|Bid||79.31 x 900|
|Ask||79.34 x 800|
|Day's Range||78.46 - 79.84|
|52 Week Range||54.20 - 91.86|
|PE Ratio (TTM)||N/A|
|YTD Daily Total Return||-14.09%|
|Beta (5Y Monthly)||1.17|
|Expense Ratio (net)||0.15%|
Exchange-traded funds that follow a value strategy were heading for their best week in about a month, a signal investors may be shifting their attention to market segments that haven't participated in the recent rally. The iShares Edge MSCI USA Value Factor ETF climbed 2.4% Friday, and was up 2.7% over the week. That's the most since a 15.2% gain during the April 9 week, according to FactSet data. A competitor, the Vanguard U.S. Value Factor ETF , was up nearly 4% Friday and 2.7% for the week. Funds with a momentum strategy were lagging behind Friday - the iShares Edge MSCI USA Momentum ETF was up 0.9% - but has posted a 4.6% gain this week. If investors become more convinced of the resilience of the economic recovery, they may bet on shares that are undervalued by some metric, rather than relying on the momentum of stocks that have been consistently rising.
“Chris Watling of London’s Longview Economics shows that value goes through long cycles of two decades or more,” wrote John Authers in Bloomberg. The index is composed of the common stock of typically 20 companies included in the S&P 500 that have been selected through a proprietary ranking system developed by the fund’s index provider, that evaluates the earnings and cash flows of each company to create a final universe of companies that are deeply undervalued as compared to the S&P 500 overall.
As the stock market continues to reach record highs, global investment firm JP Morgan still sees the movement to value-oriented equities from momentum-based equities to run for some time. It's already been going on for four months and could go on for another four or even more, according to JP Morgan. “Currently, we estimate that 42% of potential rotation has been realized,” said J.P. Morgan’s chief U.S. equity strategist, Dubravko Lakos-Bujas.
As Wall Street bulls rage on, investors can play high-beta ETFs to make the most of the Santa rally. These ETFs offer solid value and allay overpricing concerns.
For a brief moment in August and September 2019, value stocks finally started to outperform momentum stocks for the first time in several years. That is, during a stretch from late August to September, the iShares Value Factor ETF (BATS:VLUE) rose more than 10%, while the iShares Momentum Factor ETF (BATS:MTUM) fell flat.This unusual divergence was the result of rapidly rising U.S. Treasury yields. Long story short, momentum stocks were being pushed higher by low interest rates, which were being pulled lower by Federal Reserve rate cuts and escalating U.S.-China trade tensions. But, in late August, trade tensions started to ease, the economic outlook started to improve and it looked like the Fed was going to pause its rate-cutting cycle. Interest rates surged higher, putting pressure on momentum stocks (for valuation reasons) but breathing life into value stocks (because higher rates usually mean a stronger economic outlook).This trend has since ended. Yes, the economic outlook is still improving, the Fed is still on hold and trade tensions are still easing. But, despite all that, inflation remains stubbornly below 2%. So, Treasury yields have flat-lined since mid-September. As they have, value and momentum stocks have performed equally well, with both rising about 5%.InvestorPlace - Stock Market News, Stock Advice & Trading TipsOne way of looking at this dynamic is that value stocks are finally holding their own. The other view -- which I feel is more appropriate -- is that momentum stocks refuse to slow down. No matter what you throw at them -- be it falling rates, rising rates, fast economic expansion, slow economic expansion -- momentum stocks just keep running higher. * 7 Vaping Stocks to Get into Ahead of the Crowd With this thought in mind, let's take a closer look at seven momentum stocks which have fully embodied this "we won't slowdown for anything" attitude. Momentum Stocks to Watch: Shopify (SHOP)Source: Jirapong Manustrong / Shutterstock.com Trailing 3-Year Return: 854%Year-to-Date Return: 185%E-commerce solutions provider Shopify (NYSE:SHOP) has morphed into the poster child of unstoppable momentum stocks in the internet era, rising a whopping 854% over the past three years and 185% year-to-date on the back of internet-related tailwinds.Shopify got to this point by turning into the backbone of digital commerce. In a nutshell, Shopify provides e-commerce tools so that any merchant, regardless of size or background, can succeed in the e-retail world. In essence, it has become a necessary tool for every merchant looking to sell online. Fortunately for Shopify, the entire commerce world has pivoted online over the past few years. As it has, retailers and merchants of all shapes and sizes have increasingly employed Shopify's solutions to help them sell more effectively online. This rapid adoption uptake has led to huge sales growth at Shopify, at favorable gross margins, which has powered enormous gains in SHOP stock.At present, only 11% of retail sales in the U.S. are transacted digitally. That's a small number. Inevitably, it will move higher over time, meaning that the e-retail tailwinds which have propelled huge growth at Shopify won't slow anytime soon. From this perspective, Shopify projects as a big grower for a lot longer. Just below a $400 price tag, a lot of that big growth is priced in … so much so that shares may need to take a temporary breather here.But, in the long run, sustained big growth through e-retail expansion will keep SHOP stock on a winning path. Chegg (CHGG)Source: Casimiro PT / Shutterstock.com Trailing 3-Year Return: 404%Year-to-Date Return: 35%Connected learning platform operator Chegg (NYSE:CHGG) has taken digital world principles and applied them to the academic industry. In so doing, Chegg has turned into a momentum stock that is up almost five-fold over the past three years and nearly 40% year-to-date.Chegg got here by doing something very simple -- creating a learning platform that students have wanted for a long time. That is, high school and college students today are surrounded by digital, on-demand connected services which make their lives very easy. The academic world, though, did not