Author Archives: Scalper1

Income Hunters Left Salivating At Dominion Resources’ Future Growth Prospects

Summary On-track, long-term growth-oriented renewable energy generation projects will fuel revenues and earnings growth. Company’s timely and on-budget execution of ongoing projects will create secure and sustainable cash flow base. Strong growth opportunities will bode well for the stock valuation. Sale growth expectation of 5.13% for D is well above the industry median sales growth expectation. Utility stocks have remained a popular investment option for investors, as utilities usually have large exposure to regulated business operations. Additionally, the predictable cash flow base allows utilities to make healthy cash returns, and makes them attractive dividend stocks. Dominion Resources (NYSE: D ) is one of the largest utilities in the U.S., which serves a broader U.S. area with its wider portfolio of energy generation assets. Owing to the company’s on-track, growth-centric projects like regular expansion of renewable energy generation asset portfolio through acquisitions and construction projects, and steady growth of midstream business will drive its future financial growth. Moreover, D’s on time and on budget Cove Point Facility and Atlantic Coast Pipeline (ACP) project will support its long-term growth. The company’s dividend growth has also remained strong, as it generates strong and sustainable cash flows. Additionally, D’s strong balance sheet position supports its dividend growth plan and future growth ventures. The company’s policy of allocating a decent portion of its cash flows for funding growth plans has been helping it apply for constant rate hikes, thereby adding well towards D’s financial numbers. As per the company’s long-term growth plans, average annual capital spending over the next five years will be $3.2 billion , which signals at a bright outlook for the stock. Of all its targeted growth areas, renewables remain most attractive. Over the years, the company has developed itself as a leader in renewables space, with its wider portfolio of renewable energy generation portfolio. To keep its solar energy generation portfolio strong, D is still making solar energy generation deals; the company acquired an 80MW solar energy generation portfolio in VA, which is expected to start construction by the end of 2015, whereas operation of the project will begin in fall 2016. Therefore, this acquisition will help D achieve its target of having established total 425MW of solar energy generation capacity set-up by the end of 2015. Additionally, plans to build a 400MW solar plant in Virginia has been announced, which is expected to begin operations in the next five years. Given the fact that the company will be able to recover the cost of these ongoing hefty solar energy generation-based projects by rate case increases, I think D will witness a boost in its future sales and earnings growth. Moreover, the construction of the company’s Cove Point facility is on track. By the end of 3Q’15, the Cove Point Terminal facility was 47% complete, and remains on time and on budget. After its completion by the end of 2017, the Cove Point Terminal will expand the company’s operations; D will be able to export 5.75 million metric tons of LNG, at its full capacity, every year after its completion in 2017. Furthermore, the company’s another important project, ACP, which is expected to come in operation in 2018, is well on track thus far. Additionally, there are 13 ongoing projects worth $1.2 billion, which will move more than 2 billion cubic feet per day for customers by the end of 2018. Given their ability to expand D’s operations; I believe these 13 ongoing projects combined with Cove Point and ACP projects will aid the company in meeting its long-term earnings growth target and will augur well to improve its profit margins. Furthermore, the company’s investments for the expansion of its Midstream business are on track to supplement its long-term earnings growth plan. Lately, D’s Midstream business acquired a 25.9% stake in the Iroquois pipeline, in order to issue 8.6 million limited partnership units to New Jersey Resources and National Grid. Also, the company’s board has authorized $50 million investment over a period of the next 12 months to buy LP units of Dominion Midstream Partners in open markets. I believe D’s sizeable investments in Midstream business will unlock a substantial return on the entering service. D’s operations have been providing a stable source of cash flows to