Tag Archives: united-states

The Complete Guide To Retail ETFs

As a pioneer in retail business, the United States provides ample growth opportunities for all types of retail companies. From growth perspective, retail ranks among the dominant U.S. industries and employs an enormous workforce. Retail sales represent approximately 30% of consumer spending, which itself accounts for more than two-thirds of the economy. The U.S. economy is sending out signals of growth, driven by lower oil prices and an improved job market. In July, 215,000 people were hired, reflecting improved employment prospects. According to the recent data from Bureau of Labor Statistics, the unemployment rate for July was constant at 5.3% reached in the previous month, its lowest level since Sept. 2008. This improvement in the job scenario is likely to boost consumer confidence and provide them with a sense of security when it comes to purchasing power, thereby increasing consumer spending. According to a recent Conference Board data, the Consumer Confidence Index rebound in August increased to 101.5 from July’s reading of 91.0. Moreover, consumer spending increased 3.1% in the second quarter from the initial estimate of 2.9%, and also improved considerably from the first quarter’s spending rate of 1.8%. July retail sales growth of 0.6% also validates the pickup in consumer activity. Additionally, real GDP expanded at a 3.7% seasonally-adjusted annual rate in the second quarter of 2015, according to the “second” estimate released by the Bureau of Economic Analysis. This fared way better than the “advance” estimate of a 2.3% increase and 0.6% growth recorded in the first quarter. The positive revision in GDP numbers reflects a rise in consumer spending, higher business spending, increased investment in intellectual property products and larger inventory levels at businesses. An expected rebound in the economy, combined with declining unemployment rate, cheap gasoline prices, higher consumer confidence and improving consumer spending, the retail space is bubbling with optimism. ETFs present a low cost and convenient way to get a diversified exposure to this sector. Below we have highlighted a few ETFs tracking the industry: SPDR S&P Retail (NYSEARCA: XRT ): Launched in June 2006, SPDR S&P Retail is an ETF that seeks investment results corresponding to the S&P Retail Select Industry Index. This fund consists of 103 stocks, the top holdings being Netflix Inc. (NASDAQ: NFLX ), Amazon.com Inc. (NASDAQ: AMZN ) and Casey’s General Stores Inc. (NASDAQ: CASY ), representing asset allocation of 1.33%, 1.29% and 1.22%, respectively, as of Aug. 28, 2015. The fund’s gross expense ratio is 0.35%, while its dividend yield is 1.04%. XRT has $1,118 million of assets under management (AUM) as of Aug. 31, 2015. Market Vectors Retail ETF (NYSEARCA: RTH ): Initiated in Dec. 2011, Market Vectors Retail ETF tracks the performance of Market Vectors US Listed Retail 25 Index. The fund comprises 26 stocks, the top holdings being Amazon.com Inc. ( AMZN ), Home Depot Inc. (NYSE: HD ) and Wal-Mart Stores Inc. (NYSE: WMT ), representing asset allocation of 12.78%, 8.66% and 7.75%, respectively, as of Aug. 31, 2015. The fund’s net expense ratio is 0.35% and dividend yield is 0.39%. RTH has managed to attract $216.9 million in AUM till Aug. 31, 2015. PowerShares Dynamic Retail (NYSEARCA: PMR ): PowerShares Dynamic Retail, launched in Oct. 2005, follows the Dynamic Retail Intellidex Index and is made up of 30 stocks that are primarily engaged in operating general merchandise stores such as department stores, discount stores, warehouse clubs and superstores. The fund’s top holdings are O’Reilly Automotive Inc. (NASDAQ: ORLY ), The Home Depot Inc. ( HD ) and CVS Health Corp. (NYSE: CVS ), reflecting asset allocation of 5.66%, 5.34% and 5.24%, respectively, as of Sept. 1, 2015. The fund’s net expense ratio is 0.63%, while its dividend yield is 0.61%. PMR has managed to attract $24.7 million in AUM as of Aug. 31, 2015. Original Post