offer any such digital, on-demand and connected service. So, Chegg created it, offering a suite of services like on-demand tutoring, e-textbooks and online courses, all on one connected learning platform. Students from across the nation have quickly bought into the Chegg ecosystem. As they have, Chegg's revenues, profits and stock price have all marched higher.The key numbers here are 3.1 million and 36 million. That first number is the number of Chegg subscribers today. The second number is the total number of high school and college students in the U.S. Thus, Chegg is tapping into less than 10% of its addressable market in the U.S. alone. Eventually, Chegg will expand internationally, too. So, the runway for further growth here is very big and very long. * The 8 Biggest Investing Surprises of 2019 In other words, Chegg won't stop growing at a robust rate anytime soon. Sustained robust growth will continue to push CHGG stock higher. The Trade Desk (TTD)Source: Shutterstock Trailing 3-Year Return: 720%Year-to-Date Return: 126%Programmatic ad tech leader The Trade Desk (NASDAQ:TTD) has become an increasingly important player in the digital advertising world. As it has, TTD stock has turned into a monster growth stock, delivering a near 800% return over the past three years and a 126% return in 2019 alone.The Trade Desk got here for three reasons. First, ad dollars have continued to chase engagement into the digital channel, and The Trade Desk provides demand-side services for digital advertisers. Second, the digital ad world has become increasingly programmatic, where the ad transaction process is becoming fully automated, and The Trade Desk is the leading demand-side platform (DSP) for programmatic ads. Third, the digital ad world is also becoming increasingly "open," as big tech companies are being forced to open their walled gardens, thereby allowing third-party DSPs like The Trade Desk to earn a bigger share of the global digital ad pie. These three dynamics have together propelled tremendous revenue and profit growth at The Trade Desk, which has in turn powered huge gains for TTD stock.All three of these favorable dynamics will remain in play for the foreseeable future. Ad dollars will continue to rush into the digital channel. Automated technologies will become more commonly used, and programmatic advertising will become the norm in the digital ad world. Open internet initiatives will gain traction, thereby allowing The Trade Desk to keep gaining share.The three things which have propelled big growth at TTD over the past few years will similarly propel big growth for the next few years, too. Some of this big growth is priced into TTD stock. But not all of it. So TTD stock should keep marching higher in the medium to long term. Okta (OKTA)Source: Sundry Photography / Shutterstock.com Trailing 3-Year Return: 580%Year-to-Date Return: 84%Cloud security solutions provider Okta (NASDAQ:OKTA) has taken a unique approach to cloud security. This unique approach has gained traction in the global enterprise world. As it has, OKTA stock has turned into an unstoppable momentum stock, including an 81% year-to-date surge.The key to Okta's success is that this company has built an optimal identity-based cloud security solution which doesn't compromise on security, and yet optimizes mobility. Essentially, traditional cloud security solutions were like big protective castles surrounding an entire enterprise ecosystem. Much like castles, these solutions were safe, but didn't allow for individual mobility (people had to stay within the castle). Okta solved this by getting rid of the castle, and outfitting each individual in the ecosystem with their own security armor. In so doing, Okta created an identity-based security solution which maintained high security standards, but also didn't restrict mobility. Enterprises have fallen in love with this solution. As they have, Okta's revenues, profits and stock price have all soared higher.Okta's core Identity Cloud platform will continue to gain traction in the 2020s. Powering the adoption uptake will be an increase in the number of connected devices in an enterprise ecosystem thanks to 5G and internet of things tailwinds, as well as higher usage of gig economy principles and remote work. In sum, these trends will make enterprise security mobility more important than ever, and this will turn more and more businesses into Okta customers. * 10 Best-Performing Growth Stocks of the 2010s As Okta's customers, revenues and profits march higher over the next few years, OKTA stock will march higher, too. Adobe (ADBE)Source: r.classen / Shutterstock.com Trailing 3-Year Return: 211%Year-to-Date Return: 45%Mega-capitalization creative solutions giant Adobe (NASDAQ:ADBE) has not let its increasing size slow its growth trajectory. Instead, Adobe has leveraged secular creative market tailwinds to sustain huge revenue and profit growth, the sum of which has driven a 211% gain in ADBE stock over the past three years and a 45% gain in 2019.There are three big businesses at Adobe. All three have been firing on all cylinders. First, there's the Creative Cloud business, which has grown by leaps and bounds due to a rise in creative content creation, distribution and consumption. Second, there's the Document Cloud business, which has also grown rapidly due to the paper-to-digital shift happening everywhere. Third, there's the Experience Cloud business, which has become a big player in the enterprise cloud market as visuals have become an increasingly important part of the customer experience. Big growth across all three of these verticals has propelled big gains in Adobe's revenues, profits and stock price.The creative market is really just getting started. Everywhere you look, creativity is becoming more and more important, and more and more widely deployed across various verticals. Because of this, Adobe finds itself at the epicenter of an ever-expanding creative solutions market. In this market, Adobe essentially has no competition, because it provides the best-in-class creative solutions in every major category.Given this, it appears obvious that Adobe will sustain big and profitable growth for a lot longer. That big and profitable growth will keep ADBE stock on its long-term winning trajectory. Splunk (SPLK)Source: Michael Vi / Shutterstock.com Trailing 3-Year Return: 