Tag Archives: stocks

Best And Worst Q2’16: Financials ETFs, Mutual Funds And Key Holdings

The Financials sector ranks sixth out of the ten sectors as detailed in our Q2’16 Sector Ratings for ETFs and Mutual Funds report. Last quarter , the Financials sector ranked seventh. It gets our Neutral rating, which is based on aggregation of ratings of 38 ETFs and 249 mutual funds in the Financials. See a recap of our Q1’16 Sector Ratings here . Figures 1 and 2 show the five best and worst rated ETFs and mutual funds in the sector. Not all Financials sector ETFs and mutual funds are created the same. The number of holdings varies widely (from 21 to 572). This variation creates drastically different investment implications and, therefore, ratings. Investors seeking exposure to the Financials sector should buy one of the Attractive-or-better rated ETFs or mutual funds from Figures 1 and 2. Figure 1: ETFs with the Best & Worst Ratings – Top 5 Click to enlarge * Best ETFs exclude ETFs with TNAs less than $100 million for inadequate liquidity. Sources: New Constructs, LLC and company filings PowerShares KBW Property & Casualty Insurance Portfolio (NYSEARCA: KBWP ) is excluded from Figure 1 because its total net assets (NYSEARCA: TNA ) are below $100 million and do not meet our liquidity minimums. Figure 2: Mutual Funds with the Best & Worst Ratings – Top 5 Click to enlarge * Best mutual funds exclude funds with TNAs less than $100 million for inadequate liquidity. Sources: New Constructs, LLC and company filings Schwab Financial Services Fund (MUTF: SWFFX ) is excluded from Figure 2 because its total net assets are below $100 million and do not meet our liquidity minimums. iShares U.S. Financials Services ETF (NYSEARCA: IYG ) is the top-rated Financials ETF and Fidelity Select Banking Portfolio (MUTF: FSRBX ) is the top-rated Financials mutual fund. Both earn a Very Attractive rating. iShares Residential Real Estate Capped ETF (NYSEARCA: REZ ) is the worst rated Financials ETF and Rydex Series Real Estate Fund (MUTF: RYREX ) is the worst rated Financials mutual fund. REZ earns a Dangerous rating and RYREX earns a Very Dangerous rating. 595 stocks of the 3000+ we cover are classified as Financials stocks. American Express (NYSE: AXP ) is one of our favorite stocks held by IYG and earns a Very Attractive rating. We previously published a case study outlining how AXP could boost its value by $50 billion by making strategic decisions to boost return on invested capital ( ROIC ). Over the past six years, American Express has grown after-tax profit ( NOPAT ) by 6% compounded annually. At the same time, the company has improved its ROIC from 12% in 2005 to a top-quintile 20% in 2015. However, some short-term issues, which we identify in our case study have left AXP undervalued. At its current price of $62/share, American Express has a price-to-economic book value ( PEBV ) ratio of 0.9. This ratio means that the market expects American Express’ NOPAT to permanently decline by 10%. If AXP can, instead, grow NOPAT by 6% compounded annually for the next decade , the stock is worth $98/share today – a 58% upside. Essex Property Trust (NYSE: ESS ) is one of our least favorite stocks held by REZ and earns a Very Dangerous rating. Essex earns its rating in large part to its misleading earnings. Over the past decade, GAAP net income has grown by 11% compounded annually. However, Essex’s economic earnings , its true cash flows, have declined from $7 million to -$249 million over the same time period. Further highlighting the deterioration of Essex’s operations, the company’s ROIC has halved from 8% in 2005 to a bottom-quintile 4% in 2015. GAAP earnings have propped up shares for too long, and ESS remains overvalued. In order to justify its current price of $225/share, Essex must grow NOPAT by 12% compounded annually for the next 11 years . After a decade of shareholder value destruction, the expectations baked in ESS remain too high. Figures 3 and 4 show the rating landscape of all Financials ETFs and mutual funds. Figure 3: Separating the Best ETFs From the Worst ETFs Click to enlarge Sources: New Constructs, LLC and company filings Figure 4: Separating the Best Mutual Funds From the Worst Mutual Funds Click to enlarge Sources: New Constructs, LLC and company filings D isclosure: David Trainer and Kyle Guske II receive no compensation to write about any specific stock, sector or theme. Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

Will These 3 Hot Chinese Techs Follow Alibaba Or JD With Earnings?

