Scalper1 News
The All Cap Blend style ranks third out of the twelve fund styles as detailed in our Q1’16 Style Ratings for ETFs and Mutual Funds report. Last quarter , the All Cap Blend style ranked third as well. It gets our Neutral rating, which is based on aggregation of ratings of 708 ETFs and 706 mutual funds in the All Cap Blend style. See a recap of our Q4’15 Style Ratings here. Figures 1 and 2 show the five best and worst-rated ETFs and mutual funds in the style. Not all All Cap Blend style ETFs and mutual funds are created the same. The number of holdings varies widely (from 4 to 3774). This variation creates drastically different investment implications and, therefore, ratings. Investors seeking exposure to the All Cap Blend style 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 Six ETFs 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 Jensen Quality Value Fund (MUTF: JNVIX ) (MUTF: JNVSX ) is excluded from Figure 2 because its total net assets are below $100 million and do not meet our liquidity minimums. The Market Vectors Morningstar Wide Moat ETF (NYSEARCA: MOAT ) is the top-rated All Cap Blend ETF and the Smead Value Fund (MUTF: SVFYX ) is the top-rated All Cap Blend mutual fund. Both earn a Very Attractive rating. The ProShares Ultra Telecommunications (NYSEARCA: LTL ) is the worst-rated All Cap Blend ETF and the Rydex Russell 2000 2x Strategy A (MUTF: RYRUX ) is the worst-rated All Cap Blend mutual fund. Both earn a Very Dangerous rating. Aflac Inc. (NYSE: AFL ) is one of our favorite stocks held by SVFYX and earns a Very Attractive rating. Over the past decade, Aflac has grown its after-tax profit ( NOPAT ) by 9% compounded annually while improving its NOPAT margin from 9% in 2004 to 12% in the last twelve months. Aflac currently earns a top-quintile return on invested capital ( ROIC ) of 15%. Despite the consistent profit growth, AFL remains flat over the past year, which has made shares undervalued. At its current price of $59/share, Aflac has a price to economic book value ( PEBV ) ratio of 0.8. This ratio means that the market expects Aflac’s NOPAT to permanently decline by 20%. This expectation seems overly pessimistic given Aflac’s track record of profit growth. If Aflac can grow NOPAT by just 4% compounded annually for the next decade , the stock is worth $102/share today – a 72% upside. CubeSmart (NYSE: CUBE ) is one of our least favorite stocks held by UWM and earns a Dangerous rating. Despite GAAP net income that occasionally looks good, CubeSmart has never generated positive economic earnings since going public in 2004. The company’s ROIC has remained well below that of peers and is currently a bottom quintile 4%. Worst of all, the company’s negative free cash flow and -5% free cash flow yield could put pressure on its ability to continue paying its near 3% dividend yield. Despite the problems, CUBE remains overvalued. To justify its current price of $30/share, CubeSmart must grow NOPAT by 13% compounded annually for the next 22 years. Figures 3 and 4 show the rating landscape of all All Cap Blend ETFs and mutual funds. Figure 3: Separating the Best ETFs From the Worst Funds Click to enlarge Sources: New Constructs, LLC and company filings Figure 4: Separating the Best Mutual Funds From the Worst Funds Click to enlarge Sources: New Constructs, LLC and company filings D isclosure: David Trainer and Kyle Guske II receive no compensation to write about any specific stock, style, or theme. Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article. Scalper1 News
Scalper1 News