Thu, Sep. 3, 3:12 PM
- How bad a year has it been for multi-industry stocks? Year-to-date underperformance relative to the S&P 500 is among the poorest in a decade and has gotten worse in recent weeks, say Goldman analyst Joe Ritchie and team. The negative news is no secret: Broad industrial de-stock, softening oil capex, the strong dollar, and the troubles in China. Because of this, the team remains Neutral on the beaten-up sector, but does have a few names investors should steer clear of:
- With de-stock keeping U.S. industrial growth in a "headlock," the implications are particularly negative for Sell-rated Emerson Electric (NYSE:EMR), WW Grainger (NYSE:GWW), and Neutral-rated Parker-Hannifin (NYSE:PH) and Rockwell Automation (NYSE:ROK).
- With oil capex going from bad to worse, and oil lower for longer, the Street is underestimating the impact of price declines for Dover (NYSE:DOV), Emerson, and Flowserve (NYSE:FLS). On the flip side, lower input costs should be a boon to Buy-rated Illinois Tool Works (NYSE:ITW) and Neutral-rated 3M (NYSE:MMM).
- The weaker China backdrop is most negative for Emerson, and Neutral-rated Eaton (NYSE:ETN) and Colfax (NYSE:CFX). Though Buy-rated Honeywell (NYSE:HON) and ITT Corp (NYSE:ITT) have exposure, growth is more insulated due to their market share gains.
- Source: Barron's Ben Levinsohn
- ETFs: XHB, ITB, XLI, PHO, IYT, ITA, VIS, PPA, XTN, XAR, FIDU, PKB, IYJ, FXR, UXI, PRN, RGI, SIJ, PSCI, AIRR
Thu, Mar. 5, 2:08 PM
- The financial sector (NYSEARCA:IYF) is far and away the leader in U.S. sector ETF outflows year-to-date, with $4.89B exiting, according to XTF.com. Not surprising, as the sector's been one of the poorer performers even after a nice rebound in February.
- The behavior contrasts with what's happening in energy (NYSEARCA:XLE), where bottom fishers have helped those ETFs see inflows of $2.97B - more than any other tracked sector in 2015.
- Also notable for outflows are industrials (NYSEARCA:XLI) and tech (NYSEARCA:IYW) - this despite market-beating returns so far this year.
- The other sector seeing sizable inflows is health care, with a net $2.74B coming in amid the strongest returns of all the major industries.
- ETFs: XLF, FAS, XLE, IYH, FAZ, XLK, XLV, VHT, XLI, ERX, VDE, OIH, VGT, UYG, ERY, DIG, CURE, VFH, TECL, DUG, IYE, IYW, FXH, VIS, RXL, ROM, IYF, FHLC, FTEC, TECS, FENY, SEF, PXJ, IYG, RYT, IYJ, FIDU, FXO, RYH, QTEC, IGM, FNCL, FXR, FXL, RYE, UXI, FXN, FINU, MTK, REW, RWW, RYF, RGI, DDG, SIJ, RXD, AIRR, FINZ
Sep. 30, 2014, 1:35 PM
- The ARK Industrial Innovation ETF (NYSEARCA:ARKQ) and the ARK Web x.0 ETF (NYSEARCA:ARKW) are the first launches in line of actively managed thematic ETFs filed with the SEC by ARK.
- ARKQ seeks to invest in companies that are revolutionizing the industrial world and how people travel, while ARKW seeks to invest in companies that are transforming every sector of the economy thanks to Internet-enabled innovation.
- "An acceleration in the pace of innovation makes it more challenging for analysts to analyze industries and companies, and for benchmarks to adjust. Our strategy is to find and invest in the companies that are poised to transform economic sectors and the global economy," said Cathie Wood, founder of ARK, in a press release.
- Other Internet ETFs: FDN, PNQI
- Other broad industrial ETFs: XLI, VIS, IYJ, FIDU, FXR, UXI, SIJ, RGI, AIRR, IPN, EXI
Apr. 7, 2014, 9:10 AM
- Twitter's down 32% this year, Facebook's off 20% in a month, and biotech nearly that much, but money is returning to the industrial sector. While the Nasdaq 100 posted its worst one-day drop since 2011 on Friday and last week fell for the 3rd week in 4, the Industrial Select SPDR (XLI) gained 1.6%.
