Tag Archives: zacks funds

Highflier Airlines Earnings: Time For JETS ETF

The airline stocks, which were flying low at the start of the year on a stronger dollar and global growth worries, skyrocketed lately on improving industry fundamentals. Higher margin, lower debt, surging ancillary revenues from hotel accommodation, car rentals, onboard food, limited capacity growth and a host of modifications in operations helped the sector to gain altitude. As a result, the pure-play aviation ETF U.S. Global Jets ETF (NYSEARCA: JETS ), which has added just 4.5% so far this year, advanced about 5.8% in the last one month (as of October 22, 2015). In any case, cheap fuel has been a bonus for long. The swelling middle-income population in emerging markets is benefitting worldwide customer growth. Now, solid earnings results from top-notch companies are an icing on the cake. The sector is in the top 16% category of the Zacks Industry Rank at the time of writing, giving strong indications of the upcoming flight of the entire industry. Let’s take a look at some of the key third-quarter 2015 earnings in the sector: On October 14, Delta Air Lines (NYSE: DAL ) beat on earnings but missed on revenues. The top line was hurt by adverse foreign currency movements. In Q2 itself, Delta had planned to slash its international capacity by 3.5% in the fourth quarter of 2015 to lessen the unfavorable impact of foreign exchange on its international operations. Third-quarter adjusted earnings of $1.74 per share steered past the Zacks Consensus Estimate by 3 cents and improved 45% from the year-ago figure. Revenues dipped 0.6% year over year to $11.11 billion in the reported quarter, falling short of the Zacks Consensus Estimate of $11.12 billion. Delta expects volatile fuel prices going ahead. The estimated fuel price, including taxes and hedges, is expected in the range of $1.75 to $1.80 per gallon for the final quarter; the high end being in line with the average fuel price in Q3. The average price is even lower than what Delta had earlier expected for the second half of 2015 i.e.; in the band of $1.90 to $2.00 per gallon. This Zacks ETF Rank #2 (Buy) stock has a Zacks Momentum & Value style score of ‘A’ and a Growth score of ‘B’. Shares advanced about 4% in the last five trading sessions (as of October 22, 2015). United Continental Holdings Inc. (NYSE: UAL ) came up with mixed Q3 results with an earnings beat and a revenue miss. Earnings were up about 65% year over year on lower fuel costs and reduced operating expenses. Revenues declined 2.4% on lower passenger revenues. Cargo revenues were down 0.8% while other revenues improved 9.8% in the third quarter. Its indicators are also promising with a Zacks ETF Rank #2, and Growth, Value and Momentum scores of ‘A’. Shares were up about 2.8% in the key trading session of October 22, post earnings. Yet another leading U.S. carrier Southwest Airlines Co.’s (NYSE: LUV ) third-quarter 2015 earnings and revenues outpaced the respective Zacks Consensus Estimate. Revenues grew 2% year over year helped by 3.3% and 102.1% expansion in Passenger and Other revenues, respectively. Airline traffic was up 8.9% while passenger load factor inched up to 85.4% from 84.4% recorded in the year-ago quarter. LUV, with a Zacks ETF Rank #2, also boasts hopeful indicators of Growth score of ‘B’ and Value and Momentum score of ‘A’. Shares shot up over 7.4% to reflect the results on October 22. On October 23, American Airlines Group (NASDAQ: AAL ) reached a milestone when it came up with the ‘ highest quarterly profit in the company’s history’. This airline reported $2.77 per share of Q3 earnings breezing past the estimate of $2.72. Revenues came in at $10.71 billion, marginally short of the Zacks Consensus Estimate of $10.72 billion. This is also a Zacks ETF Rank #2 stock and its investing metrics were even more upbeat with all Growth, Value and Momentum criteria having a top-notch score of ‘A’. The company also bought back $1.56 billion of common stock. Not only these heavy-weight stocks, sturdy performances also were put up by other sector players. Alaska Air Group, Inc.’s (NYSE: ALK ) Q3 2015 earnings per share of $2.16 beat the Zacks Consensus Estimate of $2.06 and improved 47% from the year-ago earnings. Revenues grew 3% year over year and narrowly beat our estimate. This Zacks ETF Rank #2 stock can be a great pick for growth and value investors. ALK added 1.7% following earnings on October 22. By now, one must have realized that the mood in the airlines industry is upbeat. So investors might play the trend via basket approach to tap the entire potential of the space. And to do so, what could be a better option other than JETS ETF? The $46 million-fund holds over 30 stocks in its portfolio and is concentrated on a few individual securities, as it allocates about 70% to the top 10 holdings. Southwest Airlines (12.94%), American Airlines (12.78%), Delta Airlines (12.34%), United Continental (11.31%) are the top four elements in the basket, with a combined share of about 45%. Alaska Air holds a seventh position in the fund with 3.51% weight. The product charges 60 bps in fees. The fund added 3.5% in the last five trading sessions (as of October 22, 2015) which made the peak of airlines earnings releases. Original Post

