Author Archives: Scalper1

3 Healthcare Funds To Buy On Biotech Rebound

After being beaten down during the first three months of the year, biotech stocks made a remarkable rebound over the past few days. Though the iShares Nasdaq Biotechnology ETF (NASDAQ: IBB ) is still down 17% in the year-to-date frame, it posted an increase of 5.9% on Wednesday, witnessing the best percentage gain since March 12, 2009. In fact, the 7.9% rise in IBB over the past one-month period also propelled healthcare mutual funds, which gained 2.9% during the same period. Mutual funds from this category may be profitable for investors, who are looking to gain from this encouraging trend. Reasons for the Recent Surge Strong gains of 5% and 3.5% respectively in Pfizer Inc. (NYSE: PFE ) and Allergan plc (NYSE: AGN ) played an important role in lifting biotech stocks on Wednesday. The increase was prompted when the companies mutually called off their merger after tougher tax inversion rules were imposed by the U.S. Treasury Department and Internal Revenue Service. Leaving the deal behind, Allergan CEO Brent Saunders said that the company, “could act immediately if” it gets “the right opportunity with the right growth profile and the right strategic logic.” Meanwhile, it is now speculated that names of other UK-based firms like GlaxoSmithKline plc (NYSE: GSK ) are on Pfizer’s radar. Moreover, a surge of nearly 17% in shares of Edwards Lifesciences Corp. (NYSE: EW ) gave a boost to this sector. According to the company, data from the trial revealed that a procedure which uses its SAPIEN 3 valve shows better results than open heart procedures for certain patients. What’s Ahead? In spite of the recent surge, some of the concerns that affected the performance of biotech stocks at the start of 2016 may continue to impact the sector in the near future. Calls for reducing the prices of several drugs had played an important role in dragging down the sector. Hillary Clinton’s comments on the prohibitive pricing of certain medications drew much attention last year, weighing down on the sector’s stocks. Moreover, the U.S. Treasury Department’s adaptation of new rules to contain inversion-related deals may lower the volume of overseas merger and acquisition deals in the near term. Moreover, mixed earnings results during the fourth quarter affected the sector to quite an extent. Also, continued decline in the first-quarter earnings forecast is likely to hurt the sector’s performance in the days ahead. First-quarter earnings from the healthcare sector are anticipated to grow only 0.6% from the year-ago level compared with 9.3% growth witnessed in the previous quarter. Moreover, the year-on-year revenue growth rate is projected to decline to 8.8%, lower than the fourth quarter’s growth pace of 9.7%. However, an innovative product pipeline, product approvals and impressive performances by key products may act as growth catalysts and help the sector to overcome the above-mentioned concerns. Moreover, favorable valuation can make smaller companies within the sector attractive bets for acquisition. Separately, positive results from clinical trials also lift the sector’s stocks. They are difficult to predict, but come as welcome surprises for investors. 3 Healthcare Funds Picks Given this strong recovery, we have highlighted three healthcare mutual funds that either have a Zacks Mutual Fund Rank #1 (Strong Buy) or #2 (Buy). We expect these funds to outperform their peers in the future. Remember, the goal of the Zacks Mutual Fund Rank is to guide investors to identify potential winners and losers. Unlike most of the fund-rating systems, the Zacks Mutual Fund Rank is not just focused on past performance, but also on the likely future success of the fund. These funds have encouraging one-month and three-year annualized returns. The minimum initial investment is within $5000. Also, these funds have a low expense ratio and no sales load. Delaware Healthcare Fund I (MUTF: DLHIX ) invests a large chunk of its assets in equity securities of companies that are engaged in operations such as production, development and of products and services related to healthcare sector. DLHIX is a non-diversified fund. Along with a Zacks Mutual Fund Rank #1, DLHIX has one-month and three-year annualized returns of 5.9% and 16.8%, respectively. Annual expense ratio of 1.11% is lower than the category average of 1.35%. Fidelity Select Biotechnology Portfolio (MUTF: FBIOX ) seeks growth of capital. FBIOX invests the lion’s share of its assets in companies primarily involved in the research, development, manufacture, and distribution of various biotechnological products. The fund invests in securities of companies throughout the globe. Along with a Zacks Mutual Fund Rank #2, FBIOX has one-month and three-year annualized returns of 5.1% and 16.8%, respectively. Annual expense ratio of 0.72% is lower than the category average of 1.35%. Live Oak Health Sciences Fund (MUTF: LOGSX ) invests the majority of its assets in common stocks of healthcare companies or those related to medicine and life sciences. Though LOGSX primarily focuses on acquiring domestic securities, it may allocate a small portion of its assets in securities of foreign firms and ADRs. Along with a Zacks Mutual Fund Rank #2, LOGSX has one-month and three-year annualized returns of 3.9% and 15.9%, respectively. Annual expense ratio of 1.08% is lower than the category average of 1.35%. Link to the original post on Zacks.com

