Tag Archives: outlook

4 Growth ETFs & Stocks To Bloom In Spring

As the spring season kicked off, economic activity across all the sectors are likely to step up, injecting fresh optimism in both business and consumer confidence. The housing and transport sectors in particular gain momentum with demand building up over the frigid winter for new homes and transportation, which is a barometer of broad economic health. This spring, solid job gains, slowly rising wages and higher spending power buoyed by cheap fuel will add to the strength. The combination of these factors will give a boost to the stock market, which saw a scary start to the year but made an impressive comeback over the past one month. While value stocks have been gathering maximum attention this year, growth stocks have more upside potential in the coming month, buoyed by spring fever. This is especially true as growth investing is basically a momentum play and a great strategy in a trending market (a market characterized by a prolonged uptrend). Growth stocks refer to high-quality stocks that are likely to witness revenue and earnings increase at a faster rate than the industry average. These stocks harness their momentum in earnings to create a positive bias in the market, resulting in rocketing share prices. As such, growth stocks tend to outperform during an uptrend. Given this, investors should recycle their portfolio into the growth space to obtain a nice momentum play. For them, we have presented four ETFs and stocks that are ready to bloom this spring. ETF Picks Using our database, we have selected growth ETFs that provide exposure to the broad stock market instead of a particular sector and have a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). This is because these ranks suggest strengthening fundamentals and superior weighting methodologies that could allow them to lead higher than their cousins in a booming market. Further, these funds have outperformed the broad market fund (NYSEARCA: SPY ) by a wide margin over the past one year. Notably, SPY delivered returns of 0.82% in the same time period. iShares Russell Top 200 Growth ETF (NYSEARCA: IWY ) This fund offers exposure to the large-cap segment by tracking the Russell Top 200 Growth Index. Zacks ETF Rank: #3 Expense Ratio: 0.20% AUM: $622 million No. of Stocks: 137 One-Year Return: 3.76% PowerShares QQQ (NASDAQ: QQQ ) This fund also offers exposure to the large-cap equities and follows the Nasdaq 100 index. Zacks ETF Rank: #3 Expense Ratio: 0.20% AUM: $37.8 billion No. of Stocks: 106 One-Year Return: 2.80% Vanguard S&P 500 Growth ETF (NYSEARCA: VOOG ) This fund tracks the S&P 500 Growth Index. Zacks ETF Rank: #3 Expense Ratio: 0.15% AUM: $795.9 million No. of Stocks: 311 One-Year Return: 2.06% Vanguard Russell 1000 Growth ETF (NASDAQ: VONG ) This ETF tracks the Russell 1000 Growth Index. Zacks ETF Rank: #3 Expense Ratio: 0.12% AUM: $515.8 million No. of Stocks: 641 One-Year Return: 1.10% Stock Picks For stocks, we have chosen four top picks using the Zacks Screener that fits our five criteria: a Zacks Rank #1, a Growth Style Score of ‘A’, Zacks Industry Rank within the top 15%, market cap of over 1 billion, and positive relative price change (compared to the S&P 500). Here are our chosen stocks. Tyson Foods Inc. (NYSE: TSN ) This Arkansas-based company is one of the world’s largest producers of chicken, beef, pork and prepared foods, offering a wide range of protein-based and prepared foods products. Zacks Industry Rank: Top 2% Market Cap: $24.29 billion Relative Price Change: 25.92 John Bean Technologies Corporation (NYSE: JBT ) This Illinois-based company is a leading global technology solutions provider to high-value segments of the food processing and air transportation industries. Zacks Industry Rank: Top 6% Market Cap: $1.60 billion Relative Price Change: 9.98 Smith & Wesson Holding Corporation (NASDAQ: SWHC ) This Massachusetts-based company is one of the world’s leading producers of quality handguns, law enforcement products and firearm safety and security products. Zacks Industry Rank: Top 10% Market Cap: $1.46 billion Relative Price Change: 21.13 Insperity Inc. (NYSE: NSP ) This Texas-based company provides an array of human resources and business solutions to enhance the performance of small and medium-sized businesses in the United States. Zacks Industry Rank: Top 10% Market Cap: $1.09 billion Relative Price Change: 6.63 Original Post