181%Year-to-Date Return: 42%Big data analytics platform provider Splunk (NASDAQ:SPLK) has turned into an unstoppable momentum stock thanks to its broad and robust exposure to artificial intelligence and data-related tailwinds, the sum of which have driven a 181% trailing three-year gain in SPLK stock (including a 44% year-to-date gain).Splunk is all about converting data into everything, so much so that the company's core product is called the Data-to-Everything platform. At a high level, what this platform does is what every business today needs to do, and that is turning the mountains of raw data at their fingertips into actionable insights which can improve the company's research, product development, sales and marketing initiatives. Business have increasingly realized that they need to pivot towards a data-driven decision making framework over the past few years. As they have, Splunk's customer base has rapidly expanded. Revenues and profits have soared. So has SPLK stock.This growth narrative is just getting started. The volume of data globally is going to grow exponentially from here, as companies start deploying more data-tracking initiatives and as the number of data-tracking devices grows with IoT expansion. At the same time, our abilities to transform that data into actionable insights will similarly grow as machine learning and AI algorithms improve with time and practice. Consequently, we are at the tip of the iceberg when it comes to entering an era of data-driven decision making. * 4 Beaten-Up Pot Stocks Worth Considering in 2020 That's great news for Splunk. The more companies pivot toward a data-decision making framework, the more they will pivot toward using Spunk's Data-to-Everything platform. This will sustain huge revenue and profit growth at Splunk, which will in turn sustain big gains in SPLK stock. Roku (ROKU)Source: JHVEPhoto / Shutterstock.com Trailing 3-Year Return: 891%Year-to-Date Return: 350%The hottest momentum stock on this list is streaming device maker Roku (NASDAQ:ROKU), which has rode secular streaming TV adoption tailwinds to huge share price gains, including a near ten-fold increase from the stock's September 2017 IPO price of $14 and a 350%-plus gain in 2019 alone.The streaming TV world is booming. Everyone is going from watching linear TV to watching streaming TV. Amid this pivot, the streaming TV world is becoming increasingly complex. There's a ton of supply and a ton of demand. Someone needs to organize the market and seamlessly connect all that supply to all that demand. Roku is that someone. It is increasingly transforming into the de facto "cable box" of the streaming world, providing a central, common and streamlined access point for consumers to watch their favorite streaming services. Because of this, Roku has sustained big user and engagement growth, which has propelled even bigger revenue growth as ad dollars have chased users into the Roku ecosystem.All of this will continue over the next decade. More and more consumers globally will pivot into the streaming TV channel. Most of them will use the Roku OS to access their streaming services. Ad dollars will continue to chase those consumers into the Roku ecosystem.Big picture, then, Roku will sustain big growth for a lot longer. That means ROKU stock is far from being done with its rally.As of this writing, Luke Lango was long SHOP, CHGG, TTD, OKTA and ADBE. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Vaping Stocks to Get into Ahead of the Crowd * 5 Retail Stocks That Are Winning Big This Holiday Season * Make the Shift Toward Value Stocks With These 5 Picks The post 7 Momentum Stocks Refusing to Slow Down appeared first on InvestorPlace.
When it comes to factors, value hasn’t been reaping the rewards of indexes like the S&P 500 breaking new records, but 2020 could see a reversal of fortune for the value factor. “We’ve seen more and more people give up on the idea of value investing, which we think is a little strange because we’re in the only major industry in the global macro economy where people hate bargains,” said Rob Arnott, chairman at Research Affiliates on CNBC’s “Trading Nation” segment.
In early September, we saw an unprecedented shift in the investment landscape from momentum stocks to value stocks. This came amid a recovery in economic fundamentals and a sharp rise in interest rates.By mid-September, the the iShares Momentum Factor ETF (BATS:MTUM) was down more than 1%, while the iShares Value Factor ETF (BATS:VLUE) was up more than 7%. This big divergence prompted me to write a piece on InvestorPlace outlining seven momentum stocks to buy on the dip.The logic was simple. These sharp momentum-to-value shifts don't happen often. But, when they do, it's when the things are getting better. See late 2016. It is investors voting with their money that the coast is clear to buy stocks that require a good economy to head higher. As such, these shifts are normally temporary, and a harbinger of a broader market rally. When they end, both value and momentum stocks power higher alongside a rising economy.InvestorPlace - Stock Market News, Stock Advice & Trading TipsThus, I reasoned that the September weakness in momentum stocks presented a solid buying opportunity into 2020, when all stocks would power higher supported by easing trade tensions, re-accelerated global capital investment and economic activity, revamped corporate profit growth, healthy labor markets and supportive central bank policy.Fast forward two months. Since then, both the Momentum Factor ETF and Value Factor ETF are up more than 3%, five of the seven momentum stocks I recommended are up more than 8%, and three of them are up more than 20%. * 7 Stocks to Buy in December I think this momentum stock rebound will continue. As such, let's take a deeper look at five of my favorite momentum stocks that have shown impressive strength since mid-September. Momentum Stocks to Buy on the Rebound: The Trade Desk (TTD)Source: Shutterstock % Gain Since Sept. 16: 20%At one point in time, programmatic advertising leader The Trade Desk (NASDAQ:TTD) was one of the biggest losers in the mid-2019 momentum-to-value shift. Shares had shed almost a quarter of their value by mid-September. But, since then, shares have soared 20%.This big rebound in TTD stock will persist for a few reasons.First, the long-term fundamentals are favorable