Tag Archives: worst

Best And Worst Q4’15: Financials ETFs, Mutual Funds And Key Holdings

Summary The Financials sector ranks sixth in Q4’15. Based on an aggregation of ratings of 43 ETFs and 220 mutual funds. IYF is our top-rated Financials sector ETF and DVFYX is our top-rated Financials sector mutual fund. The Financials sector ranks sixth out of the 10 sectors as detailed in our Q4’15 Sector Ratings for ETFs and Mutual Funds report. Last quarter , the Financial Sector ranked 9th. It gets our Neutral rating, which is based on aggregation of ratings of 43 ETFs and 220 mutual funds in the Financials sector. See a recap of our Q3’15 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 24 to 563). 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 The PowerShares KBW Property & Casualty Insurance Portfolio ETF (NYSEARCA: KBWP ) is excluded from Figure 1 because its total net assets 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 The Schwab Financial Services Fund (MUTF: SWFFX ) is excluded from Figure 2 because its total net assets (TNA) are below $100 million and do not meet our liquidity minimums. The iShares U.S. Financials ETF (NYSEARCA: IYF ) is the top-rated Financials ETF and the Davis Financial Fund (MUTF: DVFYX ) is the top-rated Financials mutual fund. IYF earns a Very Attractive rating and DVFYX earns an Attractive rating. The PowerShares KBW Premium Yield Equity REIT Portfolio ETF (NYSEARCA: KBWY ) is the worst-rated Financials ETF and the Rydex Real Estate Fund (MUTF: RYREX ) is the worst-rated Financials mutual fund. Both earn a Very Dangerous rating. Discover Financial Services (NYSE: DFS ) is one of our favorite stocks held by Financials ETFs and mutual funds and earns our Very Attractive rating. Since 2011, Discover has grown after-tax profit ( NOPAT ) by an impressive 34% compounded annually. Over the same time frame, the company has increased its return on invested capital ( ROIC ) to a top quintile 18% up from 10%. Despite improving profitability, DFS is down 16% year-to-date and now presents value investors a great buying opportunity. At its current price of $57/share, Discover has a price to economic book value ( PEBV ) ratio of 0.9. This ratio implies that the market expects Discover’s profits to permanently decline by 10%. If Discover can grow NOPAT by just 4% compounded annually over the next five years , the stock is worth $74/share today – a 30% upside. PHH Corporation (NYSE: PHH ) is one of our least favorite stocks held by Financials ETFs and mutual funds and is on October’s Most Dangerous Stocks list . PHH earns our Very Dangerous rating. PHH has been wildly inconsistent at generating positive GAAP net income, but one thing that has been consistent is PHH’s inability to generate economic earnings . Additionally, PHH earns a bottom quintile ROIC of -18% which is well below the 12% earned in 2013. It appears investors realized the trouble at PHH as shares crashed over 30% after poor Q2’15 earnings. However, what investors may not realize is how overvalued PHH remains. To justify its current price of $14/share, PHH must immediately achieve pre-tax margins of 2% (average of last five years, excluding the -44% in 2014) and grow revenues by 12% compounded annually for the next 12 years . 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 Thaxston McKee receive no compensation to write about any specific stock, sector or theme.

