CHICAGO, May 28, 2014 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include the Wal-Mart (NYSE:WMT-Free Report), SPDR S&P Retail ETF (AMEX:XRT-Free Report), Market Vectors Retail ETF (AMEX:RTH-Free Report), Amazon.com (Nasdaq:AMZN-Free Report) and PowerShares Retail Fund (AMEX:PMR-Free Report).
Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.
Here are highlights from Tuesday's Analyst Blog:
Weak Earnings Hurting Retail ETFs
Retailers saw a weak Q1 with total earnings from 97.3% of the sector's total market capitalization reported so far being flat on 3.3% revenue growth. Earnings surprises were predominantly negative for retailers, with only 43.9% of the companies beating earnings estimates, the lowest in the S&P 500, and an even lower 39.0% beating revenues.
Further, the retail sector has been the weakest among the 16 Zacks sectors in terms of price performance from a year-to-date look. This is especially true as the retail sector stocks in the S&P 500 are down over 5% versus over 3% gain for the S&P 500. Harsh winter, intense price competition and lower consumer income have taken a toll on the broad retail space.
In particular, lower-than-expected earnings from retailers like Wal-Mart (NYSE:WMT-Free Report), and their sliding stock prices have been the major culprits, spreading bearishness in the retail sector on the whole (read: Wal-Mart Earnings Miss Push These ETFs Down).
ETFs in Focus
The weak and strong performances by retailers have put retail ETFs in focus for the next few days. Investor seeking to tap the current beaten down prices in a diversified way could consider the following three ETFs. Any of these could be considered solid picks given that these have a favorable Zacks ETF Rank of '2' or '3' and retail fundamentals are improving.
SPDR S&P Retail ETF (AMEX:XRT-Free Report)
This product tracks the S&P Retail Select Industry Index, holding 105 securities in its basket. It is widely spread across each component as none of these holds more than 1.46% of total assets. About half of the portfolio is dominated by small cap stocks while the rest have been split between the other two market cap levels (read: 3 Small Cap ETFs Outperforming the Russell 2000 Index).
In terms of sector holdings, apparel retail takes the top spot at one-fourth share in the basket while specialty stores, automotive retail and Internet retail have double-digit allocations. The fund has amassed about $680 million in its asset base and trades in heavy volume of nearly 3.2 million shares per day. The ETF charges 35 bps a year in fees. XRT was flat over the past 10 trading sessions and has a Zacks ETF Rank of 2 or 'Buy' rating with Medium risk outlook.
Market Vectors Retail ETF (AMEX:RTH-Free Report)
This fund follows the Market Vectors US Listed Retail 25 Index and holds about 26 stocks in its basket with AUM of $27.5 million. Average daily volume is light at under 39,000 shares while expense ratio is at 0.35%. The product is a large cap centric fund and heavily concentrated on the top 10 holdings with 63.4% of assets with largest allocations to WMT, Amazon.com (Nasdaq:AMZN-Free Report) and HD.
Sector wise, specialty retail occupies the top position with less than one-third share, followed by double-digit allocation to hypermarkets, drug stores, departmental stores, and health care services. RTH added about 0.8% over the past 10 days and has a Zacks ETF Rank of 3 or 'Hold' rating with a Medium risk outlook.
PowerShares Retail Fund (AMEX:PMR-Free Report)
This retail fund provides diversified exposure across various market caps with 39% in large caps, 34% in small caps and the rest in mid-caps. This is easily done by tracking the Dynamic Retail Intellidex Index. The fund has accumulated $24.9 million in its asset base while trades in light volume of under 12,000 share a day. The ETF charges 63 bps in fees per year (read: ETFs to Watch on Rotten Whole Foods Earnings).
In total, the product holds 30 securities with moderate concentration of 45.8% across the top 10 holdings. In terms of industrial exposure, food retail takes the top spot at 21.53%, followed by automotive retail (15.89%) and drug retail (13.65%). PMR gained about 2% in the past 10 trading sessions and has a Zacks Rank of 3 with a Medium risk outlook.
Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.
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