here. Programmatic advertising is "smart" advertising, which leverages algorithms, data and machine learning to transform ad transactions and ad spend allocations from a guess-and-check process, to an automated and optimized process. The whole ad industry is pivoting into programmatic advertising, yet only a small portion of global ad dollars are transacted programmatically today. The Trade Desk is at the center of this pivot. Thus, as more ad dollars flow into the programmatic channel over the next few years, TTD's revenues and profits will continue to roar higher.Second, the valuation remains reasonable. By my numbers, The Trade Desk will net $12 in earnings per share by fiscal 2025, behind 20%-plus annual revenue growth, steady profit margin expansion and 25%-plus profit growth. Based on an exit multiple of 35-times forward earnings (which is average for application software stocks) and a 10% discount rate, that equates to a 2019 price target for TTD stock of $260 -- above today's $250 price tag.Third, the optical backdrop will remain supportive. Yields appear to be done surging, so the valuation headwinds which hit TTD stock in September also appear to be over. At the same time, easing trade tensions should support a rebound in enterprise capital spending, and as that picks up, companies should spend more on their programmatic advertising pivots.Ultimately, TTD stock should stay in rebound mode. Adobe (ADBE)Source: r.classen / Shutterstock.com % Gain Since Sept. 16: 8%Shares of creative solutions giant Adobe (NASDAQ:ADBE) weren't hit that hard by the mid-2019 momentum-to-value shift. But, ADBE stock has still rattled off an impressive 8% gain since mid-September as momentum stocks have come back in favor. Shares presently trade just a few bucks shy of all-time highs.The fundamentals here imply that ADBE stock should hit new all-time highs soon.The economic and market backdrops are healthy. Trade tensions are easing. Easing trade tensions will support a rebound in capital spending, which will fuel a rebound in the global economy. As the global economy rebounds, stocks will broadly power higher. This rising tide will lift most boats, including ADBE stock.Adobe's internals are equally healthy. This is a company which dominates the secular growth creative solutions market with essentially no real competition. Growth is big because enterprises and professionals are investing more into creative solutions as the world becomes more visually based. Margins are huge, because Adobe commands tremendous pricing power. Profit growth is consequently big, too. All of this should continue for the foreseeable future, and at an accelerated rate in 2020, thanks to a rebound in enterprise spending trends.Also of note, the valuation on ADBE stock remains tangible. By my projections, Adobe will remain a double-digit revenue growth company for several years thanks to creative market tailwinds, while margins will naturally improve with scale. Those growth projections create visible runway for earnings per share to hit $20 by fiscal 2025. Based on a systems software sector-average 25-times forward earnings multiple and a 10% discount rate, that equates to a 2019 price target for ADBE stock of $310. * 7 Unsteady Stocks Investors Should Consider Selling Before 2020 All in all, then, the data here suggests that ADBE stock will remain in rally mode. Okta (OKTA)Source: Sundry Photography / Shutterstock.com % Gain Since Sept. 16: 24%Another momentum stock which was hit hard during the momentum-to-value shift was identity cloud company Okta (NASDAQ:OKTA). Much like TTD stock, OKTA stock lost about a quarter of its value during this shift. Since mid-September, though, OKTA stock has rattled off a 24% gain.OKTA stock should continue to rebound for three big reasons.First, Okta is a big growth company with strong long-term fundamentals. At its core, this company is reinventing the way companies protect their data. Instead of building a castle of security surrounding an entire enterprise ecosystem (as most traditional cybersecurity solutions do), Okta is outfitting each member in an enterprise ecosystem with personalized "armor," under the idea that if each individual is protected, so is the entire ecosystem.Okta calls this new method the Identity Cloud. This Identity Cloud is surging in popularity, because it improves enterprise flexibility, mobility and convenience, without compromising on security integrity. Still, Okta is a relatively small company (less than $500 million in revenue) in a huge cybersecurity market ($170 billion and growing), so there is ample room for Okta to stay on a big growth trajectory for a lot longer.Second, the valuation on OKTA stock isn't stretched. My modeling suggests that Okta has a visible opportunity to net $11 in EPS by fiscal 2030 (assuming 20%-plus revenue growth, sustained big gross margins, and significant positive operating leverage). Based on an application software sector-average 35-times forward multiple and a 10% discount rate, that equates to a 2019 price target of nearly $150.Third, the optics are improving. Specifically, capital spending trends are rebounding, and Okta's revenues come from the capital spending well.Big picture -- OKTA stock can and will keep moving higher. Chegg (CHGG)Source: Casimiro PT / Shutterstock.com % Gain Since Sept. 16: 11%On seemingly no catalyst whatsoever, shares of digital education giant Chegg (NASDAQ:CHGG) tumbled from nearly $50 in late July 2019, to below $30 by early November 2019. Then, Chegg reported strong third-quarter numbers, which implied that the selloff was grossly overdone. CHGG stock has since rebounded to $40.This rebound should continue until CHGG stock runs back to its $50 all-time highs.Chegg is a big growth company. This company has created a connected learning platform which is increasingly becoming a necessary and vital part of the learning experience for high school and college students. That's because Chegg has built the first education platform that caters to modern student's needs. They want digital services, they want on-demand services, they want streamlined services and they want all-the-time services. Chegg provides all four, all in one place.As such, it isn't too far off to think that Chegg will one day be used by most high school and college students across America. There are 36 million students who