- In the year's first quarter, the XLI had lost 1.4%, putting it in 9th place among 10 S&P 500 groups.
- "You’re seeing the beginning of investors shifting money ahead of a wave of spending,” says Drew Nordlicht of HighTower Advisors. “The expectation is, as the economy begins to kick into a higher gear, corporate America will utilize the amount of cash to spend on capital expenditures."
- GE comprises more than 10% of the XLI, and UTX, Union Pacific, Boeing, and 3M round out the top 5, each with holdings in the 5% range.
- Related ETFs: XLI, PHO, CGW, PIO, VIS, ITA, FIW, PPA, IGF, CARZ, IYJ, XAR, IPN, EMIF, FIDU, PRN, UXI, FXR, PXR, EXI, GII, EVX, FLM, RGI, SIJ, PSCI, NFRA, TOLZ, AXID
Jan. 16, 2014, 6:36 PM
- On January 24th the reverse split will occur, artificially decreasing the number of shares outstanding and increasing the price per share for the ETFs included in the split.
- Every 4 pre-split shares will result in the receipt of 1 post-split share and will be priced at 4 times the price of 1 pre-split share.
- The majority of the effected funds feature short term equity strategies and have underperformed during the recent economic upturn.
- ETFs undergoing a 1-for-4 reverse split on Jan 24th: EWV, EPV, QID, SQQQ, SMDD, SJH, SBB, SIJ, FXP, MZZ, TWM, SDD, SKK, AGQ, UVXY, SPXU,
Dec. 11, 2013, 10:02 AM
- "Warehouses over townhouses" is one of BAML's ten themes for 2014 - highlighting a potential shift away from consumer-driven stocks to industrial and commercial names.
- "If revenue growth continues to accelerate as we expect, corporations are likely to invest in their businesses by spending some of the cash accumulated on their balance sheets. This capex cycle, combined with improving global economic growth, is likely to benefit stocks in more industrial and cyclical parts of the economy over those that are more dependent on the consumer. In our view, this has already started, but probably is in its early stages."
- An attached chart shows this outperformance beginning to creep in in Q3.
- If the thesis is correct, investors may want to be sellers of Consumer Discretionary (XLY), Health Care (XLV), and Financials (XLF), and buyers of Tech (XLK), Energy (XLE), Industrials (XLI), and Materials (XLB).
- Related ETFs: FAS, XLF, IYH, FAZ, XLE, XLV, ERX, XLI, XLY, XLB, OIH, VHT, VDE, ERY, UYG, DIG, DUG, VFH, VCR, UYM, VAW, IYE, CURE, VIS, IGE, IYM, IYF, RXL, FXH, SEF, SMN, PXJ, IYG, PXI, IYJ, FXO, PFI, PSCH, KBWB, PSCE, FXD, UXI, MATL, PYZ, PRN, FXN, FXZ, RYE, RWW, FINU, FHLC, RYH, DDG, FXR, RCD, RTM, RYF, FIDU, SBM, SIJ, PSCF, PTH, FDIS, FENY, RGI, FNCL, RXD, PEZ, PSCD, PSCI, PSCM, FMAT, FINZ
Sep. 30, 2013, 12:55 PM
- Among BAML's Ten Reasons to Buy Industrials, most interesting is the team's argument for a P/E re-rating for the sector because of earnings stability. Industrials have the most stable earnings of all ten major market sectors - even against defensive areas like Consumer Staples - yet they're still penalized for being too cyclical. "There is a glaring mis-pricing of risk."
- Another reason is the charts: Industrials have quietly broken out relative to the S&P 500 - a bullish trend for those liking to buy relative strength.
- Relevant ETFs: FXR, IYJ, PRN, XLI, VIS, RGI, PSCI, UXI, SIJ.
Sep. 9, 2013, 12:23 PM
- Bullish on the economy, Goldman's David Kostin says investors should favor those firms with high fixed costs as they'll benefit most from margin expansion. This leads him to pick industrials (XLI) and financials (XLF) as his favorite sectors.
