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A Year-End Review Of ROBO, The Robotics And Automation ETF
Summary The ETF’s percentage of large-cap holdings has declined by 9% since February 2014. Since February 2014, there has been an increase in riskier mid-cap, small-cap and micro-cap holdings within this ETF. Kuka AG and Krones AG are leading performers of the Robo Global Robotics and Automation Index ETF while Omron Corporation and Oceaneering International Inc. are leading laggards. The Robo Global Robotics and Automation Index ETF’s high expense ratio and increased exposure to riskier stocks makes the fund a risky investment. Just like Robin Roberts performs a year-end wrap-up of the year 2015, it is only appropriate that I perform a year-end analysis of the Robo-Stox Global Robotics And Automation Index ETF (NASDAQ: ROBO ) This exchange-traded fund was fortunate enough not to suffer the same fate as the now liquidated 3D Printing, Robotics and Technology Fund (MUTF: TDPIX ). As of the date of this article, the Robo Global Robotics and Automation Index ETF’s total YTD Performance was -4.73%. However, the funds has picked up momentum over the past three months with a gain of 10.54% over that span. Without further ado, it is time for me to perform an in-depth dissection of this fund. The Robo Global Robotics and Automation Index ETF has a high expense ratio of 0.95%. This is 0.30% higher than the expense ratio category average . The following chart illustrates the fund’s weight in terms of giant, large, mid, small and micro-cap stocks when I analyzed this fund in February 2014 . Size % of Portfolio Benchmark Category Average Giant 12.02 56.05 46.73 Large 17.80 21.14 13.74 Medium 40.85 17.44 25.91 Small 13.39 5.24 10.90 Micro 15.94 0.13 2.73 As you can see by the following chart, the percentage of large-cap holdings in the fund has declined by over 9% from nearly two years ago and is well below its category average. Meanwhile, you can see that there has been a percentage increase in the mid-cap, small cap and micro-cap stocks of this fund. These statistics are as of 12/23/2015. Size % of Portfolio Benchmark Category Average Giant 11.22 42.29 3.56 Large 8.79 31.26 28.17 Medium 44.89 19.80 52.11 Small 18.09 6.24 12.66 Micro 17.01 0.41 3.50 LEADERS OF ROBO GLOBAL ROBOTICS AND AUTOMATION INDEX ETF In terms of coming up with the top performers in the fund, I took into account both the portfolio weight and YTD Return of the holdings. KUKA AG ( OTCPK:KUKAF ) = KUKA AG is an automation firm that develops and gives sells robotic systems internationally under the KUKA brand. KUKA AG has the 8th best portfolio weight at 2.14%, yet had an YTD return of 37.10%. Currently, KUKA AG is trading at $87.74 and is coming off of a solid third quarter performance . KUKA AG’s garnered a 25% in orders received and a 34% increase in sales revenues. These increases included totals from the Swisslog division, which was not consolidated in the previous year. The firm’s robotics division increased by 20% in terms of orders received, yet its sales revenues declined by 7% for the quarter. According to its report, KUKA AG have benefited from increased car sales in its three biggest markets, Western Europe, China and the U.S. Car sales in Western Europe, China and The U.S grew by 8.7%, 5.5% and 5% respectively for the first nine months in 2015. KUKA expects to benefit from further growth in these markets. KRONES AG ( OTC:KRNNF ) – Krones AG is responsible for the planning, developing and manufacturing machinery and systems for the process technologies and intralogistics arena in Germany as well as worldwide. Krones AG has a 2.06% portfolio weight and has an YTD return of 34.35%. Krones is trading at $108.25. Its latest report revealed that Krones AG was right on target in terms of meeting its target objectives. Krones AG’s revenue and net orders has increased by 4.9% and 5.2% respectively. The firm’s EBIT, EBT and Net Income increased by 14.8%, 14.2% and 13.9% respectively. LAGGARDS OF ROBO GLOBAL ROBOTICS AND AUTOMATION INDEX ETF It would be easy for me to point the finger at the struggling 3-D Printing stalwarts of 3D Systems Corp (NYSE: DDD ) and Stratasys (NASDAQ: SSYS ). Both have YTD Returns of -69.29% and -69.12%. However, both holdings hold portfolio weights of less than 1%. Thus, both holdings do not hold enough significance to the fund at this point. However, Omron Corporation (OMR) has a hefty portfolio weight of 2.12% and has a negative YTD Return of -22.50%. In their latest half-year report, Omron Corporation’s revenue increased year-over-year by 2.2%. Yet, the company’s net income declined by -27.3% to $24.5 million dollars. Omron’s operating income was dragged down by a mix of increased SG&A and R&D and lower added value. Oceaneering International Inc. (NYSE: OII ) has a sizable portfolio weight of 1.74% and has a YTD return of -33.79%. Oceaneering International Inc. just hit a new one-year low on Dec 21st. This came on the heels of Oceaneering International Inc. being downgraded to a Strong Sell by Zacks. In the company’s latest report, Oceaneering International Inc’s reported a 31% decrease in net revenues and an 81% decline in net income. BOTTOM LINE: I still cannot give this ETF my full endorsement as an investment as it is still overly exposed to riskier stocks as shown by the chart comparisons above. In addition, Morningstar rates this fund zero stars and has an F rating by ETF.com. The fund’s high expense ratio of 0.95% is an even bigger turnoff. Editor’s Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.