fit that description. Chegg has only nabbed 3.1 million of them. Thus, with a meager 10% penetration rate in a highly fragmented market that is ripe for disruption, Chegg is primed for big growth over the next few years.This big growth simply isn't priced into CHGG stock today. By my numbers, Chegg has a realistic opportunity to hit $2.50 in EPS by fiscal 2025. Based on a big-growth 30-times forward earnings multiple and a 10% discount rate, that equates to a 2019 price target for CHGG stock of $45. * 10 Tech Stocks to Buy Now for 2025 That's well above where shares trade today. So long as shares remain fundamentally undervalued and the momentum/growth stock backdrop remains favorable, CHGG stock should grind higher. Splunk (SPLK)Source: Michael Vi / Shutterstock.com % Gain Since Sept. 16: 28%Big data analytics company Splunk (NASDAQ:SPLK) was hit hard in mid-2019 on cash flow, growth, and margin concerns. But, Splunk reported third quarter numbers in November that put those concerns to ease. SPLK stock has since sprinted to all time highs.Although the valuation on SPLK stock seems somewhat stretched here, most signs indicate that this rally will continue.First, Splunk is in the game of turning data into actionable insights. Current trends imply that demand for this service is surging. Not only did Splunk just report strong Q3 numbers that included 30% year-over-year growth, but Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) also recently acquired Fitbit (NYSE:FIT) in a data acquisition play, tennis players have recently started using big data to prep for matches and the real estate industry is getting in on the big data trend.Second, recovering business sentiment -- thanks to easing trade tensions -- should provide a lift to Splunk's revenue trends, since the higher business sentiment goes, the more those businesses spend on things like data, and the more money makes its way into the Splunk ecosystem.Third, Splunk is in the early stages of realizing the financial benefits of its recently launched Data-to-Everything platform. Building that platform has been a multi-year, multi-billion dollar commitment. That investment phase is over. Now comes the growth part. This transition should provide a lift to SPLK stock.I'm slightly concerned about valuation on SPLK stock up here. But, momentum stocks have a tendency to ignore valuation risks when they have full momentum. That's exactly what Splunk has right now. So, for the foreseeable future, shares should keep making new highs.As of this writing, Luke Lango was long TTD, ADBE, OKTA and CHGG. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Strong Buy Stocks That Are Bargains Right Now * 7 Excellent Bank Stocks Worth an Investment * 4 Small-Cap, Big-Dividend Stocks The post 5 Momentum Stocks to Buy on the Rebound appeared first on InvestorPlace.
There has been a lot of chatter recently about momentum stocks versus value stocks, thanks to a huge pivot that started in September. Specifically, investors are asking two questions -- why did this pivot happen, and will it continue?In short, it's happening all because of the 10-year U.S. Treasury yield, and it will persist for the foreseeable future.The logic is simple. Lower yields support momentum stock valuations by decreasing the discount rate on future profits, and thereby increasing the net present value of future profits. Theoretically, this should help all stocks. But, momentum stocks derive more value from future profits than value stocks, so lower yields disproportionally benefit momentum stocks. Thus, when yields move lower, momentum stocks outperform. When yields go higher, momentum stocks underperform.InvestorPlace - Stock Market News, Stock Advice & Trading TipsThe data is also simple. From January to May 2019, the 10-year Treasury yield was largely range-bound between 2.5% and 2.7%. During that stretch, the the iShares Momentum Factor ETF (BATS:MTUM) and the iShares Value Factor ETF (BATS:VLUE) both returned about 13%-14%.From May to September 2019, however, the 10-year Treasury yield plunged from 2.5% to 1.5%. During that stretch, MTUM rose 6%. VLUE dropped 4%. Then, from September to November 2019, the 10-year Treasury yield rebounded to 2%, the Momentum Factors ETF fell flat, and the Value Factors ETF rose 11%. * 7 Companies Using Artificial Intelligence to Outperform the Market In the momentum versus value debate, it's all about yields. Thanks to an improving economic outlook, easing geopolitical tensions and a Federal Reserve that seems to be done with this rate-cut cycle, it appears that yields will keep rising for the foreseeable future. As they do, value stocks should continue to work.With that in mind, let's take a look a five strong value stocks that are worth buying as yields move higher. Strong Value Stocks to Buy: Intel (INTC)Source: JHVEPhoto / Shutterstock.com Percent Return Since September: 22%First on this list of strong value stocks to buy as yields move higher is global semiconductor giant Intel (NASDAQ:INTC).The bull thesis on INTC is simple. This is a value stock trading at a very reasonable 12.3-times forward earnings multiple, with a respectable 2.2% yield. Those are deep value characteristics, so as yields move higher and provide a boost to the whole value category, INTC stock should benefit from that boost.At the same time, thanks to easing global geopolitical tensions, economic activity is starting to pick back up. This is especially true in the semiconductor space, which has been hit hard in 2019 but has shown signs of bottoming and reversing course over the past few months. That's great news for Intel, whose data-centric business has been hit hard by slowing semiconductor demand over the past few quarters. But, much like the broader semiconductor space, Intel's data-centric business rebounded in a big way last quarter. That has sparked a 22% rally in INTC stock since early September.History says this is more than head-fake. Usually, if demand rebounds for several months following a multi-month streak of declines, it is the beginning of a big rebound in the semiconductor space. That's exactly what we have today. Thus, over the next few quarters, semiconductor demand should continue to bounce back, and so will Intel's data-centric business and INTC stock. General Electric (GE)Source: Jonathan Weiss / Shutterstock.com Percent Return Since September: 