Follow T. Rowe Price with These Stocks and ETFs
With the Fed turning hawkish, several industry experts predicting 2016 as a down year for stocks, overvaluation concerns looming large and growth worries still brewing abroad, investors must be looking for the right pick in the markets (read: 5 ETF Ways to Keep Volatility at Bay).
The broader U.S. market has lost over 1.2% so far this year (as of December 15, 2015) as denoted by Vanguard Total Stock Market ETF (VTI) while global stocks are off about 4% as depicted by iShares MSCI ACWI (ACWI). At home, only tech stocks held their head high as indicated by tech-laden Nasdaq ETF QQQ’s 8.8% return.
In such a situation, while several experts are coming up with varying views, investors can follow
the American publicly owned investment firm T Rowe Price’s tech stock selections for 2016.
Investors should note that none of the picks is Buy-rated as per Zacks (at the time of writing); in fact some of these have a ‘Sell’ rating. So, if you follow T. Rowe Price’s picks, bets could be contrarian in nature. However, investors can go against the crowd via the ETF approach as it covers up one component’s weakness with another component’s strength and runs lesser risk.
Below we highlight tech stock selections of T. Rowe Price and the ETFs having considerable exposure to those stocks.
JD. Com (JD) – WisdomTree China ex-State-Owned Entpr ETF (CXSE)
Beijing-based e-commerce company reported wider-than-expected loss in Q3 reported in November, but provided a better-than-expected fourth-quarter revenue guidance. The company’s revenues of RMB44.1 billion (US$6.9 billion) also represented a year-over-year jump of 52% in Q3.
T. Rowe Price finds its valuation ‘very attractive’. The stock gained 9.6% in the last one month and is up 36.5% so far this year (as of December 15, 2015). However, the stock has a Zacks Rank #4 (Sell) as there were no upward estimate revisions by analysts in the last 7, 30 and 60 days for any of the quarters, at the time of writing.
Thus investors seeking to follow T. Rowe Price but with lower risks might opt for a basket or ETF approach. The stock has a top spot in WisdomTree China ex-State-Owned Enterprises ETF with 9.48% exposure. As the name suggests, the fund does not consider Chinese state-owned entities. Though CSXE also has a Zacks ETF Rank #4, the fund is up 0.6% in the last one month.
Tesla (TSLA) – First Trust NASDAQ Clean Edge Green Energy ETF (QCLN)
Electric vehicles maker Tesla has always been a hot stock thanks to its relentless initiatives. Though its headline Q3 numbers were not very enthusiastic, Tesla is steady on deliveries of new automobiles. Also, the unveiling of Tesla's new, more affordable Model 3 car in March 2016, may lead investors to place big bets on the stock. T. Rowe Price expects the usage of electric car to be common in 2016 and 2017.
TSLA has a Zacks Rank #3 (Hold) and hails from an industry which is in the top 26% of the Zacks universe, at the time of writing. Tesla was up 3.2% in the last one month (as of December 15, 2015) but is off 0.6% year to date.
The stock has 7.11% weight in the clean energy ETF QCLN. The fund has a Zacks ETF Rank #3 and was up 5.6% in the last one month but is down 12.4% year to date. In any case, the sailing should be smooth for clean energy ETFs ahead following the Paris climate summit wherein efforts to limit greenhouse emissions were widespread.
Alphabet (GOOGL) – iShares U.S. Technology ETF (IYW)
As per T. Rowe Price, Alphabet – the publicly traded firm formerly known as Google – is gaining traction from mobile phones and the demand for YouTube. Solid revenues, stock repurchase plans and “very attractive valuation” makes Alphabet shares lucrative. This Zacks Rank #3 stock has a Growth score of ‘B’ and a Momentum score of ‘C’. GOOGL is up over 43% this year.
The stock has 6.2% weight in the Zacks Rank #2 (Buy) ETF IYW. The fund is up over 3.5% so far this year (as of December 15, 2015) (read: Want a Better Taste of Apple? Pick ETFs Instead of Stock).
Applied Materials (AMAT) – Market Vectors Wide Moat Research ETF (MOAT)
Applied Materials is one of the world’s largest suppliers of fabrication equipment to semiconductor, LCD and solar PV cell manufacturers. The rise of mobile devices, better utilization of resources and the recently-announced merger with Tokyo Electron are the positives. AMAT was up over 14% in the last three months (as of December 15, 2015). This Zacks Rank #3 has a Value and Growth score of ‘B’.
The stock has a 5.66% weight in the fund MOAT which is intended to offer exposure to the 20 most attractively priced companies with continued competitive advantages according to Morningstar’s equity research team. MOAT is up 1.1% in the last three months (read: 5 ETFs to Buy and Hold for the Next 5 Years).
NXP Semiconductors (NXPI) – NASDAQ CEA Cybersecurity ETF (CIBR)
As per T. Rowe Price, this semiconductor company benefits big time from industrial and auto end markets. It’s acquisition of Freescale Semiconductor also bodes well for the fund. The fund has a Zacks Rank #4 and a Growth score of ‘B’ and Value score of ‘C’. NXPI retreated 7.7% in the last three months.
Apart from semiconductor ETFs, the stock has 5.9% weight in the cyber security ETF CIBR. The fund added over 0.1% in the last three months (read: Cyber Security ETFs in Focus on Solid Q3 Reports).
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WISDMTR-TR WTCH (CXSE): ETF Research Reports
NASDAQ-CL EDG G (QCLN): ETF Research Reports
ISHARS-US TECH (IYW): ETF Research Reports
MKT VEC-WIDE MT (MOAT): ETF Research Reports
FT-NDQ CEA CYBR (CIBR): ETF Research Reports
JD.COM INC-ADR (JD): Free Stock Analysis Report
TESLA MOTORS (TSLA): Free Stock Analysis Report
ALPHABET INC-A (GOOGL): Free Stock Analysis Report
APPLD MATLS INC (AMAT): Free Stock Analysis Report
NXP SEMICONDUCT (NXPI): Free Stock Analysis Report
VIPERS-TOT STK (VTI): ETF Research Reports
AGILENT TECH (A): Free Stock Analysis Report
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