Inside New Diversified Return U.S. Equity ETF By J.P. Morgan

The global economy is presently caught in a vicious cycle of volatility with the sole star U.S. (in the developed market pack) also finding itself trapped. Instead of leaning on policy tightening, the domestic economy is now backtracking on the issue. This was especially true given the slowing momentum in the labor market and muted inflation. In this backdrop, volatility has taken center stage. Still, several other economic indicators at home are sturdy enough for investors to bet on U.S. stocks. Plus, a dovish Fed eased tensions over the sudden cease or shrinkage in cheap money inflows. All in all, risky assets regained some lost ground but volatility prevailed. Probably keeping this in mind, issuers look to deploy quality factors as much as possible. After all, be it developed economies, emerging nations or commodities and currencies, shocks were felt everywhere. Thanks to this, J.P. Morgan’s new factor-based ETF targeted on the U.S. market – J.P. Morgan Diversified Return U.S. Equity (NYSEARCA: JPUS ) – deserves a detailing. JPUS in Focus The fund looks to track the performance of the Russell 1000 Diversified Factor Index and has exposure to domestic multi-cap stocks. The fund seeks to score high on basic factors like quality and momentum to mitigate risks and tack on capital appreciation. The 561-stock portfolio is equally weighted resulting in minimal company-specific concentration risk. No stock accounts for more than 0.65% of the basket at present. Xcel Energy Inc. (NYSE: XEL ), TECO Energy Inc. (NYSE: TE ) and Henry Schein Inc. (NASDAQ: HSIC ) are the top three holdings. Consumer discretionary (17%), health care (16%), utilities (13%), consumer staples (13%) and technology (12%) get double-digit exposure in the fund. Large caps rule the basket with about 60% focus followed by 35% of assets invested in the mid caps and 5% in the small caps. The fund charges 29 bps in fees. How Will it Fit in a Portfolio? Several academic researches indicated that the risk-adjusted returns from quality stocks outperform the broader market over long term. Thus, this ETF could be an intriguing pick for investors looking to invest in stocks that have high quality and are rich in momentum factors. This way the fund appears to stay afloat in a booming as well as in a volatile market. ETF Competition The craze for smart-beta or high-quality products is high of late especially given the heightened volatility in the market. Issuers are increasingly coming up with multi-factor ETFs, though the space is yet to be jam-packed. However, J.P. Morgan has been quite proactive with this technique and bet on the trend last year with the launch of a global equity ETF (NYSEARCA: JPGE ) which focuses on factors like value, size, momentum and low volatility. State Street is also ramping up its multi-factor lineup. Apart from these, a few products including PowerShares S&P 500 High Quality Portfolio (NYSEARCA: SPHQ ), MSCI USA Quality Factor ETF (NYSEARCA: QUAL ), MSCI USA Value Factor ETF (NYSEARCA: VLUE ) or Arrow QVM Equity Factor ETF (NYSEARCA: QVM ) could put pressure on this new J.P. Morgan ETF. There is also iShares MSCI USA Momentum Factor ETF (NYSEARCA: MTUM ) which is a notable momentum play. Despite these threats, we do not expect J.P. Morgan’s Russell 1000 Diversified Factor ETF to face much problem in garnering assets given a unique index, the strong brand name of the issuer and multi-factor techniques. Within just a few days of its launch, JPUS has accumulated over $10.5 million of assets which gives an idea about its forthcoming success. Original Post