40%Next, we have beaten-up global industrial giant General Electric (NYSE:GE), which appears to be in the first few innings of staging a big comeback.GE stock is up 40% since early September. That's the biggest and most convincing rally this stock has staged in recent memory. Is it for real? Will the strength last?Yes and yes, because this recovery is supported by internal and external improvements which should persist. On the internal front, management continues to do everything right to get GE back on track. The company is paying off debt and reducing leverage on the balance sheet, divesting non-core businesses and simplifying the business model, and cutting costs where necessary to improve profitability. Management has said that they will continue to do all these things until profit trends improve in a big way. * 10 Cheap Stocks to Buy Under $10 Meanwhile, on the external front, easing trade tensions are providing a lift to corporate confidence levels around the globe. This lift in confidence should provide a boost to presently depressed capital spending trends. As those spending trends rebound, GE's numbers should improve, since this company is built on the back of industrial capital spending. At the same time, yields are moving higher, and that will help push this still relatively cheap stock higher. CVS (CVS)Source: QualityHD / Shutterstock.com Percent Return Since September: 23%Specialty pharmacy retailer CVS (NYSE:CVS) has regained its groove over the past few months and should stay on a winning path for the next few months, too.CVS stock is a value stock. At 10.6-times forward earnings with a 2.7% yield, this is the exact type of low-multiple, big-yield stock that investors think of when they think of value stocks. Thus, as value stocks continue to work thanks to rising yields, CVS stock should continue to work, too.Meanwhile, the fundamentals here are also improving. For a long time, this was just another stagnant, non-innovative pharmacy retailer with sluggish traffic, sales and profit trends. But, CVS is finally starting to innovate across multiple verticals, including rolling out localized healthcare HealthHUB locations. This innovation is powering a rebound in the company's sluggish traffic, sales and profit trends. So long as this rebound persists, investors will continue to push CVS stock higher against a favorable value stock backdrop.A favorable backdrop and favorable fundamental improvements should continue to push CVS stock higher. AT&T (T)Source: Jonathan Weiss / Shutterstock.com Percent Return Since September: 7%Often considered the king of deep value stocks, telecom giant AT&T (NYSE:T) should naturally be a winner as yields rise and value stocks move higher.There are two pieces to the bull thesis here. First, at almost 11-times forward earnings and with a 5%-plus dividend yield, AT&T stock is a prototypical deep value stock with a small multiple and a big yield. Those stocks tend to do well when yields move higher. AT&T stock is no exception. It's up 7% since yields started powering higher in early September. This strength should persist so long as yields keep grinding higher.Second, AT&T's fundamentals are set to meaningfully improve in 2020. For the past several years, AT&T has been plagued by cord-cutting trends in its video business. This has weighed on revenues and profits, and ultimately kept T stock stuck in neutral from 2015 through 2018. But, AT&T is set to launch a new streaming service in 2020, HBO Max, and this new streaming service should help the company offset its cord-cutting problem with streaming subscriber adds. * 9 Tantalizing Dividend Stocks for 2020 This should provide a nice boost for T stock. Just look at what happened to Disney (NYSE:DIS). This, too, is a company which has been mired in cord-cutting headwinds over the past few years. But, Disney launched a new streaming service in 2019, and early success of that streaming service has pushed DIS stock 35% higher year-to-date to all-time highs.The same could happen to AT&T stock in 2020. Skechers (SKX)Source: ThamKC / Shutterstock.com Percent Return Since September: 25%Last, but not least, on this list of strong value stocks to buy as yields rise is athletic apparel maker Skechers (NYSE:SKX).For all intents and purposes, Skechers is a growth company. Just look at the numbers. Constant-currency revenues rose 17.2% last quarter, paced by a 25.7% gain in the international business. Comparable-store sales rose 7.7% in the quarter. Gross and operating margins expanded. And, last quarter wasn't an anomaly. Since the start of 2018, Skechers' average constant-currency revenue growth rate has been above 12%. The international business has averaged about 20% growth, comps have averaged about 4% and margins have consistently powered higher.In other words, the numbers says Skechers is a growth company. But, SKX stock doesn't trade like a growth stock. It trades like a value stock.The forward earnings multiple on SKX stock? Just 15.6. That's below the apparel sector's average forward earnings multiple of 19, the consumer discretionary sector's average forward multiple of 22 and the footwear sector's average forward multiple of 28. It's also well below where both peers Under Armour (NYSE:UA, NYSE:UAA) and Nike (NYSE:NKE) trade, and yet, Skechers is growing at a faster pace than both of those companies.Broadly, then, Skechers is a growth company trading at a value stock valuation. That discrepancy implies a favorable risk-reward profile for bulls, especially in an environment where value stocks are set to move higher.As of this writing, Luke Lango was long INTC, GE, CVS, T, DIS, SKX and NKE. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Companies Using Artificial Intelligence to Outperform the Market * 7 Earnings Reports to Watch Next Week * 6 Retail Stocks Dropping Hard Ahead of Black Friday The post 5 Strong Value Stocks to Buy As Treasury Yields Rise appeared first on InvestorPlace.
Costs continue to be a key driver when it comes to investors’ decisions on where to allocate their capital. As such, value equities could be seeing more strength through the rest of 2019 and it eked past ...
With the S&P 500 Value Index up nearly 8% just this month, more investors are discussing the resurgence of the long downtrodden value factor and how to play that rebound with ETFs. Well-known value ETFs ...