help it fund its hefty dividend payment plan. The company offers a healthy yield of 3.85% . Given the strong strategic growth prospects of its long-term energy generation projects, well-headed for witnessing earnings and profit margin growth, I believe D’s dividend growth outlook is pretty impressive. Additionally, the expected continuation in the company’s balance sheet strength, shown in the graph below, supports my view about its ability to meet dividend commitments in the longer run without any stress of deterioration in the balance sheet position. And I think D’s management’s targeted dividend growth rate of 8%, from 2015 to 2020, looks highly achievable. Source: 4-traders.com Summation D’s on-track, long-term growth-oriented renewable energy generation projects are rightly headed to fueling its revenues and earnings growth, and to boost its free cash flows in the years ahead. The company’s timely and on-budget execution of ongoing projects like ACP and Cove Point indicate that its efforts to create a secure and sustainable cash flow base will positively affect its stock price by enabling it to meet its dividend commitments in the longer run. Also, strong growth opportunities will bode well for the stock valuation. D is currently trading at a higher forward PE ratio of 17.46x , in contrast to its peers’ forward P/Es (American Electric Power Inc. (NYSE: AEP ) has a forward P/E of 15.04x and Exelon (NYSE: EXC ) has a forward P/E of 10.83x ). D’s higher forward P/E is justified I think, because it has a higher future growth potential than its peers. D’s earnings in the future are expected to grow at an average annual rate of 6.23% . Moreover, the sale growth expectation of 5.13% for D is also well above the industry median sales growth expectation of 1.04% . Therefore, I think D stays a good investment prospect for income hunting investors.

5 Market-Beating Broad International ETFs Of 2015

This has been a pretty rough year for the global stock market. Several China-driven offhand events causing global market rout in mid-year, growth worries in global superpowers like the Eurozone, Japan and Canada, Greek debt deal drama, the vicious cycle of oil price declines, commodity market upheaval, and finally the Fed rate hike in almost a decade kept the global markets edgy throughout the year. The impact of these events was harsh on the bourses. SPDR S&P 500 ETF (NYSEARCA: SPY ) has lost about 1% so far this year (as of December 22, 2015), Vanguard FTSE Europe ETF (NYSEARCA: VGK ) has shed about 5.1% during the same timeframe, iShares MSCI Emerging Markets (NYSEARCA: EEM ) has retreated as much as 16.9%, iShares MSCI All Country Asia ex Japan (NASDAQ: AAXJ ) has plummeted 11.5% and all-world ETF iShares MSCI ACWI (NASDAQ: ACWI ) has gone down over 4.7%. The price performance of these region-based ETFs was enough to tag 2015 as a down year for global stocks, on an average. In fact, as China devalued its currency yuan in a historic move in mid-August, there was a bloodbath in global equities. The U.S. and Asian stocks experienced a three -year low monthly performance in August. Europe saw the most horrible month since the 2011 debt debacle. Commodities crumbled to multi-year lows on demand issues and hit hard all commodity-rich nations. Still, the global market recouped some of its losses as the ECB extended its QE policy, BoJ made pro-growth changes in its accommodative policies and the Fed enacted a lift-off citing steady U.S. economic growth in the latter part of the year. These may give enough reasons to investors to look for international ETF survivors this year. For them, we have highlighted five ETFs that have gained at least 6% so far this year (as of December 22, 2015) defying the broad-based gloom. WisdomTree Intl Hedged Quality Div Growth ETF (NYSEARCA: IHDG ) While the Fed had been preparing for policy tightening the entire year and finally hiked rates, other developed economies of the world and a few emerging economies are going the opposite direction. Due to growth issues, global superpowers like Europe, Japan and Australia are presently pursuing easy money policies. As a result, stocks of these developed nations got an extra boost. Also, a currency-hedged approach was essential to set off the effect of a surging greenback. IHDG serves both aspects. Moreover, IHDG takes care of investors’ income too as the fund selects dividend-paying companies with growth features in the developed world ex U.S. and Canada. This Zacks ETF Rank #3 (Hold) ETF was up over 10% so far in 2015. SPDR SP