- Industrials ETFs: FXR, IYJ, PRN, XLI, VIS, RGI, PSCI, UXI, SIJ.
- Financials ETFs: XLF, IYF, PFI, VFH, RYF, RWW, FAS, UYG, FAZ, SKF, SEF, IAI, FXO, PSCF, KBWD, KBWB, IYG, FINU, FINZ.
- Goldman's got a basket of 50 names set to benefit most from stronger GDP growth. Included are ANF, WFM, APC, R, X. More names as we get them.
Jun. 19, 2013, 10:53 AM"Sell in May and go into cyclicals," says Ralph Acampora after the last month. He reminds of an old adage saying sectors going down the least during a selloff become the new market leaders. During SPY's 5.2% decline from May 22-June 6, the best performers were Tech (XLK) and Industrials (XLI). The worst were Telecommunications (IYZ) and Utilities (XLU). This "rolling rotation" between sectors is necessary, he says, to give further life to the secular bull market begun in March 2009. | Jun. 19, 2013, 10:53 AM | 3 Comments
May 21, 2013, 8:49 AMExponential rapidly rising or falling markets usually go further than you think, but they do not correct by going sideways," is #4 of Bob Farrell's "Market Rules to Remember." Channeling that, BAML's Steve Suttmeier sees stocks continuing their run with risks of a topping-out not arriving unti late summer. He's most bullish on industrials (XLI) - particularly "oversold" EXPD, DE, CAT, FDX - and also thinks financials (XLF) will remain market leaders. | May 21, 2013, 8:49 AM | 4 Comments
May 6, 2013, 7:27 AMThe S&P 500 (SPY) is fairly valued, says Goldman, but opportunity lies in cyclicals (XLY, XLE, XLI, XLB) which are more undervalued vs. defensives (XLU, XLP, XLV, XTL) than at any time in the last 15 years. "Given the 4 P/E multiple point head start, even a slight valuation normalization should translate into outperformance of cyclicals over defensives during the next 12 months." | May 6, 2013, 7:27 AM | 1 Comment
May 3, 2013, 8:00 AM"We don't want to sell in May and we continue to prefer cyclicals (XLY, XLI, XLB, XLE) ," says JPMorgan's Tom Lee, fully returned to his normal bullish stance. He notes client positioning is "dramatically different" from the heavily long stance of the last 3 years at this time. More, the downturn in gasoline prices could ad 50 bps to GDP in Q2, and the rally in high-yield suggests the economy is set to get stronger. | May 3, 2013, 8:00 AM | 1 Comment
Nov. 5, 2012, 7:58 AMReporting Q3 profit off 85% from a year ago, Liugong Machinery President Zeng Guang'an warns of continued overcapacity in the Chinese construction-equipment sector, saying the country only needs about 10% of the current 200 firms in the business. "We have too much investment. We need more consumption." | Nov. 5, 2012, 7:58 AM | Comment!
Oct. 19, 2012, 9:10 AM"Investors need to understand the growing risks of overplaying the defense card," writes AllianceBernstein's Joe Paul, exploring whether high-yield stocks are in bubble territory. It's not news they're expensive compared to past metrics, but high-yielders now make up a record 44% of the S&P 500 (on a cap-weighted basis). "As a countermeasure, (investors) may want to add more cyclical, deeper-value names." | Oct. 19, 2012, 9:10 AM | 2 Comments
Oct. 19, 2012, 8:54 AMTechnicians get interested in the industrial sector (XLI) as the charts say there's a move coming, "and it's not going to be a boring one." The direction is not yet known, but J.C. Parets is giving the benefit of the doubt to the bulls. Wait for weekly closes above $38. The XLI -1.3% premarket, as its largest holding, GE, slides following earnings. | Oct. 19, 2012, 8:54 AM | Comment!
Mar. 16, 2012, 10:21 AMTaking its signal from rising bond yields, HSBC suggests cyclicals will outperform as higher rates are a sign nominal demand is rising. The main casualties: healthcare and consumer staples. As for being a threat to the entire market, HSBC believes this is only true at real yields above 4% (they're negative now), but "a sharp rise in bond yields is a threat from whatever level." | Mar. 16, 2012, 10:21 AM | Comment!
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