Tag Archives: zacks funds

Starbucks Q4 Earnings Show Strength: ETFs In Focus

Leading coffee chain Starbucks Corporation (NASDAQ: SBUX ) ended its fiscal 2015 fourth quarter with lower-than-expected earnings. The softer earnings were driven by higher employee and digital investments. However, the company’s top line saw a strong upside, thanks to outstanding growth in traffic trends in the U.S. Starbucks’ fiscal 2016 outlook was in line with the market as well as our expectations. Shares of the company rose in the trading session following the earnings release but fell thereafter. Earnings in Detail Starbucks’ adjusted earnings of 43 cents per share 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. Fiscal fourth quarter sales escalated 18% year over year to $4.91 billion, outpacing the Zacks Consensus Estimate of $4.89 billion by 0.5% driven by robust comps. Global same-store sales (comps) growth of 8% was higher than a 7% rise in the previous quarter, driven by increased traffic trends. The comps rise included 4% improvements each in global traffic and average ticket. Higher food/beverage sales, strong comps in the U.S. and Europe and incremental revenues from Starbucks Japan primarily drove sales. The coffee giant opened 1,677 net new stores in fiscal 2015, ending the fiscal year with 23,043 stores in 68 countries. Starbucks 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. The company expects to open 1,800 stores in the next fiscal year. Adjusted earnings (including the 53rd week) are expected in the range of $1.87 to $1.89 per share during fiscal 2016, in line with the Zacks Consensus Estimate. Excluding the extra week, management expects to deliver earnings growth of at least 15%. Starbucks also announced a 25% hike in the dividend to 20 cents per share, which should be welcoming news for income-hungry investors out there. ETFs in Focus Despite lower-than-expected earnings, Starbucks’ growing comps – an important metric in the restaurant industry – make us confident about the company. Strong traffic growth both in the U.S. and China are the key opportunities for the company (read: 4 Solid Reasons to Buy Consumer Discretionary ETFs ). Further, the restaurant industry has been benefiting from cheap fuel and rising income, which along with an improving U.S. economy, better job prospects and increasing consumer confidence are making the segment a great space to stay invested. In addition, with the holiday season fast approaching, investors should keep a close eye on the below mentioned Consumer Discretionary ETFs with a good exposure to Starbucks (see all Consumer Discretionary ETFs here). PowerShares Dynamic Leisure & Entertainment Portfolio ETF (NYSEARCA: PEJ ) PEJ tracks the Dynamic Leisure and Entertainment Intellidex Index, holding 30 stocks with Starbucks occupying the fifth position with 5.13% allocation. The fund includes many other restaurant stocks, such as, Papa John’s International Inc. (NASDAQ: PZZA ), Denny’s Corp. (NASDAQ: DENN ), etc. It has amassed $196 million in assets and trades in a moderate volume of nearly 34,000 shares. The product charges 63 bps in fees and returned 8.9% in the year-to-date timeframe (as of November 2, 2015). It carries a Zacks ETF Rank #3 (Hold) with a Medium risk outlook. Consumer Discretionary Select Sector SPDR ETF (NYSEARCA: XLY ) This top-asset grossing consumer discretionary ETF follows the Consumer Discretionary Select Sector Index, holding 88 stocks. Starbucks occupies the sixth position in the fund with 3.82% allocation. Amazon.com (NASDAQ: AMZN ) and Walt Disney (NYSE: DIS ) are the top two holdings in the fund. The product has garnered a robust $11.5 billion in assets and trades in a strong volume of 6.5 million shares. It is one of the cheapest ETFs in its category with only 15 bps in annual fees. The fund has been up 12.7% so far this year and holds a Zacks ETF Rank #2 (Buy) with a Medium risk outlook. Fidelity MSCI Consumer Discretionary Index ETF (NYSEARCA: FDIS ) This product provides exposure to a large basket of 383 stocks by tracking the MSCI USA IMI Consumer Discretionary Index. Starbucks is at the sixth position holding a share of 3.03%. Amazon and Walt Disney are the top two holdings in the fund. The product manages nearly $286 million in asset base and trades in a solid volume of 129,000 shares per day. It charges a negligible 12 bps in fees and gained 9.5% in the year-to-date period. FDIS carries a Zacks ETF Rank #3 with a Medium risk outlook. Link to the original post on Zacks.com