International Consumer Staples Sector ETF (NYSEARCA: IPS ) This international consumer staples ETF has double-digit exposure in U.K., Japan and Switzerland. Other nations like France, Netherlands, Belgium also get weight in the range of 6-8%. Nestle ( OTCPK:NSRGY ) (13.58%) takes the top spot in the fund followed by Anheuser-Busch InBev (NYSE: BUD ) (5.9%) and British American Tobacco (NYSEMKT: BTI ) (5.85%). Ongoing easy policy measures and non-cyclical nature of the consumer staples sector helped the fund to endure global market shocks. IPS is up 8.8% so far this year (as of December 22, 2015). iShares MSCI EAFE Small-Cap ETF (NYSEARCA: SCZ ) This ETF targets the small cap segment of the developed market space. Small caps are considered the measure of domestic economy. These are less ruffled by global economic concerns and most importantly the surging U.S. dollar. Since cheap money available in Japan, Germany and U.K. resulted in improving consumer sentiment in those regions, this small-cap ETF emerged as a winner. SCZ is up over 7.7%. SPDR S&P International Health Care Sector ETF (NYSEARCA: IRY ) Health care is another recession-proof sector and thus remained less ruffled in the down year of 2015. The fund puts double-digit weight in Switzerland (25.44%), Japan (17.15%) and U.K. (14.30%) and Germany (10.23%). The fund is heavy on pharmaceuticals sector (74.27%) followed by Health Care Equipment & Supplies (9.45%). IRY has advanced over 7% so far this year (as of December 22, 2015). iShares MSCI EAFE Minimum Volatility (NYSEARCA: EFAV ) This fund targets the low volatility stocks of the developed equity markets, excluding the U.S. and Canada. In terms of country profile, Japan and United Kingdom take the top two spots at 28.5% and 24.2%, respectively, followed by Switzerland (10.43%). It is slightly tilted toward financials at 21.7%, closely followed by consumer staples (16.8%), health care (15.9%), industrials (11.1%) and consumer discretionary (10.6%). The fund is up 6.5% so far this year (as of December 22, 2015). The fund has a Zacks ETF Rank #3 (Hold) with a low risk outlook. Original Post

Playing The Santa Rally With ETFs And Stocks

After a spectacular six-year bull run, the U.S. stock market got caught up in a nasty web of never-ending worries. It all started with the collapse in oil prices. Then came the instability in Greece, global growth concerns and the uncertainty of the Fed rate hike. Persistent weakness in China and the slump in commodities aggravated the woes. As a result, the S&P 500 and Dow Jones indices are trading in the red in the year-to-date frame, losing 1% and 2.3%, respectively. But the trend might reverse heading into the winter holidays if Santa pays a call. A Santa rally has gained coinage in the investment world, referring to the increase in stock prices in the final week of the calendar year (i.e. between Christmas and New Year’s Day) and extending into the first two days of the New Year. According to the 2016 Stock Trader’s Almanac , the Santa Claus rally has yielded average positive returns of 1.4% in 34 of the past 45 holiday seasons since 1969. Other research also confirmed this trend. If we dig into historical data dating back to 1896, the Dow Jones Industrial Average has a track record of gaining an average of 1.7% during this seven-day trading period. And this has happened 77% of the time. Santa on The Way! The Fed has raised interest rates for the first time in nearly a decade with a dovish view for future hikes. It is a clear signal that the U.S. economy has largely emerged from the impact of a financial crisis supported by solid labor market fundamentals and a gradually increasing inflation rate. This in turn has lifted consumer confidence, providing a boost to the stock market, setting the tune for a Santa rally. This is especially true as the stock market gained momentum at the start of this week with both the S&P 500 and Dow Jones gaining 1.7% each. Further, year-end seasonal factors such as holiday optimism, tax-related affairs, people investing their Christmas bonuses, short sellers going on vacation, and the “January effect” added to the strength. As such, Santa seems to be just round the corner but the rout in commodities and the resultant stress in the junk bond space could block its way. Nevertheless, the oil price has rebounded slightly from their 11-year low, bolstering hopes of a bullish market. As hopes start building for a Santa rally, we have highlighted a trio of ETFs and stocks that could provide investors with happy returns