Tag Archives: auto

MaziValue February Performance And March Outlook

PORTFOLIO PERFORMANCE Note : Mazi Ume Capital LLP does not exist right now, but if I do run a hedge fund in the future, that’s what it will be called. Mazi Ume Capital LLP is just my personal portfolio for now. Click to enlarge Below, is a chart from Interactive Brokers’ Portfolio Analyst comparing my performance (Consolidated) to the Russell 2000 (RTY), S&P 500 (SPX), and the Vanguard Total World Stock Index ((NYSEARCA: VT )) since inception of the portfolio on December 10th, 2015. I believe the performance of the Indexes include dividends. My portfolio’s return (Consolidated) is after interest and fees. Interactive Brokers charges interest when you buy a security in a different currency, and fees are trading fees. My portfolio is most comparable to the Russell2000, since every stock on the long side (90% of total portfolio) has a

4 Sector ETFs On Sale

A string of woes have held back the U.S. market this year, with the S&P 500 adding just about 2.5% so far. Global growth issues, Fed lift-off worries and a surging greenback are coming in the way of the markets’ outperformance. While many may hope for a sharp revival in the market in 2016 following such a slow year, Goldman Sachs’ latest prediction points to the same story next year. Considering dividends, Goldman estimates stocks to return merely 3% next year. The renowned investment banker also raised overvaluation concerns over the U.S. market. This statement very well motivates investors to search for a value sector, if there is any left at all. A value play is especially required given the broad-based revenue weakness noticed in Q3, not only among multinationals but also within small-cap companies. After all, the low valuation might lead investors to some quality sector buys at best prices. No doubt, with all the major indices trading at around all-time highs, it is hard to find value plays at home. But for those investors ardently seeking undervalued sectors, there are still a few hidden treasures out there. While several indicators are used to find out any stock or sector’s valuation status, price-to-earnings ratio or P/E has been the most widespread. We have identified four sector picks having the lowest forward P/E ratio for next year’s earnings in the pack of 16 S&P sectors classified by Zacks and detail the related ETFs to play those sectors’ undervalued status. Auto – First Trust NASDAQ Global Auto ETF (NASDAQ: CARZ ) The U.S. automotive industry is on high gear. A strong labor market, persistently lower energy prices, increasing aging vehicles on road and a still-low interest rate environment made the first half of 2015 the best six months in a decade for auto sales. Though the Fed is poised to raise key interest rates in December, it will opt for a slower rate hike trajectory. So, auto loans are presently feared to get pricy. Despite strong fundamentals, the sector has a P/E ratio of 9.9 times for 2015 and 8.8 times for 2016, the lowest in the S&P universe, as per the Zacks Earnings Trend issued on November 18. Investors should note that the P/E of the auto industry trades at a 43.8% discount to the current year P/E of S&P and 45.7% discount to the next year P/E. The space is down 12.1% so far this year, implying that the auto stocks are yet to capitalize on the sector’s momentum. Investors should note that there is only one pure play CARZ in the space that provides global exposure to nearly 40 auto stocks by tracking the Nasdaq OMX Global Auto Index. CARZ has a Zacks ETF Rank #2 (Buy) and is up 1.4% so far this year (as of December 1, 2015). Transportation – iShares Dow Jones Transportation Average Fund (NYSEARCA: IYT ) This is yet another sector which failed to make the most of improving economic activities. The sector’s pricing is down 13.2% year to date. While a strong dollar will definitely play foul with the profits of big transporters, tailwinds including a stepped-up economy and cheap fuel are still in fine fettle. This raises optimism on the future of the transportation sector. This is especially true as total earnings of the sector were up 22.5% in Q3 while revenues declined 1.3%. This is much better than Q2 earnings growth of 9.4% and revenue decline of 1.9% for the same period. Revenues are forecast to grow from the first quarter of 2016. The current and the next year P/Es for the sector are 12.2 times each, reflecting a 30.7% and 24.7% discount to the S&P 500, respectively. One way to play this trend is with IYT, which tracks the Dow Jones Transportation Average Index that holds 20 stocks in its basket. The fund has a Zacks ETF Rank #3 (Hold) with a High risk outlook. The fund is off 10% so far this year (as of December 1, 2015). Finance – SPDR S&P Regional Banking ETF (NYSEARCA: KRE ) With the looming prospect of a lift-off, all eyes will be on financial stocks and ETFs. While the operating backdrop of financial stocks has improved a lot from the recession-cursed phase, a potential rising rate environment is another positive for the financial ETFs. The space has a current-year P/E of 13.6 times, reflecting a 22.7% discount to the S&P while its next year P/E stands at 12.8 times, a 21% discount to the S&P 500’s 2016 P/E. The space has lost 1.7% so far this year (as of November 27, 2015). While there are plenty of financial ETFs, investors can take a look at Zacks #2 ETF KRE. The bank fund is up 12.4% so far this year. Utilities – PowerShares S&P SmallCap Utilities ETF (NASDAQ: PSCU ) Utilities will be hurt by the Fed lift-off as this sector underperforms in a rising rate environment. But the space is expected to score positive earnings growth from the second quarter of 2016. The space has a current-year P/E of 15.7 times, reflecting a 10.8% discount to the S&P while its next year P/E stands at 15.3 times, a 5.6% discount to the S&P 500’s 2016 P/E. The space has lost 13.4% so far this year (as of November 27, 2015). However, investors should note that utility is a risky bet at this point of time. We thus highlight the small-cap utility ETF as small-cap stocks deal more with the reasonably expanding U.S. economy and also offer less exposure to the greenback. PSCU is up 4.1% so far this year (as of December 1, 2015). Original Post