Silver Mining ETFs Head To Head: SLVP Vs. SIL

Precious metals are back to business now owing to the recent spate of disappointing economic data, mainly from the U.S. and China. After the weak September U.S. job data, the most recent inflation data from China and retail sales and producer prices data from the U.S. jumpstarted the rally in precious metal prices. Consumer price index (“CPI”) in China rose 1.6% year over year in September, lower than the August gain of 2%. The producer price index (“PPI”) declined 5.9% in the same month after falling by the same magnitude in the previous month. With this, it recorded its 43rd straight month of decline. On the other hand, U.S. retail sales gain of 0.1% in September was lower than expected (0.2%) while producer price index was the lowest since January at 0.5% in the same month, after remaining unchanged in August. Further, International Energy Agency (“IEA”) recently predicted that the global oil market will remain oversupplied in 2016 due to the surge in Iranian oil supply following a nuclear deal and weak global demand. This will continue to put pressure on oil prices and result in subdued inflation across the world due to lower oil consumption bill. All these data dimmed the prospect of an interest rate hike by the Fed, at least in 2015, leading people to flock toward non-yielding assets such as gold and silver. The chance of a delay in rate hike also led the U.S. dollar to tumble to its lowest level since late August against a basket of major currencies. This has further strengthened the demand for gold and silver in the global market as a weaker dollar makes them cheaper for holders of other currencies. As a result, both gold and silver hit their three-and-a-half-month highs recently. Amid the bullish price trend for silver, it would be intriguing to look at two top performing silver mining ETFs and their key differences. iShares MSCI Global Silver Miners (NYSEARCA: SLVP ) This ETF tracks the price and yield performance of the MSCI ACWI Select Silver Miners Investable Market Index, which provides exposure to companies primarily engaged in the business of silver mining in both developed and emerging markets. The fund holds 30 stocks in its basket. Canadian firms dominate the fund’s portfolio with a 59.08% share, followed by U.K. (12.44%) and the U.S. (9.99%). Silver Wheaton Corp. (NYSE: SLW ), Fresnillo Plc ( OTCPK:FNLPF ) and Industrias Peñoles ( OTCPK:IPOAF ) occupy the top three positions in the basket with shares of 21.96%, 10.02% and 8.04%, respectively. The top 10 holdings comprise 71.42% of the fund. Notably, the fund has some exposure to the broader precious metals and minerals sector (29.18%) and gold (10.26%), apart from silver (60.49%). The product has amassed over $13.5 billion in its asset base and trades in a paltry volume of around 15,000 shares a day. It charges investors 39 bps in fees per year and has a dividend yield of 2.87% (as of October 14, 2015). The fund returned 23.6% in the past one month. Global X Silver Miners ETF (NYSEARCA: SIL ) This ETF follows the price and yield performance of the Solactive Global Silver Miners Index, measuring the performance of the silver mining industry. The fund holds 24 stocks in its basket. Industrias Penoles Cp, Silver Wheaton Corp. and Silver Standard Resources Inc. (NASDAQ: SSRI ) are the top three holdings of the fund with allocations of 11.19%, 10.11% and 7.52%, respectively. The top 10 holdings account for 65.76% of the fund’s assets. The ETF is also highly focused on Canadian firms with a 57.96% share, followed by the U.S. (12.34%) and Mexico (11.15%). SIL has gathered about $154 million in assets and trades in an average volume of more than 238,000 shares. It charges 65 bps in fees from investors per year and offers a dividend yield of only 0.09%. The product was up 25.4% over the last one month. Exposure: In terms of company and country exposures, both funds stand on the same foot. However, SLVP has an edge over SIL as the former is also exposed to gold and the broader precious metal and minerals mining sector. Concentration: SLVP holds more securities than SIL and is more concentrated in its top 10 holdings. Volume: The higher volume of SIL compared to SLVP suggests that the former is much more liquid and its bid/ask spread should be relatively tighter than the other. Cost and Yield: SLVP is cheaper than SIL and has a much higher dividend yield. Therefore, investors keen or riding the bullish trend in silver prices should take note of these points before choosing between the two popular silver mining ETFs. Original Post