Alibaba rival JD.com ( JD ) was crumbling to a three-month low Monday after reporting light Q2 revenue guidance. Meanwhile, Alibaba ( BABA ) edged higher Monday intraday after jumping 4% last week on its earnings report, with the Chinese e-commerce giant now setting its sights on $1 trillion in gross merchandise volume in four years. Chinese stocks in general were getting hit hard in the stock market today amid a broad sell-off in Shanghai. JD shares were gapping down  9.7% in giant volume, hitting their lowest level since mid-February. The stock is now trading about 40% below its high reached last June. IBD Take: How to JD.com, Weibo and other Chinese Internet giants stack up? Find out at IBD Stock Checkup Alibaba is trading about 16% below its 52-week high. The stock was able to find support at its 50-day line ahead of its report and is now trading just under a 79.94 buy point within a larger pattern. Fellow Chinese tech stocks NetEase ( NTES ), Sina ( SINA ) and Weibo ( WB ) are all due to issue their quarterly reports after the close on Wednesday. Gaming company NetEase is expected to see earnings rise 56% in local currency, with revenue jumping 118%. NetEase is hitting resistance at its 50-day line. Shares are about 25% below their late December high, down about 1% in intraday trade. Internet portal Sina is expected to swing to a loss of 4 cents a share, while revenue edges up 2%. Shares are dropping back below buy range from a cup-with-handle base in intraday trade, losing 4.4%. The stock is about 20% below its June high. And social platform Weibo is projected to see earnings grow 300% to 4 cents a share, while revenue jumps 18%. Weibo was a part of Sina before its IPO in 2014. Sina remains a majority shareholder, while Alibaba owns a 30% stake. The stock was trading past the 20% profit-taking zone after breaking out of a cup-with-handle base a month ago. Shares are now extended about 13% from the buy point, dropping 5% Monday.

InvenSense Sales Expected To Topple After Apple iPhone Shortfall

Apple ‘s ( AAPL ) iPhone shortfall could draw InvenSense ( INVN ) into the tornado late Monday when the sensor-chipmaker is expected to report its first-ever sales decline and its biggest earnings fall to date. InvenSense stock toppled 5.5% to 7, falling the most of IBD’s 41-company Electronic Semiconductor-Fabless industry group which was up a fraction on the stock market today . Fellow Apple suppliers Broadcom ( AVGO ) and Qualcomm ( QCOM ) stocks rose 1.2% and 0.1%, respectively, vs. flat shares of NXP Semiconductors ( NXPI ) and Cirrus Logic ( CRUS ). InvenSense follows radio-frequency supplier Qorvo ( QRVO ), which reported earnings last Wednesday. The consensus of 13 analysts polled by Thomson Reuters models $79.9 million in sales and 2 cents earnings per share ex items for InvenSense’s fiscal Q4. On a year-over-year basis, sales and EPS would be down 20% and 83%, respectively. It would be InvenSense’s fifth straight quarter of decelerating sales growth, and the first time the Apple supplier has seen sales fall vs. the year-earlier quarter. Earnings fell 14% last quarter. Three months ago, InvenSense guided to $77 million to $83 million in sales and 0-2 cents EPS ex items. During the January conference call, CFO Mark Dentinger noted a step-down at “the North American customer” — widely assumed to be Apple — and lighter sales in Korea. He expected Internet of Things sales to help fill those holes. On April 26, Apple reported its first-ever year-over-year iPhone sales decline and its first revenue drop since 2003. Teardowns show InvenSense supplies a gyroscope/accelerometer combination chip for the iPhone 6S. But InvenSense is forecast for 13% sales and 2% EPS growth in fiscal 2016 to $420.9 million and 47 cents, respectively, on healthier metrics earlier in the year. Apple shares rose 1% intraday after hitting a 2-year low on Friday.