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Auto ETFs And Stocks To Ride On This Holiday Season

The auto industry has been on a high gear and remains on track to break the all-time record of 17.35 million vehicles reached in 2000. Once again, the monthly auto sales data spread bullishness into the entire industry across the globe. In particular, auto sales rose 1.4% year over year to an annualized 18.2 million units in November. This represents the highest auto sales in 14 years and the third consecutive month of 18 million plus sales. Five of the six major American and Japanese automakers reported solid sales growth for November. Nissan ( OTCPK:NSANY ) led the way higher with 4% growth, followed by sales increases of 3% for Fiat Chrysler Automobiles (NYSE: FCAU ), 3.0% for Toyota (NYSE: TM ), 1.5% for General Motors (NYSE: GM ) and 0.3% for Ford Motor (NYSE: F ). However, Honda’s (NYSE: HMC ) auto sales fell 5% last month. A major boost came from attractive year-end offers, Black Friday deals, higher demand for sport utility vehicles, cheap fuel and low financing costs. Further, a plethora of new models, the need to replace aging vehicles, higher income, increasing consumer confidence, and higher spending power are adding enough fuel. The robust trend is likely to continue this month as well, as automakers continue offering discounts and holiday season incentives. Further, about two-thirds of the industries falling under the auto sector have a strong Zacks Rank in the top 39%, suggesting healthy growth. As such, investors seeking to take advantage of the current boom may consider the ETFs and stocks from this corner of the broad market. ETFs to Buy First Trust NASDAQ Global Auto Index ETF (NASDAQ: CARZ ) This fund offers pure play global exposure to the 37 auto stocks by tracking the NASDAQ OMX Global Auto Index. It is a large-cap centric fund, highly concentrated on the top 10 holdings with about 62% of assets. The four prime automakers – General Motors, Ford, Honda and Toyota – are among the top five holdings. In terms of country exposure, Japan takes the top spot at 36.8% while the U.S. and Germany round off the next two spots with 23.4% and 18.3% share, respectively. CARZ is under appreciated as indicated by its AUM of only $41.1 million and average daily trading volume of about 10,000 shares. The product charges 70 bps in fees per year and has gained 2.4% in the year-to-date time period. It has a Zacks ETF Rank of 2 or ‘Buy’ rating with a High risk outlook. Consumer Discretionary Select Sector SPDR ETF (NYSEARCA: XLY ) While XLY provides broad exposure to the consumer discretionary space, investors could go for this product as it has an at least 8% allocation to the auto industry. It holds 90 securities in its basket and some well known automakers like Ford, General Motor, O’Reilly Automotive (NASDAQ: ORLY ) and Delphi Automotive (NYSE: DLPH ) make up for a nice mix in the portfolio. It is the largest and the most popular product in this space with AUM of nearly $11.7 billion and average daily volume of roughly 6.6 million shares. It charges 14 bps in annual fees from investors and has gained 14.3% so far this year. The fund has a Zacks ETF Rank of 2 with a Medium risk outlook. Stocks to Buy We have used our Zacks stock screener to find out the best stocks in the auto space having a Zacks Rank #1 (Strong Buy) or 2 (Buy) and a Growth Style Score of ‘B’ or better. The Growth Style Score analyzes the growth prospects of a company with a thorough analysis of the income statement, balance sheet and cash flow statement that evaluate its financial health and the sustainability of growth trajectory. The results show that stocks with Growth Style Scores of A or B when combined with Zacks Rank of 1 or 2 offer the best upside potential. Superior Industries International Inc. (NYSE: SUP ) Based in Southfield, Michigan, Superior Industries is one of the world’s largest original equipment manufacturer (OEM) of aluminum wheels for the automotive industry. It designs, manufactures and supplies cast aluminum road wheels to the automobile and light truck manufacturers. The stock has seen positive earnings estimate revisions from 90 cents to 93 cents per share for 2015 over the past 60 days, representing a year-over-year increase of 43.1%, which is much higher than the industry average of 5.4%. The company delivered an average positive earnings surprise of 32.44% in the last four quarters. The stock has a Zacks Rank #1 with a Growth Style Score of B, meaning that it is primed for further growth in the months to come. Motorcar Parts of America Inc. (NASDAQ: MPAA ) Based in Torrance, California, Motorcar Parts is a leading manufacturer of auto parts like replacement starters, alternators, wheel hub assemblies, bearings and master cylinders used for imported and domestic passenger vehicles, light trucks, and heavy-duty