3 High Momentum Stocks And ETFs For The Santa Rally
A consensus carried out from 1950 to 2013 has revealed that December has ended up offering positive returns in 49 years and negative returns in 16 years, with an average return of 1.59%, as per moneychimp.com , the best in a year. But U.S. stocks have defied the seasonal trend this time around. The first Fed rate hike in almost a decade and possibilities of four more hikes next year along with horribly low oil prices might make Christmas a little dull this year, curbing the natural progression of the end-of-season ascent, commonly known as the Santa Clause rally. What is Santa Rally? Santa Claus rally refers to the jump in stock prices in the week between Christmas and New Year’s Day. There are several reasons behind this surge including ‘tax considerations, happiness around Wall Street, people investing their Christmas bonuses and the fact that the pessimists are usually on vacation this week’ as per investopedia. In fact, some even believe that investors buy stocks during this period to cash in on another strong equity event, known as the January Effect, which takes place soon after. As per the 2016 Stock Trader’s Almanac, in the last 45 holiday seasons, the Santa Claus rally has delivered positive returns 34 times with the average cumulative return being 1.4%. If we go a little deeper, the consistency of this rally would be more visible. The Dow Jones Industrial Average has returned about 1.7% (on an average) since 1896. However, the Santa Claus rally failed to live up to investors’ expectation several times including in 1990, 1999, 2004, 2007, and 2014, per Business Insider . Will 2015 See a Santa Rally? With just three days to go for Christmas, there are hardly any indications of such a surge. Global stocks were at great health last week with the S&P 500 recording its ‘ best week since October 24, 2014’. But stocks lost their steam at the start of this week. All in all, the situation is shaky, but thanks to compelling valuation (after the latest sell-off), one can’t ignore the prospect of a Santa rally this year as well. Currently, the U.S. economy appears to be the lone star in a tottering global backdrop. This fact, along with compelling valuation brings about bright opportunities for some U.S.-based momentum stocks and ETFs in the coming days, especially in a market rebound. After all, no storm lasts forever. Thus, momentum investing might be an intriguing idea for those seeking higher returns in a short spell. Momentum investing looks to reflect profits from buying stocks, which are sizzling on the market. Below we highlight three momentum stocks and ETFs to watch out for in the coming trading sessions. Stock Picks For stocks, we have chosen top picks using the Zacks Screener that fits our three criteria: momentum score of ‘A’, stock Zacks Rank #1 (Strong Buy) and positive estimate revision for the current quarter. Here are the three recommended stocks. American Eagle Outfitters Inc. (NYSE: AEO ) Based in Pennsylvania, this retailer of apparel and accessories has delivered an average positive earnings surprise of 16.7% over the trailing four quarters. The consensus estimate for the current quarter has risen from 40 cents to 42 cents per share in the last 30 days as six analysts raised their forecast, while just one cut its estimate. Along with Momentum score of ‘A’, the stock also has a Growth and Value score of ‘A’. This Zacks Rank #1 stock is up 8.9% so far this year (as of December 21, 2015). B&G Foods Inc. (NYSE: BGS ) The company makes and markets packed and easy-to-store food and household products. Its products basket carries hot cereals, fruit spreads, canned meats and beans and many more. B&G has a Zacks Rank #1 and is up over 16.6% so far this year. The stock currently has a solid Zacks Industry Rank in the top 37%. The consensus estimate for the current quarter has risen from 42 cents to 44 cents per share . Caesars Entertainment Corporation (NASDAQ: CZR ) The Nevada-based company offers casino-entertainment and hospitality services in the U.S. and abroad. The stock currently has a Value score of ‘A’ and the solid Zacks Industry Rank in the top 15%. In the last 30 days, its projection of losses contracted from 27 cents to 14 cents. No analyst cut their estimate in the last 7, 30 and 60 days period, though there were positive revisions. Though this Zacks Rank #1 and high-momentum stock is down 50.9% so far this year, it added over 4.3% in the last one month. ETF Picks iShares MSCI USA Momentum Factor ETF (NYSEARCA: MTUM ) This ETF seeks to track the performance of large- and mid-cap U.S. stocks exhibiting relatively higher momentum characteristics. The fund has attracted about $1.1 billion is assets so far. With an expense ratio of just 15 basis points, this is one of the cheapest options in the high momentum ETFs space. The ETF is tilted toward the Consumer Discretionary and Information Technology sectors. Each of these takes over 25% of the basket. The next two spots are occupied by Consumer Staples and Health Care, each with double-digit weight. Amazon (NASDAQ: AMZN ) is currently the top holding of the fund, with Facebook (NASDAQ: FB ), Home Depot (NYSE: HD ), Visa (NYSE: V ) and Starbucks (NASDAQ: SBUX ) rounding out the top five. MTUM is up 7.2% so far this year but lost 1.3% in the last one month, though lesser than SPY (down over 3.5%). SPDR Russell 1000 Momentum Focus ETF (NYSEARCA: ONEO ) This new ETF has amassed about $325.8 million in assets in less than a month. The fund looks to track the performance of a segment of large-capitalization U.S. equity securities demonstrating a combination of core factors with a focus factor comprising high momentum characteristics. This 918-stock ETF is heavy on Consumer Discretionary (20.05%) followed by financial services (16.84%) and producer durables (16.37%). The fund charges 20 bps in fees and added about 3% in the last five trading sessions (as of December 21, 2015). First Trust Dorsey Wright Focus 5 ETF (NASDAQ: FV ) This ETF hovers around technical indicators such as relative strength. The fund is designed to identify the five First Trust sectors and industry-based ETFs that are arguably expected to have the maximum chance of outperforming the other ETFs in the selection universe. Securities with high relative strength scores (strong momentum) are given higher weights. Currently, the fund has the highest exposure to the ETF following Biotech, Internet and Health Care. The fund has already managed to attract more than $4.56 billion in assets. It is a slightly expensive choice thanks to its “enhanced indexing” approach, with an expense ratio of 94 basis points. The fund is up 5.7% so far this year. 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