15 Top Performing Fidelity Funds In Q3 2015

The performance of Fidelity mutual funds fell in the third quarter from the second quarter and mirrored the broader trend of declining returns in July-September 2015. The third quarter of 2015 ended up giving the worst performance for the benchmarks since Sep 2011. In the third quarter, the Dow, S&P 500 and Nasdaq declined 7.6%, 7% and 7.4%, respectively. Obviously, it was difficult for mutual funds as well. In fact, calling the third quarter a bloodbath will not be far from the truth. Just 17% of mutual funds managed to finish in the green in the third quarter. This was a slump from 41% in the second quarter, which was also a sharp fall from 87% of the funds that ended in the positive territory in the first quarter. Reflecting the broader trend of slumping returns, Fidelity’s top-gainer in the third quarter, Fidelity Spartan Long Treas Adv (MUTF: FLBAX ), could post only 5.5% return. In fact, except for this fund’s Investor class fund, Fidelity Spartan Long Treas Inv (MUTF: FLBIX ), there was no other that managed a 5% plus gain. The majority of gainers in the third quarter posted flimsy returns of 1-2%. However, FLBAX’s gain of 5.5% helped Fidelity to beat other key fund families, which we will discuss later. Fidelity’s Performance in Q3 vs. Q2 Out of the 971 funds we studied, just 111 funds managed to finish in the green. However, the gains were very modest as all these funds posted an average gain of 1.2%. In comparison, 504 funds out of 950 funds had finished in the positive territory in the second quarter. But the larger concern here is that while only 22 funds suffered above 5% loss in the second quarter, 655 funds ended the third quarter with more than 5% negative returns. Out of the 857 funds that finished in the red in the third quarter, 189 funds lost at least 10%. The average loss for these 857 funds was a worrying 8%. (Note: These numbers include same funds of different classes). The biggest loser among the Fidelity funds in the third quarter was Fidelity Adv China Region C (MUTF: FCHKX ), which nosedived 26.3%. This is completely in contrast to what happened in the second quarter, when Fidelity’s best gainer Fidelity China Region Fund (MUTF: FHKCX ) added 11.6%. China region funds were robust gainers in the second quarter and the country was the third-best category performer in the first half of 2015 as well. However this time, the worst performer is the China category. This is a result of the market rout that the China region suffered since mid June. In fact, China-led global growth worries were primarily responsible for the market rout in key markets across the globe; eventually pushing most mutual funds lower. Also, the 11.6% gain from FHKCX had helped Fidelity to beat other prominent fund families like Vanguard, BlackRock and American Funds to mention a few in the second quarter. In the third quarter, Fidelity failed to beat Vanguard, the best gain of which hit 8.4% by Vanguard Extended Duration Treasury Index Fund Institutional (MUTF: VEDTX ). In a quarter ravaged by headwinds, mutual funds from the Vanguard Group gave a decent performance. However, Fidelity managed to beat both BlackRock and American Funds. From the American Funds stable, American Funds US Govt Sec R5 (MUTF: RGVFX ) was the best performer with timid gains of 1.7% in the quarter. BlackRock’s best performer was Blackrock US Real Estate Sec Str I (MUTF: BIREX ), which gained 2.4%. Franklin Templeton’s best gainer also belonged to the Real