3 Best-Rated Pacific Mutual Funds To Invest In

Investors interested in gaining exposure to the well-diversified and economically vibrant Pacific Basin may consider mutual funds that primarily allocate most of their assets in countries within this region. Mutual funds investing in Pacific Basin are expected to provide a blend of growth opportunities and low investment risk courtesy of high diversification in developed and developing markets. Prominent centers of production and fast-growing potential markets in this part of the world also make it an exciting investment destination. Below we share with you three top-ranked Pacific Mutual Funds. Each has earned a Zacks Mutual Fund Rank #1 (Strong Buy) and is expected to outperform its peers in the future. Fidelity Pacific Basin (MUTF: FPBFX ) invests a major portion of its assets in securities of issuers located in or economically tied to the Pacific Basin. FPBFX primarily focuses on acquiring common stocks of companies located across a wide range of Pacific Basin countries. Factors such as financial strength and economic conditions are considered before investing in a company. The Fidelity Pacific Basin fund has a five-year annualized return of 6.5%. John Dance is the fund manager of FPBFX since Oct. 2013. Commonwealth Australia/New Zealand (MUTF: CNZLX ) seeks long-term growth of capital. CNZLX invests a large portion of its assets in depositary receipts represented by Australian and New Zealand issuers that are tied economically to Australia or New Zealand. CNZLX may invest in open-end, closed-end and exchange-traded funds. The Commonwealth Australia/New Zealand fund has a five-year annualized return of 4.5%. As of January 2016, CNZLX held 45 issues with 18.14% of its assets invested in South Port New Zealand Ltd. Matthews Korea Investor (MUTF: MAKOX ) invests a large chunk of its assets in common and preferred stocks of South Korean companies. MAKOX focuses on mid-to-large-cap firms, but is not restricted to them. The fund seeks long-term capital appreciation. The Matthews Korea Investor is a non-diversified fund and has a five-year annualized return of almost 8%. MAKOX has an expense ratio of 1.10% as compared to the category average of 1.87%. Original Post

Closed-End Fund Craziness

By Alan Gula, CFA Last week, Barack Obama became the first U.S. president to visit Cuba in nearly nine decades. As you may recall, President Obama announced that the United States would re-establish diplomatic relations with Cuba in December of 2014. Of course, investors immediately began searching for ways to profit from the re-opening of trade and travel with Cuba. Some investors thought they had uncovered a gem called The Herzfeld Caribbean Basin Fund (NASDAQ: CUBA ), a closed-end fund (CEF). After all, the ticker seemingly told you all you had to know. From December 16, 2014 to December 23, 2014, CUBA rose 107%. The fund went from a discount of over 10% of its underlying net asset value (NAV) to a massive 70% premium . Except there was one big problem: CUBA had little direct exposure to Cuba. Close, but no cigar. By mid-January 2016, the fund had lost over 60% of its value and was once again trading at a discount to its NAV. CEFs, like CUBA, have a set number of shares outstanding. Therefore, supply and demand forces determine whether the shares trade at a premium or discount to NAV. CEFs tend to be relatively small and illiquid, so their holders are predominantly individual investors. As a result, CEF share prices are heavily influenced by the herding of retail investors – perfectly illustrated by the CUBA episode. However, CUBA is an especially small CEF. Such pricing anomalies would never occur with the larger funds run by prominent financial institutions, right? High-Yield CEFs In June of 2014, near the height of the “reach for yield” mania, I recommended selling two high-yielding PIMCO closed-end funds . At the time, the PIMCO High Income Fund (NYSE: PHK ) and the PIMCO Global StocksPLUS & Income Fund (NYSE: PGP ) were trading at absurd 57% and 66% premiums to their NAVs, respectively. Over the next 15 months, PHK and PGP both lost roughly 40% of their values (distributions included but not reinvested). The premium for PHK evaporated and the premium for PGP hit a more reasonable but still elevated 18%. But wait… The herd is back for more! The premiums have since re-inflated for both funds. In fact, the premium on PGP recently reached an unprecedented 103%. It seems as though many folks are using the snapback rally in the credit market as an excuse to bid up several closed-end funds with impunity. The following table is a list of several CEFs trading at high premiums: The premiums on Eagle Point Credit Company Inc. (NYSE: ECC ) and the DoubleLine Opportunistic Credit Fund (NYSE: DBL ) have recently surged to their highest levels ever. The Babson Capital Corporate Investors (NYSE: MCI ) is rated five stars by Morningstar and has a great track record, but no fund is worth a 20%-plus premium. The PIMCO Municipal Income Fund (NYSE: PMF ), PIMCO California Municipal Income Fund II (NYSE: PCK ), PIMCO New York Municipal Income Fund II (NYSE: PNI ), and PIMCO California Municipal Income Fund III (NYSE: PZC ) are all trading at very high premiums. No matter how bullish you are on muni-bonds, there’s no reason to pay up this much for exposure. The financial markets may not make sense all of the time, but, as you can tell, craziness is the norm in CEF land. When a CEF you own trades at a small premium to its NAV, you should at least consider selling it. When that premium exceeds 15%… hit the bid and get out as if you’re fleeing a communist dictatorship.