In early September, we have seen a violent, significant and largely unprecedented shift in the investment landscape from momentum stocks to value stocks. Month-to-date, the iShares Momentum Factor ETF (BATS:MTUM) is down more than 1%, while the iShares Value Factor ETF (BATS:VLUE) is up more than 7%.What's happening under the hood? Long story short, investors were hyper-concerned about a recession in August. In response to rising recession fears, investors ditched economically sensitive value stocks that require a good economy to head higher, and piled into momentum growth stocks that don't require a good economy to head higher (because they have such strong secular tailwinds).In September, though, recession fears have backed off. The Federal Reserve has sounded as dovish as they've ever sounded. China and the U.S. have resumed trade talks. Long bond yields have moved higher. The curve has mostly un-inverted. In response to these easing recession fears, investors are unwinding their momentum trade. That is, they are booking profits on their momentum stocks, and buying the dip in value stocks, since these stocks should now move higher that the economic outlook is improving.InvestorPlace - Stock Market News, Stock Advice & Trading TipsIn other words, the September momentum-to-value shift is actually a vote of confidence in the economy from the equity markets.The last time a momentum-to-value shift like this happened? Mid-2016, when the global economy was in the process of shaking off slowing growth headwinds.What happens next? All stocks go higher -- momentum stocks and value stocks. Broadly, the global economy isn't going into a recession. On the contrary, conditions are improving. As conditions do improve, both value and momentum stocks will move higher over the next few quarters. * 10 Recession-Resistant Services Stocks to Buy The implication right now? Selectively buy the dip in high quality momentum stocks. Which ones are on my shopping list? Let's take a look. Momentum Stocks to Buy on the Dip: Shopify (SHOP)Source: Beyond The Scene / Shutterstock.com YTD Gain Before Selloff: Almost 200%% Off High: 15%First up, we have e-commerce solutions provider Shopify (NYSE:SHOP), which -- thanks to a near 200% gain from January to August 2019 -- has been one of the most unstoppable stocks this year. But, as we all know, there is no such thing as an unstoppable stock. Indeed, SHOP stock has been stopped recently. Over the past few weeks, the stock has shed 15% as investors have booked profits on what has been an 800% rally over the past three years.The "buy the dip" thesis on SHOP stock revolves around three things.First, the fundamentals underlying Shopify stock remain rock solid -- the company just reported (yet another) 50%-plus volume growth quarter with robust margin expansion, and the underlying decentralization and direct retail trends supporting the growth narrative remain vigorous. The only thing that has changed is the stock is now cheaper.Second, this momentum trade unwind won't last forever. It's tough to see investors selling Shopify stock and buying Rite Aid (NYSE:RAD) stock for the foreseeable future. They won't. This momentum-to-value shift is short lived, and is simply a reversion to the norm (momentum's out-performance relative to value got over-extended in the summer). Once we do get back to the norm, investors will pile back into SHOP stock because this stock is supported by one of the most robust growth narratives in the market.Third, excluding the late 2018 selloff, corrections in SHOP stock usually bottom out once they hit a 20% peak-to-trough decline. We are almost there today, so it looks like the worst of this sell-off is over. Okta (OKTA)Source: Sundry Photography / Shutterstock.com YTD Gain Before Selloff: About 120%% Off High: 24%Next up, we have cloud security and access management company Okta (NASDAQ:OKTA). Through late July, OKTA stock was up a whopping 120% year-to-date. Ever since, though, the stock has come crashing down, and now trades in bear market territory, or more than 20% off recent highs.Much like the selloff in SHOP stock, the August/September selloff in OKTA stock is a buying opportunity. The rationale? The fundamentals remain great and the optics are improving.Big picture, Okta is a hyper-growth cloud player in the secular growth identity access management market, which is essentially an identity-centric approach to data security and management. This market is very big (around $10 billion in 2018), is growing very quickly thanks to widespread cloud adoption and the mainstream emergence of IoT devices (13% compounded annual growth rate projected into 2025), and Okta is rapidly gaining share in that market (roughly 1% share in 2015, to 4% share in 2018). Assuming Okta can continue to expand share in this market thanks to its exclusive focus on cloud IAM (comps in this space have many different verticals, of which IAM is just one), then Okta projects as a big revenue grower for a lot longer.At the same time, gross margins are really high, and approaching 80%, while the opex rate is rapidly falling with revenue scale. This dynamic will persist for the foreseeable future, meaning Okta projects as big time profit grower for a lot longer, and that reality provides a favorable fundamental backdrop for OKTA stock. * 10 Big IPO Stocks From 2019 to Watch Meanwhile, as mentioned earlier, the optics surrounding big growth momentum stocks should improve over the next few months. As those optics improve, they will converge on favorable fundamentals, and ultimately spark a nice rebound rally in OKTA stock. The Trade Desk (TTD)Source: Shutterstock YTD Gain Before Selloff: Over 120%% Off High: 23%Third on this list of momentum stocks to buy on the dip is programmatic advertising leader The Trade Desk (NASDAQ:TTD). Once up over 120% year-to-date, TTD stock has come crashing down over the past few years, and presently trades in bear market territory.The next move in this stock will likely be higher for three big reasons. First, the fundamentals remain supportive of sustained long-term growth. Second, the optics surrounding TTD stock will improve going forward. Third, the stock is closing in on major technical support.On the first point, The Trade Desk is the leader in the secular growth programmatic advertising market, which entails automating and optimizing the ad transaction process by using data and algorithms. As the global economy becomes increasingly automated and data-driven, so will the global advertising world, meaning that at scale, The Trade Desk's programmatic ad platform will be a very important and relevant piece in the global ad machine.Right now, less than a percent of global digital ad spend flows through The Trade Desk's ecosystem. Thus, the runway for growth here is quite robust in the big picture.On the second point, as mentioned