Duke Energy Is A Good Play In This Volatile Market

Duke Energy is an electric power holding company whose stock is a low-risk investment. Despite its poor return on equity, Duke Energy has strengths that will continue to make it a reliable dividend stock. The company has performed poorly during the most recent quarter, but this is expected to improve. Duke Energy Corporation (NYSE: DUK ) is the largest electric power holding company in the United States and it is expected to stand firm in the electric utilities industry. Recently, the company has underperformed the industry average in many respects, causing its stock price to decrease from $89 to $70 within the past half year. However, an improvement in both company performance and market performance is anticipated. Duke Energy’s faults may currently overshadow its strengths, so it is important to dig deeper into the company’s operations and history before making a decision to buy. Insider Monkey shows that Luminus Management held onto about 1.68 million shares of DUK after decreasing its position by 22%. Seminole Capital’s position in DUK was slightly higher with 630,534 shares, while Highbridge Capital added a new position of 350,000 shares in DUK. We follow these funds because as Insider Monkey shows ( read the details here ), they have a penchant for making good long picks, but their short picks usually eat into their overall returns. In total, Insider Monkey showed five funds adding new positions in the shares of DUK and ten exiting their stakes. We think those funds staying long will not regret their decisions. Duke Energy has struggled with a YTD return of -12.19% even though its shares outstanding have decreased by 2.8% in the same time. The company’s gross margin of 42% exceeds the industry average, but its revenue has decreased over the past year, and in turn, DUK’s EPS has hit a recent low of $3.46. These disappointing statistics are troubling to investors, but there is plenty of reason to still consider DUK as a worthy investment. While many have lost faith in Duke Energy as of the most recent quarter, the company remains poised to reaffirm its reputation and generate a steady source of income for its shareholders. As the largest electric holding company in the country, Duke Energy has shown that its strengths will continue to make it an attractive opportunity for investors. With $120 billion or more in operating assets and nearly 8 million customer relationships , the company can ensure consistent operating cash flows and dividends. Its dividend yield is currently 4.49%. Slumping performance metrics are expected to improve in the near future as well. According to TheStreet , the market expects EPS to increase by $1.00 in the next year. With this may come a decrease in P/E ratio all else equal, meaning DUK may be undervalued considering its forecasted EPS. Additionally, NASDAQ shows DUK will realize earnings growth of 2.4% on a year-end basis and 5.28% by the end of 2016. DUK is known for its relatively consistent cash flows, but an improvement in performance may also be around the corner. Perhaps most important to investors, DUK is a low-risk stock, even compared to most other dividend stocks with an ultra-low beta of 0.35 on a 5-year basis. Its generally consistent performance is why the dividend has increased every year and the yield now stands at 4.5%. DUK remains an attractive option for risk-averse investors in that they have generated predictable cash flows through out their 150+ year existence, and its stock’s fortunes are not entirely tied to the market and the company’s fortunes are not entirely tied to the economy. Duke Energy’s two biggest direct competitors, American Electric Power Company (NYSE: AEP ) and CenterPoint Energy (NYSE: CNP ), have underperformed even more so than DUK. According to Yahoo Finance , AEP and CNP trail DUK in quarterly revenue growth, gross margins, operating margins, and EPS. The electric utilities industry in aggregate, however, has outperformed DUK in terms of quarterly revenue growth, perhaps due to the emergence of utility-scale solar developers. Otherwise, DUK seems to be in a far better position than its two largest direct competitors and the electric utilities industry as a whole. Duke Energy is a low-risk stock that may not offer grand price appreciation, but the company can provide shareholders with a steady source of income through dividends. Its position in the electric utilities industry, including its enormous portfolio of operating assets, allows cash flows to remain relatively predictable. Despite the disappointment surrounding recent performance metrics, DUK is still a reliable investment opportunity and can provide some stability in an increasingly volatile market. Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. (More…) I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Safe 11% Annual Return With Cleco