applications in the United States and Canada. The company has seen a solid earnings positive estimate revision of 6 cents for the current fiscal year over the past 60 days and is expected to grow at an annual rate of 24.4% versus negative industry growth. Further, the company delivered positive earnings surprises in the three of the past four quarters, with an average beat of 4.64%. The stock currently has a Zacks Rank #1 with a Growth Style Score of B, suggesting incredible growth in the months ahead. Bottom Line Holiday fervor, massive discounts, an improving economy, and increased consumer spending will continue to drive U.S. auto sales higher in the weeks ahead, making the above ETFs and stocks compelling choices for investors to play this holiday season. Original Post

11 Most Popular Currency-Hedged ETFs

Currency hedging strategies have been in vogue since the start of this year given the ultra-loose monetary policy across the globe in stark contrast to the U.S. Fed policy of tightening its stimulus program. The popularity saw a rise last month when the Fed hinted at a modest hike in interest rates in December. The diverging policies have been pushing the U.S. dollar higher and other currencies lower. While monetary easing is making international investment a compelling opportunity in the U.S., a strong dollar could wipe out gains when repatriated in U.S. dollar terms, pushing international investment into the red even when international stocks performed well. As a result, investors flocked to currency-hedged ETFs to tap bullish international fundamentals, dodging the effects of a strong greenback. This is especially true as the currency-hedged funds look to strip out currency exposure to a foreign economy via the use of currency forwards or other instruments that bet against the non-dollar currency, while at the same time, offering exposure to foreign stocks. Given this, we have highlighted 11 currency-hedged ETFs for investors that are extremely popular in the market: WisdomTree Europe Hedged Equity ETF (NYSEARCA: HEDJ ) The ETF tracks the WisdomTree Europe Hedged Equity Index holding 129 securities with moderate concentration on the top 10 holdings at 25.5%. It is pretty well spread across a number of sectors, with consumer staples, industrials, consumer discretionary, healthcare and financials taking double-digit exposure each. Among countries, Germany (25.9%), France (24.3%), the Netherlands (17.2%) and Spain (16.4%) dominate the holdings list. The fund has AUM of $21.3 billion, and sees an average daily volume of about 4.9 million shares. It charges 58 bps in annual fees and gained 13.5% in the year-to-date time frame. The product has a Zacks ETF Rank of 3 or a “Hold” rating with a Medium risk outlook. WisdomTree Japan Hedged Equity ETF (NYSEARCA: DXJ ) With AUM of $17.1 billion, this ETF targets the Japanese equity stock market without the currency risk by tracking the WisdomTree Japan Hedged Equity Index. Holding 314 stocks in its basket, the product is moderately concentrated across securities, with none holding more than 4.84% share. Consumer discretionary and industrials take the top two spots with 24.6% and 23.2% share, respectively, while information technology and financials round off the top four. The fund trades in solid volume of more than 6 million shares per day, and charges 48 bps in annual fees. It has risen nearly 14% so far this year, and has a Zacks ETF Rank of 2 or a “Buy” rating with a Medium risk outlook. Deutsche X-trackers MSCI EAFE Hedged Equity ETF (NYSEARCA: DBEF ) This fund targets the developed international stock market with no currency risk, and tracks the MSCI EAFE US Dollar Hedged Index. In total, the product holds 920 securities in its basket, with none holding more than 1.95% share, and charges 35 bps in fees. It is skewed toward the financials sector, which makes up one-fourth of the portfolio, while consumer discretionary, industrials, consumer staples and healthcare round off the top five with double-digit exposure each. Among countries, Japan takes the top spot at 23%, closely followed by United Kingdom (17%), France (10%) and Switzerland (10%). With an asset base of around $13.9 billion and average daily volume of about 4 million shares, the fund has gained 7.5% so far this year and has a Zacks ETF Rank of 3 with a Medium risk outlook. Deutsche X-trackers MSCI Europe Hedged Equity ETF (NYSEARCA: DBEU ) This product is the second popular European play that follows the MSCI Europe US Dollar Hedged Index. It holds 445 securities in its basket, which are widely spread out across components, with each holding less than 3% of assets. United Kingdom takes the top spot at 27%, while France, Switzerland and Germany round off the next three spots. From a sector look, financials accounts for the largest share at 22.5%, closely followed by consumer staples (14.9%) and