Category Archives: nasdaq

Best And Worst Q2’16: Utilities ETFs, Mutual Funds And Key Holdings

The Utilities sector ranks ninth out of the ten sectors as detailed in our Q2’16 Sector Ratings for ETFs and Mutual Funds report. Last quarter , the Utilities sector ranked last. It gets our Very Dangerous rating, which is based on aggregation of ratings of nine ETFs and 35 mutual funds in the Utilities sector as of April 20, 2016. See a recap of our Q1’16 Sector Ratings here . Figure 1 ranks from best to worst the eight Utilities ETFs that meet our liquidity standards and Figure 2 shows the five best and worst rated Utilities mutual funds. Not all Utilities sector ETFs and mutual funds are created the same. The number of holdings varies widely (from 19 to 253). This variation creates drastically different investment implications and, therefore, ratings. Investors should not buy any Utilities ETFs or mutual funds because none get an Attractive-or-better rating. If you must have exposure to this sector, you should buy a basket of Attractive-or-better rated stocks and avoid paying undeserved fund fees. Active management has a long history of not paying off. 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 Reaves Utilities ETF (NASDAQ: UTES ) 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 PowerShares DWA Utilities Momentum Portfolio (NYSEARCA: PUI ) s the top-rated Utilities ETF and Wells Fargo Utility & Telecommunications Fund (MUTF: EVUYX ) is the top-rated Utilities mutual fund. Both earn a Dangerous rating. PowerShares S&P SmallCap Utilities Portfolio (NASDAQ: PSCU ) is the worst rated Utilities ETF and Rydex Series Utilities Fund (MUTF: RYUTX ) is the worst rated Utilities mutual fund. Both earn a Very Dangerous rating. 76 stocks of the 3000+ we cover are classified as Utilities stocks, but due to style drift, Utilities ETFs and mutual funds hold 253 stocks. UGI Corporation (NYSE: UGI ) is one of our favorite stocks held by Utilities ETFs and mutual funds and earns an Attractive rating. UGI is the only Utilities stock that receives an Attractive-or-better rating out of the 76 Utilities stocks under coverage. Over the past decade, UGI has grown after-tax profit ( NOPAT ) by 7% compounded annually. The company’s return on invested capital ( ROIC ) is currently 8%, which is up from 4% earned in 2012. UGI is undervalued given the company’s consistent profit growth and increasing profitability. At its current price of $41/share, UGI has a price-to-economic book value ( PEBV ) ratio of 0.9. This ratio means that the market expects UGI’s NOPAT to permanently decline by 10%. If UGI can grow NOPAT by just 6% compounded annually for the next decade , the stock is worth $55/share today – a 34% upside. Southwest Gas Corp (NYSE: SWX ) is one of our least favorite stocks held by PSCU and earns a Dangerous rating. The company has failed to generate positive economic earnings in any year of our model, which dates back to 1998. In fact, over the past four years, economic earnings have declined from -$5 million in 2012 to -$39 million in 2015. Southwest Gas Corp earns a bottom-quintile ROIC of 4% and has consistently earned a bottom-quintile ROIC since 1998. Given the poor fundamentals, SWX is significantly overvalued. To justify its current price of $66/share, SWX must grow NOPAT by 8% compounded annually for the next 11 years . The expectations embedded into the current stock price offer little upside but rather large downside risk. Figures 3 and 4 show the rating landscape of all Utilities 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 Kyle Guske II receive no compensation to write about any specific stock, sector 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.

Hedge Funds Dump Apple, Buy Facebook In Q1

Hedge funds fled equities in the first quarter, with Apple ( AAPL ) and PepsiCo ( PEP ) the most-sold stocks, S&P Global Market Intelligence said in a report Wednesday . The top 10 hedge funds managed about $141 billion in equity holdings in Q1, down more than $18 billion from Q4 2015. The funds decreased the total number of stock positions held from 427 to 408, the fewest stock positions held since S&P Global Market Intelligence began tracking such data in 2014. It was the second consecutive quarter of equity sell-off by the large funds. Consumer discretionary and information technology stocks led the sell-off, with Apple ranked seeing the most selling for an individual stock last quarter. The major hedge funds sold $5.4 billion worth of Apple stock in Q1. Other top sells included PepsiCo ($1.8 billion), Amazon.com ( AMZN ) ($1.4 billion), Priceline ( PCLN ) ($1 billion) and Walgreen Boots Alliance ( WBA ) ($1 billion). The highest volume of buying among the top hedge funds occurred in Facebook ( FB ) stock, with a total of $2.3 billion in buys in the first quarter, S&P said. Other top buys included Broadcom ( AVGO ) ($1.5 billion), Alphabet ( GOOGL ) ($945 million), Eli Lilly ( LLY ) ($892 million) and Willis Towers Watson ( WLTW ) ($884 million). RELATED: As Growth Investors Flee Apple, Warren Buffett Sees Value Startup Bubble Bursting, Valuations Due For Reset, Analyst Says .

Salesforce.com Nabs Bigger Deals, As Billings Growth A Bright Spot

Salesforce.com ‘s ( CRM ) growth in billing, a key sales metric, was a bright spot in Q1 earnings, analysts say. Salesforce.com late Wednesday reported Q1 earnings and revenue that topped expectations, while also raising its full-year revenue guidance. The business software provider’s stock was up 4.5% to 81.35 in early trading in the stock market today , blowing past a 77.92 point point and nearly hitting a record high. IBD’s Take: How healthy is Salesforce.com stock and how does it stack up vs. rivals? Find out at IBD Stock Checkup Billings rose at nearly twice the rate of the consensus estimate of 16% growth in Q1. “Billings grew to $1.63 billion, or 31% year over year, which was better than consensus of $1.45 billion and accelerated from 28% growth in Q4,” Brendan Barnicle, a Pacific Crest analyst, said in a research report. San Francisco-based Salesforce.com garners mainly subscription revenue from on-demand software delivered via the Internet and over the cloud. The company continues to move up-market, making bigger deals with bigger companies, says Jefferies analyst John DiFucci. “We believe something has changed on the margin for Salesforce — that is, the willingness of large enterprises to engage on a more strategic level with SaaS (software-as-a-service) solutions,” DiFucci wrote in a research note. Salesforce.com, the leading provider of customer relationship software, said Q1 profit jumped 50% to 24 cents per share minus items. Revenue in the three months ended April 30 rose 27% to $1.92 billion, the company said. Analysts polled by Thomson Reuters had modeled 23 cents and $1.89 billion. In the current quarter, Salesforce.com forecast earnings ex items of 24 cents to 25 cents per share, up from 19 cents in the year-earlier quarter, and revenue of $2.005 billion to $2.015 billion, up 23%. Analysts had estimated 25 cents and $1.98 billion, respectively. Salesforce.com increased its full-year revenue guidance to $8.2 billion from $8.16 billion. “Following a very strong fourth quarter, where the company signed a nine-figure transaction and saw its volume of seven-figure deals increase more than 60%, the company continued its momentum of large deal activity in the quarter — closing another nine-figure transaction and again increasing the volume and size of its large transactions as compared with the year-ago period,” Bhavan Suri, a William Blair analyst, said in a report. “Not only did this lead to another strong billings beat, but it also further supplements Salesforce’s position as the cloud platform of choice.”