Index and has amassed about $31.9 million thus far. The ETF charges 63 bps in fees, so it is a bit more expensive than some of its counterparts in the space. The fund has added about 0.1% following the earnings release of the two companies. PXJ has a Zacks ETF Rank #5 with a High risk outlook. Original Post

4 Utilities To Buy In A Bear Market

Bear market fears continue to dominate the headlines this year. Oil and China are crashing, and the western markets are being sold in anticipation of another global sell-off. Investors are checking their statements in anguish, as they are now faced with a decision to sell everything or hide in areas that are less likely to be affected. Rather than panic and hit the Sell button, investors need to be aware of options that will defend their portfolio against more selling. In a recession, people still have to stay warm and keep the lights on. The consistency of revenues based on those human needs, as opposed to wants, makes the sector favorable in down times. Gas, water and other necessary utilities companies are all considered to be recession-proof industries. These companies can benefit from slowing economic growth, as interest rates will have a tendency to stay lower. Low rates help a utility company by making their dividend look more attractive, plus it allows for cheaper borrowing. The Fed has hinted that rates will be rising, making the dividend of utilities less desirable. However, if global market pressure continues, the Fed will inevitably back off from that thought. The combination of low interest rates, high dividends and market fear make utilities a good place to hide. The Utilities Select Sector SPDR ETF (NYSEARCA: XLU ) is an ETF that reflects the performance of utilities. The chart below marks the performance over the last two years versus the S&P. A closer look shows the divergence since 2016, with smart money supporting the sector. While the ETF will reduce company-specific risk, it also tends to reduce reward and dividends. Let’s take a look at four top-ranked stocks that will enhance the utility play. Idacorp (NYSE: IDA ) is an electric public utility company and a Zacks Rank #2 (Buy) stock. The company is engaged in the generation, purchase, transmission, distribution and sale of electric energy, primarily in the areas including southern Idaho, eastern Oregon and northern Nevada. It operates gas- and coal-fired plants, but the majority of its operations rely on hydroelectric power for their generating needs. The majority of its customers include lodges, condominiums, and ski lifts and related facilities. Idacorp has a market cap of $3.4 billion, with a dividend yield of 3.01%. The company’s EPS growth was up 11.45% over the previous quarter, and it has a good record of surprising EPS to the upside. NorthWestern Corp. (NYSE: NWE ) is a Zacks Rank #2 (Buy) stock and one of the largest providers of electricity and natural gas in the northwest quadrant of the United States. Founded in 1923, it generates and distributes electricity and natural gas to over 700,000 customers in four states, including Montana, South Dakota and Nebraska. The company has a market cap of $2.6 billion and a 3.52% dividend. It sports a forward P/E of 16 and has a Zacks Style Score of “B” in Growth, with EPS growth up 34% from the previous year. While EPS estimates have been coming down lately, sales growth has been steady, an important catalyst for the company. Southern Company (NYSE: SO ) is a Zacks Rank #2 (Buy) stock that operates as a public utility company by means of coal, nuclear, oil, gas and hydro power. The company, with over 26,000 employees, provides a broad range of energy-related services to utilities and industrial companies globally. Southern Company’s businesses include independent power projects, integrated utilities, a distribution company, and energy trading and marketing businesses outside the southeastern United States. Southern has a market cap of $43 billion and offers investors a dividend of 4.6%. EPS growth was up 7.34% from last year, showing why the company has a Zacks Style Score of “B” in Growth and Momentum. It has had an upside surprise six of the last eight times. SCANA Corporation (NYSE: SCG ) is a Zacks Rank #2 (Buy) stock. This is an energy-based holding company whose businesses include regulated electric and natural gas utility operations, telecommunications and other non-regulated energy-related businesses. SCANA’s subsidiaries serve electric customers in South Carolina, North Carolina and Georgia. SCANA offers investors a 3.57 dividend, with an $8.55 billion market cap. Estimates for the company have risen 1.5% over the last 90 days, going from $3.89 to $3.95 a share. In Summary Utilities won’t hit home run, but while the pitcher is throwing a no-hitter, they offer a chance for investors to bunt their way on base. If you are fearful of more market downside, park yourself in utilities until the risks fade away. If interest rates start to rise, or when the fear of global recession is no longer present, exit the sector and add risk. Original Post

3 Best-Ranked Small-Cap Growth Funds

Risky investors who prefer capital appreciation over dividend payouts may consider investing in small-cap growth mutual funds. Growth funds focus on realizing an appreciable amount of capital growth by investing in stocks projected to rise in value over the long term. Meanwhile, small cap funds are good choices for investors seeking diversification across different sectors and companies. Small cap funds generally invest in companies having market cap less than $2 billion. The companies, smaller in size, offer growth potential and their market capitalization may increase subsequently. Less international exposure make small-cap funds less vulnerable to the stronger U.S. dollar. Though small-cap stocks are believed to provide greater returns, they are also expected to be more volatile than large and mid cap companies. Also, growth funds may experience more fluctuations than other fund classes. Below we share with you 3 top-rated, small-cap growth mutual funds. Each has earned a Zacks Mutual Fund Rank #1 (Strong Buy) and is expected to outperform its peers in the future. To view the Zacks Rank and past performance of all small-cap growth mutual funds, investors can click here to see the complete list of small-cap growth funds . Fidelity Advisor Small Cap Growth A (MUTF: FCAGX ) invests the lion’s share of its assets in common stocks of small cap growth companies. FCAGX invests in securities issued throughout the globe. FCAGX considers factors including financial strength and economic condition for investing in a company. The Fidelity Advisor Small Cap Growth A fund has a three-year annualized return of 10.3%. FCAGX has an expense ratio of 1.20% as compared to the category average of 1.33%. RidgeWorth Small Cap Growth Stock I (MUTF: SSCTX ) seeks growth of capital over the long run. SSCTX invests a large chunk of its assets in securities of small cap companies that are traded in the U.S. SSCTX invests in companies having market capitalizations within the range of in the Russell 2000 Growth Index. SSCTX may also invest in American Depositary Receipts. The RidgeWorth Small Cap Growth Stock I fund has a three-year annualized return of 4.7%. As of December 2015, SSCTX held 91 issues with 2.87% of its assets invested in Heartland Payment Systems Inc. BlackRock Small Cap Growth Equity Investor A (MUTF: CSGEX ) invests the major portion of its assets in equity securities of domestic companies having small size market capitalization. According to CSGEX advisors, companies with a market cap similar to those included in the Russell 2000 Index are considered small cap firms. CSGEX may also participate in IPO markets. The BlackRock Small Cap Growth Equity Investor A fund has a three-year annualized return of 5.8%. Travis Cooke is the fund manager of CSGEX since 2013. To view the Zacks Rank and past performance of all small-cap growth mutual funds, investors can click here to see the complete list of funds .