healthcare (13.7%). The fund has amassed $3.8 billion in its asset base and trades in solid volume of more than 1.3 million shares a day. It charges 45 bps in fees per year, and has returned about 8% so far this year. The fund has a Zacks ETF Rank of 3 with a Medium risk outlook. iShares Currency Hedged MSCI EAFE ETF (NYSEARCA: HEFA ) This fund provides a broad foreign market play without currency risks. It focuses on the EAFE region – Europe, Australasia, Far East – for exposure, and follows the MSCI EAFE 100% Hedged to USD index. It is basically a holding of the iShares MSCI EAFE ETF (NYSEARCA: EFA ) with currency hedge tacked on. Financials dominates the fund’s return with one-fourth share, while consumer discretionary, industrials, consumer staples and healthcare also get double-digit allocation each. Top nations include Japan and United Kingdom, with double-digit exposure, while France, Switzerland and Germany round out the top five. The fund has AUM of $3.1 billion and average daily volume of roughly 1.4 million shares. It charges 35 bps in annual fees and has gained about 8% in the year-to-date time frame. HEFA has a Zacks ETF Rank of 3 with a Medium risk outlook. iShares Currency Hedged MSCI EMU ETF (NYSEARCA: HEZU ) This ETF is appropriate for investors looking invest in euro zone stocks. It follows the MSCI EMU 100% USD Hedged Index, and is a play on the popular unhedged fund iShares MSCI EMU ETF (NYSEARCA: EZU ) with a hedge to strip out the euro currency exposure. The fund holds 245 well-diversified securities in its basket, dominated by financials at 22.4% and followed by consumer discretionary (13.9%), industrials (12.7%) and consumer staples (11.1%). The ETF has amassed $1.9 billion in its asset base, and trades in solid volumes of more than 1.3 million shares a day. The fund charges 50 bps in annual fees from investors and has delivered impressive returns of nearly 14% so far this year. It has a Zacks ETF Rank of 3 with a Medium risk outlook. Deutsche X-trackers MSCI Japan Hedged Equity ETF (NYSEARCA: DBJP ) This product tracks the MSCI Japan US Dollar Hedged Index, which provides exposure to the Japanese equity markets and hedges the Japanese yen to the U.S. dollar by selling Japanese yen forwards. The fund holds 319 securities in its basket, with the largest allocation going to Toyota Motor (NYSE: TM ), while other firms make up less than 3% of its assets. From a sector look, the ETF is well diversified, with consumer discretionary, financials, industrials and information technology accounting for double-digit allocation each. The fund has AUM of $1.9 billion and average daily volume of around 487,000 shares. Its expense ratio came in at 0.45%. The product is up about 14.8% so far this year, and has a Zacks ETF Rank of 2 with a Medium risk outlook. iShares Currency Hedged MSCI Germany ETF (NYSEARCA: HEWG ) This ETF targets the German equity market without the currency risk. It follows the MSCI Germany 100% Hedged to USD Index, and is basically a holding of the iShares MSCI Germany ETF (NYSEARCA: EWG ) with currency hedge tacked on. Consumer discretionary, financials, healthcare, materials and industrials are the top five sectors of the fund. The fund has accumulated $1.5 billion in AUM and charges 53 bps in annual fees. Volume is good, as it exchanges more than 1.2 million shares, on average, on a daily basis. It has added 11% this year, and has a Zacks ETF Rank of 2 with a Medium risk outlook. iShares Currency Hedged MSCI Japan ETF (NYSEARCA: HEWJ ) This is another currency-hedged option to play Japanese equity, and is a hedged version of the popular iShares MSCI Japan ETF (NYSEARCA: EWJ ). Holding 320 stocks in its basket, consumer discretionary takes the top spot at 21.3%, closely followed by financials and industrials. The ETF has AUM of $712 million and sees volume of more than 593,000 shares a day. The expense ratio came in at 0.48%. The fund has gained 14.5% so far in the year and has a Zacks ETF Rank of 2 with a Medium risk outlook. WisdomTree International Hedged Quality Dividend Growth ETF (NYSEARCA: IHDG ) This product provides exposure to the dividend-paying companies with growth characteristics in the developed world ex U.S. and Canada and hedge exposure to fluctuations in the U.S. dollar and foreign currencies. This can be easily done by tracking the WisdomTree International Hedged Quality Dividend Growth Index. In total, the fund holds 213 stocks in the basket, with consumer staples and consumer discretionary as the top two sectors. In terms of country profile, United Kingdom takes the top spot at 20.2%, while Japan and Switzerland round off the next two spots with 13.3% and 10.2% share, respectively. WisdomTree Germany Hedged Equity ETF (NASDAQ: DXGE ) This German ETF follows the WisdomTree Germany Hedged Equity Index, holding 75 securities in its basket. It has a slight tilt toward the consumer discretionary sector with 21.6% share, followed by double-digit exposures in financials, industrials, materials and healthcare. It has managed assets worth $305.4 million and trades in good volume of 202,000 shares a day, on average. The fund charges 48 bps in annual fees, and is up 11.4% so far this year. DXGE has a Zacks ETF Rank of 2 with a Medium risk outlook. Original Post

