Greetings!
Below please find the ETF Spotlight newsletter 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.
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In this week's issue
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 Consumer Discretionary & Retail ETFs
- Chart of the week: Cons. Discretionary & Retail ETF Sales
Growth - Fund Focus: SPDR S&P Int'l Cons. Discretionary (IPD)
- Revisions, asset flows & short interest
- 2011 Sales per share estimates, growth rates, and P/Sales multiples for major ETFs
- Market monitor - movers & categories
To download the full newsletter click here.
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| Chart of the week |
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Consumer Discretionary & Retail ETF Sales Growth
'Tis the season to go shopping, and investors are looking for signs that consumer spending may finally be rebounding after several years of miserable holiday sales. Early reports of retail sales over the Thanksgiving holiday appear encouraging (+6.4% YoY according to the National Retail Federation).
Regular readers will recall we're more downbeat about the prospects for consumer-related stocks, however. While we do expect some rebound in consumer spending as the economy pulls out of the deep recession, growth is likely to remain subdued. For three decades consumers increased spending faster than incomes by reducing savings; that is now working in reverse (which ultimately is a healthy and necessary development). Further, now that baby-boomers are starting to retire there should be a downshift in spending from that demographic over the long term.
This week's chart of 2011E sales growth for the eight Consumer Discretionary and two Retail ETFs in our universe seem to bear this out. Forecasts call for growth of only 3.9-6.6% and the ALTAR ScoresTM for all ten of these funds are rather low. Still some appear to be better investments than others, and one that stands out, the SPDR S&P International Consumer Discretionary ETF (IPD) is the subject of this week's Fund Focus.
Download the full newsletter here.
Chart: Consumer Discretionary & Retail ETF Sales Growth
Growth in Sales per shares estimates, 2011 vs. 2010
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| Fund Focus |
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SPDR S&P International Consumer
Discretionary (IPD)
We favor these international discretionary stocks over their U.S. counterparts at present for several reasons. First, they are more pro-cyclical (more autos & durables, less retailing and media) and are enjoying a bigger recovery in profits, not to mention much stronger estimate revisions. They also trade at more reasonable valuation multiples and have a higher ALTAR Score. Finally, we simply see these profit forecasts as more credible since they aren't based on record margins and ROE.
To download the full newsletter, click here.
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