Greek Woes To Impact Brexit? ETFs In Focus

Greece is back in the headlines and the reasons are ominous. Apart from the refugee crisis that has engulfed the country, per a leaked conference call transcript published by WikiLeaks , another financial crisis is looming ahead for this embattled nation. In the document, International Monetary Fund (NYSE: IMF ) officials discussed that the only thing that will force Greece to adopt further stringent measures is a credit event. They further stated that if such an event occurs, it is unlikely that Greece will follow through on IMF’s budget target. Apart from that they also commented that such an event could lead Greece’s largest sovereign creditor, Germany, to restructure the company’s debts. As expected, the leaked document has sparked off political drama with the Prime Minister of Greece, Alexis Tsipras, questioning the good faith of the IMF officials. Tsipras also cited this as a plan to extend bailout negotiations in July, when Greece is scheduled to make huge debt repayments. In response, the IMF Managing Director Christine Lagarde stated that the Fund is still far from an agreement that would allow additional loans to Greece. Greece’s financial condition has time and again come to the limelight. Last year, Greece was on the brink of a default only to be saved by a multi-billion-dollar bailout by the EU and IMF. This allowed the country to avoid bankruptcy and stay in the Euro zone. Some analysts believe that if Greece doesn’t agree to reforms suggested by its creditors in the third bailout, Grexit could also be on the cards (read: Grexit or Not, Buy These 3 European ETFs ). The latest twist to the Greece story has come from Ewald Nowotny, a member of the European Central Bank’s Governing Council and head of Austria’s central bank. Nowotny commented in an interview that “IMF is economically speaking no longer necessary for a stabilization of Greece. This is a problem that the Europeans could solve themselves.” Impact on Brexit Greece troubles could cast a shadow on Britain. Britain will be voting on June 23 on the question “Should the United Kingdom remain a member of the European Union or leave the European Union?” This will be one of the biggest strategic decisions in decades (read: British ETFs in Focus on Brexit Talks ). There has been a steady rise in Eurosceptics in the UK over the past decade pressing for a referendum largely because of Europe’s migration crisis and continued Euro zone travails. Although chances of Brexit were slim a couple of years back, the perpetual problems in the EU have over time narrowed the polls. Fresh woes in Greece could eventually increase the chances of Brexit. Whether Greece will overcome its financial troubles and UK will ultimately choose Brexit or select to remain in the EU are questions yet to be answered. But polls, political propaganda and speculations will continue to stimulate uncertainty in the short term. In this scenario, we highlight a Greek ETF and three ETFs that are primarily exposed to British equities, which are likely to be on investors’ radar in the coming days. Global X MSCI Greece ETF (NYSEARCA: GREK ) The Greece ETF lost about 9.7% so far this year. The fund tracks the MSCI All Greece Select 25/50 Index and is home to a small basket of 32 companies. The fund trades in average daily volumes of around 427,000 shares. It is heavily concentrated in the top two firms holding nearly one fourth of total assets. Financials takes the top spot in terms of sector holdings, followed by consumer cyclical, energy and telecom. The product has AUM of $234.2 million and charges 63 bps in fees per year from investors. It has a Zacks ETF Rank #3 (Hold) with a High risk outlook. iShares MSCI United Kingdom ETF (NYSEARCA: EWU ) This product tracks the MSCI United Kingdom Index. In total, it holds 113 securities with none of the firms holding more than 5.3% of weight. EWU is popular and actively traded with AUM of $2 billion and average daily volume of almost 3.6 million shares. From a sector look, financials takes the top spot at 20.5% while consumer staples, energy, consumer discretionary, and health care round off the top five. The ETF charges 47 bps in annual fees. It has a Zacks ETF Rank #3 with a Medium risk outlook. The fund is down 5.4% in the year-to-date period. First Trust United Kingdom AlphaDEX ETF (NASDAQ: FKU ) This fund provides exposure to 75 firms by tracking the NASDAQ AlphaDEX United Kingdom Index. The fund has amassed $154.3 million in its asset base while it has an average daily volume of more than 34,000 shares. None of the firms accounts for more than 2.5% of total assets. Sector-wise, financials takes the top spot at about 31.5% share while consumer discretionary, industrials and information technology also have double-digit allocation. FKU charges a fee of 80 bps annually and has a Zacks ETF Rank #3 with a Medium risk outlook. The fund has lost 8.5% since the beginning of the year. iShares MSCI United Kingdom Small-Cap Index ETF (BATS: EWUS ) With AUM of $13.2 million, this product tracks the MSCI United Kingdom Small Cap Index. In total, it has a diversified portfolio of 238 securities with none of the components holding more than 2.2% weight. From a sector look, financials takes the top spot at 23.1% while consumer discretionary, industrials, information technology and materials round off the top five. The ETF has an expense ratio of 0.59% and trades in light volume of around 2,500 shares a day. The fund lost 6.9% so far this year (as of April 5, 2016) and has a Zacks ETF Rank #4 (Sell) with a Medium risk outlook. Link to the original post on Zacks.com