in the coming days and weeks. ETFs to Buy While there are a number of ETFs that are expected to benefit from the Santa Claus rally, we have highlighted three growth funds that have a higher potential to move upward when the markets go up. These products have been leading the broad market by a wide margin and have a top Zacks ETF Rank of 1 or ‘Strong Buy’. Further, these provide a broad play across various sectors rather than specific ones. PowerShares Dynamic Large Cap Growth Portfolio (NYSEARCA: PWB ) This ETF provides a pure exposure to the large cap growth segment of the broad U.S. equity market by tracking the Dynamic Large Cap Growth Intellidex Index. The fund is widely diversified across 50 securities with each holding less than 3.5% of total assets. From a sector look, consumer discretionary takes the top spot at 32% while information technology, healthcare and consumer staples round off the next three spots. The product has accumulated around $415.3 million in its asset base and charges 58 bps in fees per year. It gained 6.4% so far this year. iShares Russell Top 200 Growth ETF (NYSEARCA: IWY ) This fund offers exposure to 139 large U.S. companies whose earnings are expected to grow at an above-average rate relative to the market. It is concentrated in the technology sector and the top firm – Apple (NASDAQ: AAPL ) – occupies 8.2% of the basket while the other firms hold no more than 3.4% share. Consumer discretionary, healthcare and consumer staples also receive double-digit allocation each. The fund has amassed $559.3 million in AUM and has an expense ratio of 0.20%. IWY is up 5.6% in 2015. First Trust Large Cap Growth AlphaDEX Fund (NYSEARCA: FTC ) This fund provides a slightly active choice as it uses the AlphaDEX methodology to select the stock. The methodology seeks to narrow the large cap space to only the best positioned growth companies, eliminating the bottom ranked 25% of the stocks. This approach results in a basket of 177 stocks, which are widely spread across various securities with none holding more than 1.21% share. More than one-fourth of the portfolio is skewed toward consumer discretionary, followed by information technology (19.5%), healthcare (13.5%), consumer staples (13.0%) and industrials (12.8%). The product has $714.8 million in AUM and charges 63 bps in annual fees. It added 3.2% in the year-to-date time frame. Stocks to Buy For stocks, we have chosen three top picks using the Zacks Screener that fits our six criteria: a Zacks Rank #1, a Growth Style Score of ‘A’, Zacks Industry Rank within the top 15%, positive estimate revision for the current year, market cap of over 1 billion and year-to-date price performance in excess of the broad market returns. Here are the three chosen stocks. American Woodmark Corp. (NASDAQ: AMWD ) Based in Winchester, VA, American Woodmark is a major manufacturer and distributor of kitchen cabinets and vanities for the remodeling and home construction markets in the United States. The company has seen solid earnings estimate revisions of 8 cents for the current quarter over the past 30 days and delivered positive earnings surprises in the last four quarters, with an average beat of 35.40%. The stock has a solid Zacks Industry Rank in the top 5% and has doubled its returns in the year-to-date time frame. Integrated Device Technology Inc. (NASDAQ: IDTI ) Based in San Jose, CA, Integrated Device is engaged in designing, developing, manufacturing, and marketing a wide range of high-performance semiconductor products and modules for the communications, computing, and consumer industries worldwide. The company has seen earnings estimates rising by a penny for the current quarter over the past 30 days and delivered average positive earnings surprises of 10.04% in the last four quarters. Further, Integrated Device has an Industry Zacks Rank in the top 15% and gained over 37% this year. Leidos Holdings Inc. (NYSE: LDOS ) Based in Reston, VA, Leidos Holdings delivers solutions and services in the national security, health, and engineering markets in the United States and internationally. It has seen earnings estimate revision of 3 cents for the current quarter over the past 30 days and generated an average earnings surprise of 22.44% in the last four quarters. The stock is up 27.3% this year and has an Industry Zacks Rank in the top 15%. Bottom Line As the positive momentum starts to build in the market this week, Santa might definitely be on the way to give bountiful gifts to investors and set the tone for the New Year. Original Post