Greetings!
Below please find the ETF Spotlight newsletter for
the week of July 12, containing highlights of the research and
data on www.etfresearchcenter.com
as well as a recap of the past week's action in the ETF market. The focus of this week's edition is Return on Equity, one of the most important metrics in stock investing. Feel free to share it with others who may be interested. |
In this week's issue
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 Estimate revisions
- Chart of the week: Room for improvement
- Fund Focus: iShares FTSE/Xinhua China 25 (FXI)
- Revisions, asset flows & short interest
- Return on Equity and P/BV multiples for major ETFs
- Market monitor - movers & categories
To download the full newsletter click here. |
| Chart of the week
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Room for improvement
2010E Return on Equity vs. Avg. ROE  |
The challenge for value investors is to find stocks of companies where fortunes are bad but where things are likely to improve in the future. Since Return on Equity (ROE) is one of the most important indicators of a firm's profitability, we screened our universe for ETFs where current ROE is the furthest below average ROE over the course of the business cycle. This implies that while things are lousy now for these firms, results could improve substantially in coming years. Of course, valuations matter as well. Most, but not all, of the ETFs on the list have fairly high ALTAR Scores, our measure of an ETFs overall investment merit. As a result, we think it is likely that the prices for most of these funds will also improve along with the fortunes of the underlying constituents. To download the full newsletter, click here. |
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Fund Focus |
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iShares FTSE/Xinhua China 25 (FXI)
Since most firms in the index are domestically oriented (Financials, Energy & Telecom), the recent downturn in EPS was quite modest, and profits are growing rapidly again. However valuations remain more expensive than other emerging markets while profitability is average. As a result Chinese stocks rank slightly lower than the broad MSCI Emerging Markets index (EEM) in terms of ALTAR Score.
To download the full newsletter, click here.
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New Coverage
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| We have initiated coverage on the following ETFs...
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