Estate category. Franklin Real Estate Sec R6 (MUTF: FSERX ) gained 3.4%, falling short of Fidelity. Watch out for our Mutual Fund Commentary section in the coming days, wherein we will be reporting on performances and best picks from fund families and varied categories. Top 15 Fidelity Funds in Q3 Below we present the top 15 Fidelity funds with best returns in 3Q 2015: Fund Name Objective Description Q3 Total Return Q3 % Rank vs Obj YTD Total Return % Yield Expense Ratio Beta vs S&P 500 Load Fidelity Spartan Long Treas Inv Government 5.49 1 – 2.55 0.2 -0.06 N Fidelity Select Retailing Other 3.17 1 9.78 0.22 0.81 1.03 N Fidelity Spartan Rl Est Index Inv Real Est 2.84 10 -3 2.25 0.23 0.53 N Fidelity Real Estate Investment Real Est 2.76 12 -2.7 1.62 0.78 0.51 N Fidelity Spartan Inter Treas Inv Government 2.59 4 2.98 1.79 0.2 -0.01 N Fidelity Adv CA Muni Inc A Muni CA 1.7 37 1.69 2.87 0.79 -0.02 Y Fidelity Adv NY Muni Income A Muni NY 1.59 23 1.91 2.69 0.78 -0.03 Y Fidelity Series Real Estate Eqty Real Est 1.59 40 -3.65 1.56 0.75 0.54 N Fidelity Adv Muni Income A Muni Natl 1.49 26 1.32 3.14 0.8 -0.01 Y Fidelity Adv Real Estate Fund A Real Est 1.44 41 -3.93 1.27 1.11 0.55 Y Fidelity Government Income Fund Government 1.41 10 1.33 1.35 0.45 -0.01 N Fidelity Adv Government Income A Government 1.33 11 1.09 1.04 0.77 -0.01 Y Fidelity Mortgage Securities Govt-Mtg 1.32 11 1.78 2.14 0.46 0.01 N Fidelity Spartan US Bond Index Inv Corp-Inv 1.28 3 0.99 2.28 0.22 – N Fidelity Adv Mortgage Secs A Govt-Mtg 1.24 16 1.51 1.79 0.82 0.01 Y Note: The list excludes the same funds with different classes, and institutional funds have been excluded. Funds having minimum initial investment above $5000 have been excluded. Q3 % Rank vs Objective* equals the percentage the fund falls among its peers. Here, 1 being the best and 99 being the worst. The best 15 Vanguard mutual fund performers are primarily from three varied categories. These are Government Bond, Real Estate and Municipal Bond mutual funds. This was expected, as Long Government was the second best performing category in the third quarter, according to Morningstar. From this category, four funds made it to the best gainers’ list. These are Fidelity Spartan Long Treas Inv, Fidelity Spartan Inter Treas Inv (MUTF: FIBIX ), Fidelity Government Income Fund (MUTF: FGOVX ) and Fidelity Adv Government Income A (MUTF: FVIAX ). While FLBIX and FIBIX carry a Zacks Mutual Fund Rank #1 (Strong Buy), FGOVX and FVIAX carry a Zacks Mutual Fund Rank #2 (Buy). Meanwhile, Fidelity Mortgage Securities (MUTF: FMSFX ) and Fidelity Adv Mortgage Secs A (MUTF: FMGAX ) from the Government Mortgage category also found a place in the list. Both FMSFX and FMGAX carry a Zacks Mutual Fund Rank #1. Separately, many sub Municipal fund categories, such as Muni California Long, Muni Pennsylvania and Muni New York Long, featured in the top performers’ list for the third quarter. However, the gains were modest, with Muni California Long performing the best, notching up a 1.7% gain in the quarter. Three funds from this category, Fidelity Adv CA Muni Inc A (MUTF: FCMAX ), Fidelity Adv NY Muni Income A (MUTF: FNMAX ) and Fidelity Adv Muni Income A (MUTF: FAMUX ) featured in the best performers’ list. While FCMAX and FNMAX carry a Strong Buy rank, FAMUX has a Zacks Mutual Fund Rank #3 (Hold). Apart from the Government and Municipal categories, Real Estate was also in the top list of fund category performers. The sector returned nearly 1.4% in the third quarter. Four Fidelity funds feature in the list of the top 15 gainers. These are Fidelity Spartan Rl Est Index Inv (MUTF: FRXIX ), Fidelity Real Estate Investment (MUTF: FRESX ), Fidelity Series Real Estate Eqty (MUTF: FREDX ) and Fidelity Adv Real Estate Fund A (MUTF: FHEAX ). However, FRESX and FHEAX carry a Zacks Mutual Fund Rank #4 (Sell) and Zacks Mutual Fund Rank #5 (Strong Sell). FRXIX is the only fund here that carries a Zacks Mutual Fund Rank #1 while FREDX carries a Zacks Mutual Fund Rank #3 (Hold). Original post .