Dollar May Hit Parity With Euro: Bet On These ETFs

With the prospect of interest rate hike back on the table, dollar is likely to hit parity with Euro anytime soon. This is especially true as the Fed hinted at a modest December lift-off if the U.S. economy remains on track. The tight monetary policy will reduce the supply of money flowing into the economy, leading to strength in the greenback. As a result, dollar resumed its clear upward journey against the basket of other currencies, rising over 6% in the past one month. And guess what? The latest string of economic data is clearly supporting this view with October payrolls logging the biggest gain this year, unemployment falling to a new seven-year low of 5% and average hourly wages showing the sharpest growth since July 2009. Consumer confidence is also up, with the University of Michigan consumer sentiment index rising to 93.1 in early November from 90 in October, after dropping to 87.2 in September from 91.9 in August. While the manufacturing sector expanded at its slowest pace in more than two years in October on a weak global economy and strong dollar, rise in new orders spread some hopes in the sector. After two straight months of decline, inflation also rose a modest 0.2% last month – an important factor in the Fed rate hike decision. All these suggest that the U.S. economy is showing an impressive rebound after a lazy summer and looks strong enough for a December rate increase. On the other hand, euro has been slumping against the dollar and tumbled 6% in the past one month. The European Central Bank (ECB) has been looking for more stimulus measures as soon as December to spur growth in the economy and fight against deflation. Currently, the ECB is pumping €60 billion ($68 billion) per month into the sagging economy courtesy of its QE program that began in March and will run through September 2016. These diverging policies will continue to drive the U.S. dollar upward, thereby resulting in depreciation of the euro against the greenback. Further, the latest terrorist attack in the capital of France parked geopolitical tensions and raised concerns over the slowly recovering economy, pushing the euro down. Meanwhile, the tragedy has shaken investors’ confidence around the world, encouraging them to take a flight to safety in the U.S. dollar. If the current trend persists, the EUR/USD parity may be seen as euro will continue to fall while dollar will continue to rise. Investors seeking to tap this opportune moment could bet on the following ETFs. PowerShares DB US Dollar Bullish Fund (NYSEARCA: UUP ) UUP is the prime beneficiary of the rising dollar as it offers exposure against a basket of six world currencies – euro, Japanese yen, British pound, Canadian dollar, Swedish krona and Swiss franc. This is done by tracking the Deutsche Bank Long US Dollar Index Futures Index Excess Return plus the interest income from the fund’s holdings of U.S. Treasury securities. In terms of holdings, UUP allocates nearly 57.6% in euro while 13.6% collectively in Japanese yen and 11.9% in British pound. The fund has so far managed an asset base of over $1 billion while sees an average daily volume of around 2.2 million shares. It charges 80 bps in total fees and expenses, and gained 4.9% over the past one month. The fund has a Zacks ETF Rank of 3 or ‘Hold’ rating with a Medium risk outlook. WisdomTree Bloomberg U.S. Dollar Bullish Fund (NYSEARCA: USDU ) This product offers exposure to the U.S. dollar against a basket of 10 developed and emerging market currencies by tracking the Bloomberg Dollar Total Return Index. The fund allocates higher to the Euro at 30.3%, closely followed by Japanese yen (18.5%), Canadian dollars (11.8%) and Mexican peso (10.1%). Other currencies like British pound, Australian dollar, Swiss franc, South Korean won, Chinese yuan and Brazilian real receive single-digit allocation in the fund’s basket. This ETF has amassed $248.4 million in its asset base and charges 50% in expense ratio. Volume is light as it exchanges nearly 195,000 shares a day on average. The fund added 3.5% over the past four weeks. ProShares Short Euro (NYSEARCA: EUFX ) This fund seeks to deliver the inverse return of the daily performance of euro versus the U.S. dollar. It is often overlooked by investors as it has just $17.9 million in its asset base while volume is light at around 16,000 shares per day. It charges 95 bps in annual fees and added 6.3% over the past month. Original Post