Author Archives: Scalper1

U.S. Hires More Than Expected In Feb.: ETFs And Stocks To Buy

The U.S. labor market continued its strength with solid hiring in February, easily dodging the global slowdown and a tumultuous stock market. The economy added 242,000 jobs in February, much above the market expectation of 190,000. The majority of the additions were seen in healthcare, retail, bars and restaurants, and construction that more than offset the decline in the mining sector. Unemployment remained unchanged at an eight-year low of 4.9% while job gains for December and January were revised upward by a combined 30,000. However, average hourly wages unexpectedly dipped 0.1% after a strong 0.5% increase in January. This reflects the first monthly drop since December 2014 and lowered the year-over-year wage increase to 2.2% from 2.5% for January. The robust data eased fears of a recession in the U.S. and infused further signs of confidence into the economy. Investors’ sentiment thus turned toward risk-on trade once again. While a solid hiring number is strong enough to support the Fed’s gradual interest rates hike this year, tepid wage growth remains a matter of concern. Market Impact The news extended the U.S. stock market’s three-week winning streak seen this year. In particular, the Dow Jones Industrial Average climbed to over 17,000 for the first time since January 5 while the S&P 500 surpassed 2,000 during the trading session but closed at a lower level. Yields on two-year and 10-year Treasury bonds soared to one-month high levels but fell at the close. On the other hand, U.S. dollar remained volatile given that the solid pace of hiring was tarnished by a drop in average hourly wages. Given this, we have highlighted three ETFs and stocks that will be the direct beneficiaries of job gains and see smooth trading in the days ahead. ETFs to Buy PowerShares DB USD Bull ETF (NYSEARCA: UUP ) A healing job market and the resultant improving economy will pull in more capital into the country and lead to appreciation of the U.S. dollar. UUP is the prime beneficiary of the rising dollar as it offers exposure against a basket of six world currencies – euro, Japanese yen, British pound, Canadian dollar, Swedish krona and Swiss franc. This is done by tracking the Deutsche Bank Long US Dollar Index Futures Index Excess Return plus the interest income from the fund’s holdings of the U.S. Treasury securities. In terms of holdings, UUP allocates nearly 57.6% in euro and 25.5% collectively in the Japanese yen and British pound. The fund has so far managed an asset base of $830.6 million while sees an average daily volume of around 1.6 million shares. It charges 80 bps in total fees and expenses, and lost 0.3% on the day following the jobs report. The fund has a Zacks ETF Rank of 2 or “Buy” rating with a Medium risk outlook. SPDR Homebuilders ETF (NYSEARCA: XHB ) Solid labor market fundamentals along with affordable mortgage rates will continue to fuel growth in a recovering homebuilding sector, creating a buying opportunity in homebuilders and housing-related stocks. In addition, slower and gradual rate hikes will not impede the growth prospect of the sector, at least in the short term. The most popular choice in the homebuilding space, XHB, follows the S&P Homebuilders Select Industry Index. In total, the fund holds about 37 securities in its basket with none accounting for more than 5.21% share. The product focuses on mid-cap securities with 67% share, followed by 24% in small caps. The fund has amassed about $1.5 billion in its asset base and trades in heavy volume of more than 3.7 million shares. Expense ratio comes in at 0.35%. XHB added 0.2% on the day and has a Zacks ETF Rank of 2 with a High risk outlook. SPDR S&P Retail ETF (NYSEARCA: XRT ) Retail will also benefit from accelerating job growth though soft wage growth points to reduced spending power. XRT tracks the S&P Retail Select Industry Index, holding 100 securities in its basket. It is widely spread across each component as none of these holds more than 1.78% of total assets. Small-cap stocks dominate about three-fifths of the portfolio while the rest have been split between the other two market cap levels. XRT is the most popular and actively-traded ETF in the retail space with an AUM of about $617.2 million and average daily volume of around 4.4 million shares. It charges 35 bps in annual fees and gained 0.5% on the day. The product has a Zacks ETF Rank of 1 or “Strong Buy” rating with a Medium risk outlook. Stocks to Buy Though several sectors will benefit from healthy hiring, the direct beneficiary is the staffing industry. The industry bodes well at least for the near term given its superb Zacks Industry Rank (in the top 11%) at the time of writing. Investors seeking to ride out the optimism could look at a few top-ranked stocks handpicked by us using our Zacks Stock Screener . These stocks have a Zacks Rank #1 (Strong Buy) or #2 (Buy), a Growth or Value Style Score of B or better, and an above-average industry earnings growth of 13.7%. Cross Country Healthcare, Inc. (NASDAQ: CCRN ) Based in Boca Raton, Florida, Cross Country is a leading healthcare staffing services’ company which primarily focuses on providing nurse and allied, and physician staffing services and workforce solutions. The stock is expected to deliver year-over-year earnings growth of 26.9% in fiscal 2016. It shed 1.2% in Friday’s trading session and currently has a Zacks Rank #2 with a Growth Style Score of “A”. TrueBlue, Inc. (NYSE: TBI ) Based in Tacoma, Washington, TrueBlue is a leading provider of staffing, recruitment process outsourcing, and managed services in the United States, Canada and Puerto Rico. The company’s earnings are expected to growth 48.4% year over year in fiscal 2016. TBI gained 0.7% on the day and has a Zacks Rank #1 with a Value Style Score of “B”. Insperity, Inc. (NYSE: NSP ) Based in Kingwood, Texas, Insperity provides an array of human resources and business solutions to enhance the performance of small- and medium-sized businesses in the United States. The company has an incredible earnings growth projection of 53.8% for fiscal 2016. The stock was down 0.2% in Friday’s session and has a Zacks Rank #1 with Growth and Value Style Scores of “A” each. Original post