Inside The Continued Surge In Sugar ETFs

The rally in sugar prices seems to be unstoppable when most of the other commodities are finding the going tough. Its days of a supply glut ended in late August when future prices touched the lowest point since 2008. Since then, raw sugar prices at New York Mercantile Exchange recovered nearly 40% to around 14 cents per pound as of October 27, 2015, despite a surprising 1.5% fall in Tuesday’s trading session. The recent strengthening of the U.S. dollar on the back of Eurozone and Chinese stimulus measures could not derail the greenback priced commodity off the track. In fact, Morgan Stanley (NYSE: MS ) predicted raw sugar prices on the New York exchange will average 15.2 cents per pound in the final quarter of 2015 and 17.3 cents per pound in 2016. The advantage lies primarily in adverse weather conditions across the globe causing supply bottlenecks. Brazil, the world’s largest sugar producer accounting for 40% of global exports, is expected to witness above-average rainfall linked to a strong El Nino in growing regions that could disrupt the harvest, leaving a chunk of cane left to cut. Moreover, biofuel mandates and modification in energy taxation in Brazil are prompting sugarcane processors to convert cane for ethanol production instead of raw sugar, limiting its supply in the world market. According to the Brazilian Sugarcane Industry Association, or Unica, ethanol production in south-central Brazil went up 2.6% year over year to 20.2 million kiloliters while sugar production dipped 7.2% to 23.2 million tons during the April-September period. India, the world’s second largest sugar producer, is also expected to trim sugar production due to El Nino-induced drought in the region. Per Indian Sugar Mills Association, India is likely to cut its sugar output by 5% to 28.3 million tons in 2015. Other major sugar producing countries such as Thailand and China are also hit by droughts and are expected to cut sugar output. According to the International Sugar Organization and U.K. sugar trading house Czarnikow, there will be a sugar shortage of roughly 3-5 million tons in the global market for the current crop marketing year, which began this month. These apart, there are other factors that are driving the sugar price rally. China, the world’s largest importer of raw sugar, recently released data that showed a robust 80% year-over-year hike in sugar imports in September to 656,000 tons. It was the highest recorded volume since 2013, as per data from Commerzbank . Further, a recent report from Commitment of Traders revealed that hedge funds have been betting on sugar at a lower-than-expected pace, indicating the availability of surplus money to aid further rallies. Riding on the continued surge in sugar prices, ETFs that are exposed to this soft commodity have been experiencing double-digit gains over the past one month (as of October 27, 2015). Below, we highlight three of those ETFs that investors should definitely consider to play the bullish sugar market. iPath Dow Jones-UBS Sugar Subindex Total Return ETN (NYSEARCA: SGG ) SGG tracks the Dow Jones-UBS Sugar Subindex Total Return Index, which provides the returns that are in an investment in the futures contracts on the commodity of sugar. The note has garnered nearly $60 million in assets and trades in a daily volume of roughly 54,000 shares on average. It charges 75 bps in annual fees. The note was up 18.1% in the past one month and has a Zacks ETF Rank #3 (Hold) with a High risk outlook. Teucrium Sugar Fund (NYSEARCA: CANE ) This ETF tracks the Sugar Futures index, which reflects the daily changes of a weighted average of the closing prices for three futures contracts for sugar that are traded on ICE Futures US. The fund is nearly overlooked as it has gathered nearly $4 million in assets and trades in a paltry volume of around 6,000 shares. However, the ETF is expensive, charging a hefty 176 bps in fees from investors per year. It was up 12.3% over the last one month and carries a Zacks ETF Rank #3 with a High risk outlook. iPath Pure Beta Sugar ETN (NYSEARCA: SGAR ) This is another sugar ETN by iPath and follows the Barclays Capital Sugar Pure Beta TR Index. The index consists of a single futures contract but it has a unique roll structure which selects contracts using the Pure Beta Series 2 Methodology. SGAR is also neglected with only $1.5 million in AUM and is thinly traded with average volume of nearly 2,000 shares. The note charges 75 bps in annual fees and was up 17.5% in the past one month. It also carries a Zacks ETF Rank #3 with a High risk outlook. Original Post