Summary CNL offers an escape from market volatility. It also offers a double digit arbitrage yield. Here is why I own it and you might want to, too. Safety first! Deal Target Description Cleco (NYSE: CNL ) is a public utility holding company with subsidiaries that provide retail and wholesale electricity in Louisiana and Mississippi. It owns natural gas pipelines and interconnections at all generating facilities. Deal Terms On October 20, 2014, CNL announced a definitive deal to be bought by a group led by Macquarie Infrastructure and Real Assets/MIRA and British Columbia Investment Management Corporation/bcIMC, along with John Hancock Financial and others for $55.37 per share in cash. Deal Financing The deal is not conditioned upon the receipt of financing. The target is working with Goldman Sachs (NYSE: GS ) on the deal. Deal Conditions The deal is subject to normal closing conditions, including the approval of CNL shareholders, the approvals of the Louisiana Public Service Commission/LPSC and the Federal Energy Regulatory Commission/FERC, and HSR antitrust clearance. Deal Price There is currently a net spread of about $1.63 which works out to an 11% annual return if the deal closes around early December 2015 as anticipated. The deal price was at a 15% premium to CNL’s previous market price. Deal History Bruce Williamson, CNL’s CEO, is a money maker and a deal guy. So after he was named CEO in 2011, deal speculation started to build. His stock price appreciated by about 30% in his first thirty months in command. Then he began to look to sell. He has a generous package in a change of control. He gets three times his base and bonus in a deal. This was my favorite utility takeover candidate for 2014. By April 2014, Williamson definitively decided to sell. By June, he had hired GS to manage the sale process. Once the LPSC approved CNL’s formula rate plan, there was strong interest in the company from potential buyers. CNL holders approved the deal in February 2015. CFIUS cleared the deal in June 2015. FERC approved the deal in July. The FCC has approved the requisite license transfers. HSR approval was secured. The gating regulatory approval remains LPSC clearance which is expected in the fourth quarter. The hearings are scheduled for November 9-13, 2015. Deal Alternatives If the current deal falls through, alternative buyers for CNL would include American Electric Power (NYSE: AEP ), NextEra (NYSE: NEE ), CenterPoint (NYSE: CNP ), and Iberdrola SA ( OTCPK:IBDRY ). Merger Agreement Specific Performance: The parties agree that irreparable damage may occur and that the parties may not have any adequate remedy at law in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that, subject to Section 8.11(b) , in the event of any breach or threatened breach by any other party of any covenant or obligation contained in this Agreement, the non-breaching party shall be entitled to seek an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement, without the necessity of posting bonds or similar undertakings in connection therewith, this being in addition to any other remedy which may be available to such non-breaching party at law or in equity, including monetary damages. Material adverse effect on the Company means any change, effect, event, occurrence, development or state of facts (I) that is materially adverse to the business, financial condition, assets, liabilities, results of operations or properties of the Company and its subsidiaries, taken as a whole, but excluding any of the foregoing to the extent resulting from changes in international or national political or regulatory conditions generally (in each case, to the extent not disproportionately affecting the Company and its subsidiaries, taken as a whole, as compared to similarly situated persons), changes in the economy or the financial, commodities or securities markets in the United States or elsewhere in the world or the industry or industries in which the Company or any of its subsidiaries operates (in each case, to the extent not disproportionately affecting the Company and its subsidiaries, taken as a whole, as compared to similarly situated persons), changes or developments in national or regional wholesale or retail markets for electric power, capacity or fuel or related products (in each case, to the extent not disproportionately affecting the Company and its subsidiaries, taken as a whole, as compared to similarly situated persons), changes or developments in natural or regional electric transmission or distribution systems (in each case, to the extent not disproportionately affecting the Company and its subsidiaries, taken as a whole, as compared to similarly situated persons), any changes in law or GAAP or interpretations thereof (in each case, to the extent not disproportionately affecting the Company and its subsidiaries, taken as a whole, as compared to similarly situated persons), any weather-related or other force majeure event or outbreak or escalation of hostilities or acts of war or terrorism (in each case, to the extent not disproportionately affecting the Company and its subsidiaries, taken as a whole, as compared to similarly situated persons), the failure in and of itself of such person to meet any internal or published projections, forecasts or revenues predictions, provided that the exception in this clause (G) shall not prevent or otherwise affect a determination that any change, effect, event, occurrence, development or state of facts underlying such failure has resulted in, or contributed to, a material adverse effect on the Company, the negotiation, execution or announcement of, or compliance with, this Agreement in accordance with the terms hereof (including any adverse changes in the relationship of the Company or its subsidiaries with its employees, independent contractors, customers or suppliers resulting directly therefrom), provided that the exception in this clause (H) shall not apply to the representations and warranties contained in Section 3.01(d) to the extent that the negotiation, execution or announcement of, or compliance with, this Agreement would result in a breach or inaccuracy of the representations and warranties set forth in Section 3.01(d), or any taking of any action by the Company or its subsidiaries at the express written request of Parent, or (ii) that would prevent or materially delay the Company from performing its obligations under this Agreement or consummating the transactions contemplated hereby. Conclusion CNL offers a compelling long opportunity to capture a safe double digit annual return for the remainder of 2015. Disclosure: I am/we are long CNL. (More…) I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Additional disclosure: Chris DeMuth Jr is a portfolio manager at Rangeley Capital. Rangeley invests with a margin of safety by buying securities at deep discounts to their intrinsic value and unlocking that value through corporate events. In order to maximize total returns for our investors, we reserve the right to make investment decisions regarding any security without further notification except where such notification is required by law.