JPMorgan Chase, Wells Fargo Trail These Foreign Bank Stocks In 2016

Are there any signs that emerging market economies are less sick now? One clue may be found in the positive stock market action seen in certain overseas banks. IBD ranks 197 industry groups every day in terms of six-month relative price performance (see the entire table in Monday’s paper on Page B15). Today, few finance-related groups rank in the top 40, but the foreign banks group has cracked the top 30, coming in at No. 29 vs. 47th three weeks ago and vs. 90th six weeks ago. Helping drive this progress are six stocks with an IBD Composite Rating of 85 or higher; five of these six are at 95 or better. Four are based in South America: Peru’s Credicorp ( BAP ) and three Argentine lenders, BBVA Banco Frances ( BFR ),  Banco Macro ( BMA ) and  Galicia ( GGAL ), which has gotten frequent coverage in IBD’s Global Leaders column lately. Rounding out the six are India’s  HDFC Bank ( HDB ) and Brazil’s Banco Santander ( BSBR ). Meanwhile, major U.S. lenders are struggling in the stock market. JPMorgan Chase ( JPM ) is down nearly 10% since Jan. 1, and  Wells Fargo ( WFC ) is down 8%. A bet on banks is by most accounts a wager on the overall health of an economy. That seems to be the case in Peru. In January, the country’s Finance Minister Alonso Segura told Bloomberg News in Davos that he expects economic growth to rev up to 4% this year after likely expanding 2.9% to 3% in 2015. Amid these positive numbers, the country’s central bank on Feb. 11 decided to raise interest rates. It hiked the reference rate by 25 basis points to 4.25%, marking the fourth raise in six months. Yet Angela Bouzanis, senior economist at FocusEconomics, noted that Peru’s central bank sees “GDP growth performing close to its potential in 2016.” Reflecting that view, the economic analysis firm’s “LatinFocus Consensus Forecast” sees the reference rate at 4.36% by the end of the year. A steady rise in interest rates is generally good news for large commercial banks, allowing them to boost net interest margins without killing off growth in loans. Credicorp conducts commercial and consumer lending through offices spread across not only Peru, but also Bolivia and Panama. Insurance, pension fund administration and investment banking also make up a portion of the $4.8 billion in revenue recorded in 2015. Since 2007, the bank’s earnings per share have risen every year except in 2013 and have also nearly tripled over that span (from $4.40 in 2007 to $12.03 in 2015). Wall Street sees 2016 profit up 2%. The stock sports a 95 Composite Rating, buttressed by strong revenue growth in five of the past six years, a 20% return on equity last year, and net interest margin of 5.7% in 2014. Shares crossed back above their 200-day moving average, a sign of renewed demand. Now just 19% below its 52-week peak of 157.89, the stock has the potential to form a base and break out. BBVA Banco Frances and Bancro Macro are both up for the year amid optimism that new Argentine President Mauricio Macri will carry out meaningful pro-business reforms. However, the former is expected to see falling EPS in 2016 (-24%) and 2017 (-12%). The latter should see a 17% drop in 2016 EPS to $6.94, followed by a 19% rebound in 2017 to $8.24.