Ciena Gets Buy Rating Affirmation After Alliance Gets A Buyer

Competing in the shadow of Cisco Systems ( CSCO ) can be a tough place for Ciena ( CIEN ), the specialty fiber optics developer for telecom and cable service providers: Perform inadequately and you’re dust. Perform well and get picked off. In fact, perform so-so and get picked off, like Alliance Fiber Optic Products ( AFOP ) getting bought out by Corning ( GLW ) in a $305 million deal disclosed Thursday. “Ciena is quick to recognize its financial performance has fallen short of investor hopes, and its own,” said Nomura analyst Jeffrey Kvaal in a research note Friday, after spending time with Ciena Chief Technology Officer Steve Alexander and investor relations executive Gregg Lampf. Ciena is “taking steps to improve financial performance,” Kvaal said. “Ciena has suffered from high investor expectations ( Verizon ( VZ ) metro timing), macro factors (foreign exchange, mergers), and its own execution. To address these issues, Ciena has cleaned up its execution, widened the guidance range and added conservatism to its European guidance. “We would have preferred the guidance conservatism to apply more broadly. We believe many investors will only consider the stock following several quarters of outperformance, despite Ciena’s steady annual progress.” With such ambivalence, Kvaal reaffirmed Nomura’s buy rating and 24 price target on Ciena stock, which was up 2.5%, above 18, in afternoon trading in the stock market today . That’s still 32% below a nearly 16-month high of 26.50 touched last July. Shares fell below their 50-day moving average this week. Alliance Fiber Optic stock was up 19% Friday afternoon, at a six-month high near 18.50. That’s the price Corning agreed to pay for Alliance, an agreement  disclosed after Thursday’s market close. Corning was down a fraction Friday afternoon, near 20.50, near a nine-month high at 21.07 reached March 30. Shares of networking king Cisco were up a fraction, near 28. Alliance and Corning both earn middling 63 IBD Composite Ratings, while Ciena has an 81 CR. Composite Ratings rank companies by major metrics such as sales and earnings growth over the past 12 months. “Beneath the headlines,” Nomura’s Kvaal said, Ciena offers “a solid growth story with rising margins.” Kvaal notes that Ciena works in the crosstown and long-haul markets beyond 50 miles, not inside the data center or campus markets. “It thus does not see the intra-data-center strength the component vendors are seeing and is not affected by Microsoft ’s ( MFST ) Colorz launch (announced in March). ” For Ciena’s fiscal Q1, ended Jan. 31, the company earned 18 cents per share minus items, up 50% from the year-earlier quarter, beating analysts’ 14-cent estimate. Revenue rose 8% to $573 million but missed analysts’ $576 million expectation. For Q2, analysts polled by Thomson Reuters expect EPS ex items to fall 23% to 27 cents, on revenue up 1.5% to $631 million.