Best And Worst Q4’15: Consumer Discretionary ETFs, Mutual Funds And Key Holdings

Summary The Consumer Discretionary sector ranks fourth in Q4’15. Based on an aggregation of ratings of 17 ETFs and 20 mutual funds. RTH is our top-rated Consumer Discretionary ETF and FSRPX is our top-rated Consumer Discretionary mutual fund. The Consumer Discretionary sector ranks fourth out of the 10 sectors as detailed in our Q4’15 Sector Ratings for ETFs and Mutual Funds report. It gets our Neutral rating, which is based on aggregation of ratings of 17 ETFs and 20 mutual funds in the Consumer Discretionary sector. See a recap of our Q3’15 Sector Ratings here . Figures 1 and 2 show the five best and worst-rated ETFs and mutual funds in the sector. Not all Consumer Discretionary sector ETFs and mutual funds are created the same. The number of holdings varies widely (from 25 to 391). This variation creates drastically different investment implications and, therefore, ratings. Investors seeking exposure to the Consumer Discretionary sector should buy the one Attractive rated ETF in Figure 1. 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 The PowerShares Dynamic Retail Portfolio ETF (NYSEARCA: PMR ) and the U.S. Global Jets ETF (NYSEARCA: JETS ) are excluded from Figure 1 because their total net assets 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 The Rydex Retailing Fund ( RYRIX , RYRAX ) and the Rydex Leisure Fund ( RYLIX , RYLAX ) are excluded from Figure 2 because their total net assets are below $100 million and do not meet our liquidity minimums. The Market Vectors Retail ETF (NYSEARCA: RTH ) is the top-rated Consumer Discretionary ETF and the Fidelity Select Retailing Portfolio (MUTF: FSRPX ) is the top-rated Consumer Discretionary mutual fund. RTH earns our Attractive rating and FSRPX earns our Neutral rating. The SPDR Homebuilders ETF (NYSEARCA: XHB ) is the worst-rated Consumer Discretionary ETF and the Rydex Series Leisure Fund (MUTF: RYLSX ) is the worst-rated Consumer Discretionary mutual fund. XHB earns our Neutral rating and RYLSX earns our Dangerous rating. 450 stocks of the 3000+ we cover are classified as Consumer Discretionary stocks. Twenty-First Century Fox, Inc. (NASDAQ: FOXA ) is one of our favorite stocks held by Consumer Discretionary ETFs and mutual funds and earns our Very Attractive rating. Over the past five years, Twenty-First Century Fox has grown its after-tax operating profit ( NOPAT ) by 5% compounded annually. Twenty-First Century Fox’s return on invested capital ( ROIC ) has risen to 10% from 8% over this same timeframe. Though content creators will always be in demand in the television/movie industry, fears about the future of television viewership have left FOXA undervalued. At its current price of $29/share, FOXA has a price to economic book value ( PEBV ) ratio of 0.9. This ratio implies that Twenty-First Century Fox’s NOPAT will permanently decline by 10%. However, if Twenty-First Century Fox can grow NOPAT by just 5% compounded annually for the next 5 years , the stock today is worth $41/share, a 41% upside. KB Home (NYSE: KBH ) is one of our least favorite stocks held by Consumer Discretionary ETFs and mutual funds and was recently featured as a Danger Zone stock . It earns our Very Dangerous rating. KB Home’s problems are twofold; declining market share/profits and overpriced shares. Despite the housing market improving since 2011, KB Home’s economic earnings have only gotten worse over this time. However, because GAAP net income does not account for off-balance sheet liabilities and equity capital, KB Home has been able to report growing GAAP EPS. The disconnect between GAAP EPS and economic earnings has left KBH overvalued. To justify its current price of $14/share KB Home’s must grow NOPAT by 18% compounded annually for 13 years . This expectation is rather optimistic given KB Home’s inability to participate in the housing recovery over the past few years, which, as we detail in our Danger Zone report, will not likely continue for much longer. Figures 3 and 4 show the rating landscape of all Consumer Discretionary 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 Disclosure: David Trainer and Blaine Skaggs receive no compensation to write about any specific stock, sector or theme.

