Tag Archives: zacks funds

Did Restaurant Earnings Impact This New ETF?

With the introduction of the new Restaurant ETF (NASDAQ: BITE ) at the end of last month, time has come to evaluate the impact of the recent spate of restaurant industry earnings on it. Most of the restaurant stocks delivered better-than-expected earnings and rising same-store sales (comps) in the last reported quarter. The upbeat results definitely speak about the strong fundamentals of the industry. Low fuel cost, an improving U.S. economy, rising consumer confidence, higher consumer spending and better job prospects all bode well for the restaurant industry. Let us take a quick glance at some of these results. Restaurant Earnings in Detail McDonald’s Corporation (NYSE: MCD ) posted earnings per share of $1.40 for the third quarter that beat the Zacks Consensus Estimate of $1.27 by 10%. Earnings, in constant currencies, grew 44% year over year driven by decline in total costs and expenses and a lower share count. Revenues of $6.62 billion declined 5% year over year due to currency headwinds but grew 7% in constant currencies, beating the Zacks Consensus Estimate by 2.7%. This was driven by comps growth at all its segments. The maker of hamburgers and fries expects comps to grow in the fourth quarter as well. Starbucks Corporation’s (NASDAQ: SBUX ) adjusted earnings of 43 cents per share in the fourth quarter of fiscal 2015 missed the Zacks Consensus Estimate of 44 cents by 2.3%. However, earnings were on the higher end of management’s guided range and grew 16% year over year as solid top-line growth offset lower margins. Sales rose 18% to $4.91 billion, outpacing the Zacks Consensus Estimate of $4.89 billion by 0.5% driven by robust comps. Global comps growth of 8% was higher than a 7% rise in the previous quarter, driven by increased traffic trends. The company expects revenues to grow more than 10% in fiscal 2016, excluding the extra 53rd week. Comps are expected to grow somewhat above the mid-single-digit range. Buffalo Wild Wings Inc.’s (NASDAQ: BWLD ) third-quarter results were disappointing. The restaurant operator’s adjusted earnings of $1.00 per share fell 12.2% year over year and were short of the Zacks Consensus Estimate of $1.28 by 22% owing to higher food and labor costs. Despite a 22% increase, the company’s revenues of $455.5 million missed the consensus estimate by roughly 1.8%. It also expects single-digit net earnings growth for 2015 compared with 13% growth expected previously. The Wendy’s Company’s (NASDAQ: WEN ) adjusted earnings came in at 9 cents per share, exceeding the Zacks Consensus Estimate by 12.5% and year-ago earnings by 28.6% driven by lower expenses and improved margins. Total revenue of $464.6 million beat the consensus mark of $442.0 million by 5% but declined 6.5% from the prior year. The company marginally revised its earnings, EBITDA and comps guidance for 2015 on the basis of strong year-to-date operating results and encouraging response to the 4 for $4 promotion that began in October. ETF Impact Strong results notwithstanding, the performance of restaurant stocks has not been commensurate due to several headwinds like the threat of higher labor costs due to demand for rising minimum wages, price wars, strong currency and a slowdown in the Chinese economy. This found a reflection in the performance of BITE, which exclusively focuses on this industry. The fund has tumbled 5.8% since its launch (as of November 12, 2015). Except McDonald’s and Starbucks, nearly all the stocks in the fund’s top 10 holdings nosedived in the past one month. Investors, therefore, should exercise caution before hopping into this niche ETF and closely monitor its price movements in the coming days. Let us take a look at this ETF in greater detail. BITE tracks the BITE Index, which is an equal-weighted index comprising 45 publicly-traded companies in the U.S. The fund’s holdings include some of the renowned companies in the restaurant industry that operates a broad variety of restaurant formats raging from quick serve and fast casual to casual dining and fine dining. The fund’s top five holdings include McDonald’s, Starbucks, Carrols Restaurant Group Inc. (NASDAQ: TAST ), Chuy’s Holdings, Inc. (NASDAQ: CHUY ) and Ruth’s Hospitality Group Inc. (NASDAQ: RUTH ). Together, the top 10 holdings occupy 27.6% of the fund’s assets. BITE has net assets worth $2.4 million and is thinly traded with an average volume of around 5,000 shares per day. The fund is a bit expensive with 0.75% in expense ratio. Original Post