Auto ETFs And Stocks To Ride On This Holiday Season

The auto industry has been on a high gear and remains on track to break the all-time record of 17.35 million vehicles reached in 2000. Once again, the monthly auto sales data spread bullishness into the entire industry across the globe. In particular, auto sales rose 1.4% year over year to an annualized 18.2 million units in November. This represents the highest auto sales in 14 years and the third consecutive month of 18 million plus sales. Five of the six major American and Japanese automakers reported solid sales growth for November. Nissan ( OTCPK:NSANY ) led the way higher with 4% growth, followed by sales increases of 3% for Fiat Chrysler Automobiles (NYSE: FCAU ), 3.0% for Toyota (NYSE: TM ), 1.5% for General Motors (NYSE: GM ) and 0.3% for Ford Motor (NYSE: F ). However, Honda’s (NYSE: HMC ) auto sales fell 5% last month. A major boost came from attractive year-end offers, Black Friday deals, higher demand for sport utility vehicles, cheap fuel and low financing costs. Further, a plethora of new models, the need to replace aging vehicles, higher income, increasing consumer confidence, and higher spending power are adding enough fuel. The robust trend is likely to continue this month as well, as automakers continue offering discounts and holiday season incentives. Further, about two-thirds of the industries falling under the auto sector have a strong Zacks Rank in the top 39%, suggesting healthy growth. As such, investors seeking to take advantage of the current boom may consider the ETFs and stocks from this corner of the broad market. ETFs to Buy First Trust NASDAQ Global Auto Index ETF (NASDAQ: CARZ ) This fund offers pure play global exposure to the 37 auto stocks by tracking the NASDAQ OMX Global Auto Index. It is a large-cap centric fund, highly concentrated on the top 10 holdings with about 62% of assets. The four prime automakers – General Motors, Ford, Honda and Toyota – are among the top five holdings. In terms of country exposure, Japan takes the top spot at 36.8% while the U.S. and Germany round off the next two spots with 23.4% and 18.3% share, respectively. CARZ is under appreciated as indicated by its AUM of only $41.1 million and average daily trading volume of about 10,000 shares. The product charges 70 bps in fees per year and has gained 2.4% in the year-to-date time period. It has a Zacks ETF Rank of 2 or ‘Buy’ rating with a High risk outlook. Consumer Discretionary Select Sector SPDR ETF (NYSEARCA: XLY ) While XLY provides broad exposure to the consumer discretionary space, investors could go for this product as it has an at least 8% allocation to the auto industry. It holds 90 securities in its basket and some well known automakers like Ford, General Motor, O’Reilly Automotive (NASDAQ: ORLY ) and Delphi Automotive (NYSE: DLPH ) make up for a nice mix in the portfolio. It is the largest and the most popular product in this space with AUM of nearly $11.7 billion and average daily volume of roughly 6.6 million shares. It charges 14 bps in annual fees from investors and has gained 14.3% so far this year. The fund has a Zacks ETF Rank of 2 with a Medium risk outlook. Stocks to Buy We have used our Zacks stock screener to find out the best stocks in the auto space having a Zacks Rank #1 (Strong Buy) or 2 (Buy) and a Growth Style Score of ‘B’ or better. The Growth Style Score analyzes the growth prospects of a company with a thorough analysis of the income statement, balance sheet and cash flow statement that evaluate its financial health and the sustainability of growth trajectory. The results show that stocks with Growth Style Scores of A or B when combined with Zacks Rank of 1 or 2 offer the best upside potential. Superior Industries International Inc. (NYSE: SUP ) Based in Southfield, Michigan, Superior Industries is one of the world’s largest original equipment manufacturer (OEM) of aluminum wheels for the automotive industry. It designs, manufactures and supplies cast aluminum road wheels to the automobile and light truck manufacturers. The stock has seen positive earnings estimate revisions from 90 cents to 93 cents per share for 2015 over the past 60 days, representing a year-over-year increase of 43.1%, which is much higher than the industry average of 5.4%. The company delivered an average positive earnings surprise of 32.44% in the last four quarters. The stock has a Zacks Rank #1 with a Growth Style Score of B, meaning that it is primed for further growth in the months to come. Motorcar Parts of America Inc. (NASDAQ: MPAA ) Based in Torrance, California, Motorcar Parts is a leading manufacturer of auto parts like replacement starters, alternators, wheel hub assemblies, bearings and master cylinders used for imported and domestic passenger vehicles, light trucks, and heavy-duty applications in the United States and Canada. The company has seen a solid earnings positive estimate revision of 6 cents for the current fiscal year over the past 60 days and is expected to grow at an annual rate of 24.4% versus negative industry growth. Further, the company delivered positive earnings surprises in the three of the past four quarters, with an average beat of 4.64%. The stock currently has a Zacks Rank #1 with a Growth Style Score of B, suggesting incredible growth in the months ahead. Bottom Line Holiday fervor, massive discounts, an improving economy, and increased consumer spending will continue to drive U.S. auto sales higher in the weeks ahead, making the above ETFs and stocks compelling choices for investors to play this holiday season. Original Post