The Best Companies To Work For Provide The Best Returns

Summary I use employee review site Glassdoor to find the best companies to work for in America. Companies with high employee satisfaction seem to provide less volatile returns. The best company to work for in 2015 was Google. Do you work for a great company? Does it take care of your needs? Does it have a happy workforce overall? If so, are you tempted to invest in its share program? Maybe you should. In this article, I look at some of the best and worst-rated companies in America in order to see which companies give the best investment returns. Introduction When it comes to analyzing stocks, many investors focus on traditional measures of valuation such as company finances, financial ratios , or earnings projections. But one problem with this is that all investors are looking at the same things. I believe that there is sense in looking at some other, more qualitative, factors too. After all, there is more to a company that just a set of numbers on a piece of paper. Companies are made up of individual people and as English philosopher Alain De Botton said: To write up the goings-on in businesses only in economic terms, to sum up an entire company as being +1.20 or to compress the experiences of 8,000 people into a turnover of 375,776 seems as limited as reducing a novel of the complexity of Price and Prejudice to a ledger of the characters’ bank accounts. – The News, Alain De Botton . Knowing this, I believe it is important to not only analyze the financials of a business but also the manner in which the company treats its employees. And in my view , a company that treats its employees well is likely to perform more reliably and make better returns for investors. To analyze this concept, I decided to gather data from the employee review site Glassdoor . If you haven’t heard of Glassdoor, it’s basically a site that allows employees to leave anonymous reviews of employers. By storing up this data, Glassdoor has been able to rate companies across the globe based on levels of employee satisfaction. I therefore took the best and worst companies (as rated on Glassdoor) and analyzed which companies had performed the best over the subsequent few years. Best Companies To Work For In 2012 In 2012, Glassdoor released a list of the best 50 companies to work for in America and gave top place to Bain & Company. The highest publicly listed company was Facebook (NASDAQ: FB ), which was praised for its “attractive salary and friendly employees.” The following table shows 2012’s best 11 companies to work for in America and the subsequent share price of those companies, beginning 8/11/2012: (Note, I only included companies on the list that were publicly listed on one of the major US exchanges). As the table indicates, the best publicly listed company in 2012 according to Glassdoor ratings was Facebook. The stock went on to give a 77% one-year return and a 240% three-year return. Investing $1000 into each of the 11 best-rated companies would have made a 20.28% return on investment over one year and a 61.62% return over three years. Worst Companies To Work For In 2012 Turning now to the companies that were rated worst. This data was gathered from 24/7 Wall Street , originally from Glassdoor. The table below shows the worst rated 11 companies and their subsequent share performance: As shown in the table, the worst company to work for in America was Dish Networks (NASDAQ: DISH ). However, investing in DISH would have produced an excellent one-year return of 47.57% and a 3-year return of over 100%. Moreover, investing $1000 into each of the worst-rated companies would have returned 67.46% over one year and 110% over three years, sharply outperforming the return for the best-rated companies. RadioShack (NYSE: RSH ) It’s also worth noting though, that one company on this list (RadioShack) would have been a very bad choice for your portfolio. Users on Glassdoor criticized RadioShack for its “poor management, below average pay, and strenuous hours.” And if you’d invested in RadioShack alone, you would have lost 81% of your capital. In fact, the company was later forced into liquidation in February 2015. Best Companies To Work For In 2013 In 2013, the highest rated public company on Glassdoor was Facebook again. And following is the top 9 companies to work for in 2013 and their subsequent share performance from 7/20/2013: As is clear, investing in the best-rated companies would have been a good strategy in 2013. The top rated company, Facebook, produced a 166% return over the first year and a 276% return over two years. Investing $1000 into each stock would have returned 29.84% in the first year and 49.73% over two years. Worst Companies To Work For In 2013 In 2013, there were some new entries into the worst-rated companies to work for in America including businesses such as NCR Corp. (NYSE: NCR ) and Dollar General (NYSE: DG ). As you can see from the following table, the worst 9 companies to work at in 2013 produced poor returns over the next one and two-year time horizon: Investing $1000 into each of the worst-rated companies in August 2013 would have produced just a 0.75% return on investment in the first year and a 6.84% return over two years. (click to enlarge) So what can we make of these results? The goal of this piece was to try and find a link between employee satisfaction and share price performance, and on first glance, our findings are not completely compelling. In 2012, the worst places to work actually turned out to be the best stocks to invest in. This suggests that a contrarian type strategy, where investors look for businesses on the verge of turnaround could be worthwhile. However, this finding was reversed in 2013 where the worst-rated companies significantly underperformed. Less volatility One interesting insight to be culled from this study is the case of RadioShack. The stock ended up in bankruptcy in 2015 with its stock price going to zero. And the inclusion of the company in the worst-rated list in both 2012 and 2013 is telling. So, using this data on its own might not be particularly wise. But it does seem likely, that the best companies to work for give less volatile, more reliable, stock returns overall. In general, companies should be evaluated not just on their finances but based on the individuals that make up the business as a whole. Personally, I would rather invest in those companies with the most content employees. – As of 2015, the best company to work for in America was Google ( GOOG ). – Dates chosen to reflect release of the worst companies list in order to avoid look-ahead bias – Number of companies used chosen in accordance with the number available on the worst companies list. 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.