4 Strong Buy Small-Cap Blend Mutual Funds

Those with a high risk appetite as well as an interest in growth and value investing, may choose small-cap blend mutual funds to boost their portfolio. While blend funds, also known as “hybrid funds,” aim for value appreciation by capital gains, small-cap funds are expected to have higher growth prospects than their large and medium counterparts. Blend funds provide significant exposure to both growth and value stocks and owe their origin to a graphical representation of a fund’s equity style box. Meanwhile, funds investing the majority of their assets in securities of companies with market capitalization lower than $2 billion are generally considered small-cap mutual funds. Though funds investing in small-cap stocks are believed to have more exposure to market volatility than large or medium ones, they are also expected to provide diversification across sectors and companies. Moreover, small-cap companies are believed to be less affected by a global downturn – thanks to less international exposure. Below we share with you four top-rated, small-cap blend mutual funds. Each has earned a Zacks Mutual Fund Rank #1 (Strong Buy) and is expected to outperform its peers in the future. Vanguard Strategic Small-Cap Equity Investor (MUTF: VSTCX ) invests the lion’s share of its assets in equity securities of small-cap companies with a domestic focus. VSTCX invests in companies that are belied to have impressive growth potential and favorable valuations. VSTCX is expected to maintain a risk level identical to the MSCI US Small Cap 1750 Index. The Vanguard Strategic Small-Cap Equity Investor fund has a three-year annualized return of 17.8%. VSTCX has an expense ratio of 0.38% as compared to the category average of 1.23%. Fidelity Advisor Small Cap A (MUTF: FSCDX ) seeks capital appreciation over the long run. FSCDX invests a large chunk of its assets in companies having market capitalization within the range of either the Russell 2000 Index or the S&P SmallCap 600 Index. FSCDX uses the “blend” strategy to invest in common stocks of companies. The Fidelity Advisor Small Cap A fund has a three-year annualized return of 16.4%. James M. Harmon is the fund manager of FSCDX since 2005. Principal SmallCap S&P 600 Index R3 (MUTF: PSSMX ) invests the majority of its assets in firms listed in the Standard & Poor’s SmallCap 600 Index. PSSMX also invests in index futures and equity ETFs in order to reduce tracking error by gaining exposure to the index. The Principal SmallCap S&P 600 Index R3 fund has a three-year annualized return of 15.7%. As of September 2015, PSSMX held 606 issues, with 3.05% of its assets invested in Russell 2000 Mini Dec15. QS Batterymarch US Capitalization Equity Portfolio FI (MUTF: LGSCX ) seeks long-term growth of capital. LGSCX invests the major portion of its assets in securities of small-cap companies. LGSCX primarily invests in domestic companies or those which operate predominantly in the U.S. LGSCX may also invest in non-US firms through ADRs. The QS Batterymarch US Small Cap Equity FI fund has a three-year annualized return of 16.4%. LGSCX has an expense ratio of 1.20% as compared to the category average of 1.23%. Original Post

China Investing: Should You Buy These New ETFs?

China investing is back in focus, thanks to some solid trading out of that country and more hopes for stimulus measures. ETFs tracking the nation have actually been pretty good performers to kick off Q4, and there is hope that they can regain some of their lost momentum. It also appears that ETF issuers are starting to grow more confident in the China ETF space, and have begun to once again launch new products in the segment. While it is nothing like what we saw at the height of the boom, there are now close to three dozen China funds trading on the marketing, including several that launched just in October. New China ETFs But while these China ETFs might be brand new, are they better options for investors? After all, these fresh China ETFs go beyond the plain vanilla indexes and seek to offer investors slightly different options in the space. So let’s take a closer look at some of these new choices for investors: SPDR MSCI China A Shares IMI ETF (NYSEARCA: XINA ) This ETF from SPDR looks to give investors exposure to the China A-shares market, charging just 65 basis points a year in fees. While it is similar to other ETFs, SPDR does use its own SSGA division to manage the fund instead of a third party, and some believe this could be a safer way to play the space. Deutsche X-trackers CSI 300 China A-Shares Hedged Equity ETF (NYSEARCA: ASHX ) / CSOP MSCI China A International Hedged ETF (NYSEARCA: CNHX ) Thanks to recent China currency devaluations, ETF issuers are hoping to strike gold by offering up A-shares hedged ETFs. These funds look to benefit if China continues to devalue the yuan, but let’s remember that only a tiny devaluation has taken place, and it has been nothing like what we have seen in the case of Japan or even Europe. CSOP China CSI 300 A-H Dynamic ETF (NYSEARCA: HAHA ) While the ticker might be a joke, the strategy behind this ETF is nothing to laugh at, as it is pretty innovative. The fund will look at both A-shares and H-shares investments and choose the version which is the most undervalued in an intriguing way to deliver outperformance. More Information For extra information on the China ETF flurry and if these new funds are right for you (as well as my favorites from these newcomers), make sure to watch our short video on the topic below: Original Post