Eq: Value

Eq: Value (38)

Monday, 30 September 2019 08:58

The Best Strategy to Handle All This Volatility

Written by

(New York)

The market has been very up and down lately. 50 bp losses or gains in a day feel pretty standard by now. But all of that may be wreaking havoc on investors’ nerves and portfolios. So what is the best way to hedge against the volatility? Most low volatility funds invest in stocks with a low beta, or those that change little compared to market movements. However, there may be an even better way to go about hedging. AGF has an ETF call BTAL, which not only buys low beta names, but also shorts high beta ones, all in equal weight with equal sector balance. In bouts of volatility, those shorts tend to really help gains in a way that holding long-only positions does not.

FINSUM: This seems like a smart approach that gives a sophisticated level of protection to investors. Worth a look.

Tuesday, 17 September 2019 12:09

BAML Says Value Stocks are Finally Back

Written by

(New York)

For some reason, there is a great deal of glee about the return of value stocks this month. Even though we are only on the 17th day of September, seemingly ever research department on Wall Street is ready to proclaim that value stocks are back. BAML fits the bill perfectly, saying that value stocks are like a tightly wound spring that is finally uncoiling. In their defense, value stocks have outperformed growth stocks by 9 percentage points this month, the biggest divergence since 2010. Morgan Stanley also notes that there is currently “a massive rotation away from growth-style factors toward value-style”.

FINSUM: It has been a great start to the autumn for value stocks, but they have been in a funk so long that it is hard to believe they have suddenly shed their shackles.

Wednesday, 11 September 2019 13:41

Value Stocks Might Be Making a Comeback

Written by

(New York)

It has been for around a decade that value stocks have been getting hammered by growth stocks. The rut has been so bad that many have given up on the discipline altogether. But recently, something has been changing. Momentum stocks, long the darling of this bull market, have started to lag their value-oriented peers. This change started last week and is continuing today, and follows the worst month for value stocks in at least 20 years (this past August).

FINSUM: This is an encouraging sign, but certainly is not enough to say “value stocks are back!”.

Tuesday, 03 September 2019 13:13

The Best Way to Invest in this Market

Written by

(New York)

How to defend against this tough equity market? Some say to buy defensive sectors like healthcare and consumer staples. Others buy gold. Ironically, however, the best protection may be to stick with the old 60/40 balanced portfolio. Despite all the market turmoil recently, if you had been holding a 60% SPY and 40% AGG portfolio over the last month you would have had a net return of negative 0.62%, which is pretty good considering how ugly markets were. If you had been holding it for the whole year, you would have a sterling return of 14.45%.

FINSUM: These stats are a testament to old fashioned diversification!

Wednesday, 28 August 2019 14:45

The Best Stocks for a Recession

Written by

(New York)

Investors tend to go to the same old ports to ride out the storm of a recession—gold, Treasuries, healthcare, utilities etc. However, finding a new safe haven can be not only the means to good protection, but also solid capital appreciation. With that in mind here is a very unglamorous, but potentially lucrative idea—buy garbage stocks. We don’t mean bad stocks, we mean stocks of solid waste companies, like Waste Management, Waste Connections, and Casella Waste Systems. Garbage companies are highly recession tolerant (it is not as if there is less garbage), and they tend to throw off huge amounts of free cash flow. Michael Hoffman, an analyst at Stifel is recommending these shares.

FINSUM: This seems like a very good recession hedge. Garbage is a very durable sector. Will this be the next recession star?

Wednesday, 28 August 2019 14:37

Three Hated Stocks with Good Upside

Written by

(New York)

Quickly, name a sector that Wall Street hates right now. Auto stocks should come to mind. The car industry is in a sales downturn and is in the midst of broader upheaval brought on by electric cars, new competitors, and changing ownership patterns. The Nasdaq Auto Index is down almost 20% in the last year. However, all the changes have created an opportunity to buy into the sector, but not in car companies themselves. Instead it is high tech car suppliers that look attractive as they have a unique niche to fill in the changing industry. Check out Aptiv, Visteon, and BorgWarner.

FINSUM: This seems like a smart way to play all the shifts happening in the automobile industry.

Thursday, 08 August 2019 08:03

How Retirees Can Navigate Market Volatility

Written by

(New York)

There are a lot of retirees, or near retirees, who have not had to navigate real market volatility for around a decade. And as any retiree knows, high volatility in or at retirement is a very scary prospect. However, there are ways to navigate it. Some tips including keeping a cash buffer, going bargain hunting in the market to find undervalued stocks, and re-evaluating stock exposure. Rotating into sectors that do well in downturns, like consumer staples, healthcare etc, can also be smart.

FINSUM: This is good advice. That said, the US may not be headed into a really bad economic and market scenario, so it may not be wise to get too defensive.

Monday, 29 July 2019 10:47

How Retail Stocks Will React to Rate Cuts

Written by

(New York)

How might retail stocks react to rate cuts? That question hasn’t gotten much air time lately, but is a good one considering how much investment there is in the sector. Generally speaking, low rates should be good for the sector as they would technically stoke consumer spending. However, the logic there gets skewed based on the underlying economy (i.e. how it is trending). For the current environment, the answer is that some retail stocks will benefit handsomely, while others will struggle. The “haves” will do well, while the “have nots” will continue to suffer. The “haves” include Amazon, Lululemon, Costco, while the “have nots” include cash strapped retailers like Gap and J.C. Penney.

FINSUM: So basically a rate cut will help those who are already doing well, but won’t do much for the rest of the sector. This makes sense, as it is hard to see consumer spending changing much at the current stage of the cycle.

Tuesday, 09 July 2019 08:40

The Best Cheap Blue Chip Stocks

Written by

(New York)

The market may be way up this year, but there are still some great values out there. The average P/E ratio of the S&P 500 is 16.7, yet 67 of the companies in it trade at below 10, triple the amount of five years ago. Here are a handful of blue chips that are very cheap, but have strong market positions, decent profitability, and nice growth positions: Delta Airlines, Bank of America, Kroger, homebuilder Lennar, and BorgWarner, a maker of car components.

FINSUM: These seem like great picks, but they also appear to be the victims of the long-term decline in value investing. Investors keep thinking value investing will bounce back, but it hasn’t.

Wednesday, 26 June 2019 07:24

10 Stocks to Win in a Downturn

Written by

(New York)

The market’s outlook grew significantly dimmer yesterday. The Fed made clear that investors should not expect a rate cut in a July, which took the wind out of equity investors’ sails. With that in mind, here is a list of ten stocks that should help investors win in a downturn. The theme here is “low volatility” stocks, or stocks with less risk that should outperform the market in a choppy environment. The list: Aflac, Amdocs, American States Water, Atmos Energy, DTE Energy, Duke Energy, McDonalds, NextEra Energy, OGE Energy, WEC Energy Group.

FINSUM: Given the Fed’s reversal from what the market thought was its stance yesterday, right now does seem like a good time for low volatility stocks.

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