earlier, the momentum-to-value shift won't last forever. Once it ends -- and it should end soon -- momentum stocks will come back into favor, providing an upward lift for TTD stock.On the third point, TTD stock is rapidly closing in on its 200-day moving average, which has -- historically speaking -- provided a significant level of support for the stock during selloffs. If TTD successfully tests and holds this support level, the next move here will almost assuredly be higher. Pinterest (PINS)Source: Nopparat Khokthong / Shutterstock.com YTD Gain Before Selloff: Over 90% (from its IPO price)% Off High: 20%Another momentum stock that looks compelling on recent weakness is social media and digital ad platform Pinterest (NYSE:PINS). Pinterest went public in April 2019 at a price of $19 per share. By mid-August 2019, PINS stock had nearly doubled from its IPO price. Since, the stock has tumbled alongside other momentum names and presently trades 20% off those August highs.The bull thesis on PINS stock goes something like this. Pinterest has always been a great company. They operate a unique and differentiated social media platform that is used for visual discovery and inspiration, and which importantly: 1) has very little use-case overlap with other social media platforms, and 2) is a perfect place for ads, since consumers are going to Pinterest looking for something. Consequently, as this company just starts to ramp up its ad business, the next few years should comprise very big growth since advertisers will love the unique attention they get through the Pinterest platform.Despite all this greatness, PINS stock simply became too richly valued in August. It's now sold off -- to much more reasonably valued levels. As such, the fundamentals check out here, and imply that this selloff is a buying opportunity. * 7 Marijuana Penny Stocks to Consider for Those Who Can Handle Risk So do the optics, which -- as mentioned before -- should improve surrounding all momentum stocks over the next few months as this momentum-to-value shift stops. Net net, then, favorable fundamentals and optics should drive PINS stock higher from today's lows. Splunk (SPLK)Source: Michael Vi / Shutterstock.com YTD Gain Before Selloff: Over 30%% Off High: 18%Another cloud momentum stock that looks good on this dip is big data company Splunk (NASDAQ:SPLK). SPLK stock has been less hot this year than its momentum peers -- at its peak, it was up just 30% year-to-date. But, this relative under-performance in 2019 has not shielded the stock from recent momentum stock weakness. At current levels, SPLK stock trades nearly 20% off recent highs.Time to buy? I think so. Splunk is at the heart of arguably the biggest growth narrative in the market today -- data-driven decision making. Broadly, everyone and their best friend are starting to understand that data is the future of everything, since it allows individuals and companies to make better, smarter and faster decisions. Consequently, enterprises everywhere are doing all they can to get their hands on data. But, what good is data if you can't understand it, and glean actionable insights from it?Insert Splunk. This is exactly what Splunk does. They help enterprises of all shapes and sizes turn their raw machine data into actionable insights. Consequently, as companies continue to pivot into data-driven decision making processes over the next several years, they will adopt and more heavily lean into Splunk's services.The long-term implication? Splunk's revenue and profit growth trajectory will remain robust for a lot longer. As it does remain robust, SPLK stock will continue to move higher, meaning that recent weakness in the stock is nothing more than a long-term buying opportunity. Chegg (CHGG)Source: Casimiro PT / Shutterstock.com YTD Gain Before Selloff: About 60%% Off High: 26%One momentum stock that has been hit particularly hard over the past few weeks is digital education company Chegg (NASDAQ:CHGG). At one point, CHGG stock was up an impressive 60% year-to-date. That was back in late July and early August. Ever since, CHGG stock has come crashing down and presently trades more than 25% off those recent highs.This big selloff is a compelling opportunity for three simple reasons.First, nothing company-specific prompted this selloff. The last news we heard from Chegg was a double beat-and-raise Q2 print which shot the stock to all-time highs in late July. Ever since, we haven't heard anything big -- good or bad -- from the company. Thus, CHGG stock has shed more than 25% on no news.Second, the core fundamentals underlying CHGG stock remain very healthy. The company has created a connected learning platform that is rapidly becoming a necessary learning tool for high school and college students across America. Current growth rates are huge, with 25%-plus revenue growth last quarter and 30% subscriber growth. Margins are powering higher -- gross margins were up nearly 500 basis points last quarter thanks to the software pivot. The opportunity remains large -- only 3 million subs for Chegg, in a 36 million U.S. high school and college student market. Thus, broad strokes, the fundamentals underlying Chegg stock remain very good.Third, the valuation is now attractive. In late July, this stock had a near 60-times forward earnings multiple. Today, that multiple stands narrowly above 30, which is below the application software sector average forward earnings multiple. * 7 Dow Titans Breaking Higher Net net, CHGG stock looks ready to bounce back. This selloff was largely unwarranted, the fundamentals remain good, and the valuation leaves room for multiple expansion powered upside. Adobe (ADBE)Source: r.classen / Shutterstock.com YTD Gain Before Selloff: Over 35%% Off High: 11%Last, but not least, on this list of momentum stocks to buy on the dip is cloud giant Adobe (NASDAQ:ADBE). Adobe stock, which at one point was up more than 35% year-to-date, presently trades about 11% off recent highs. That matches the biggest drop ADBE stock has posted in 2019, and the second-biggest drop over the past three years.In other words, with ADBE stock, you have a winning company in the midst of its second-biggest selloff in three years. That's a compelling set-up to buy the dip.Adobe is a very good company. This company dominates the visual cloud segment, with very little competition. That's a great segment to dominate today. All content is becoming visual -- think streaming TV services, or visual-first social media apps. We live in a world where consumers love to consume visual content, meaning we live in a world where enterprises, advertisers and creative professionals have to create visual content. When those entities create visual content, they do so with Adobe -- and they've been creating more and more visual content than ever before, meaning adoption of Adobe's services is growing rapidly.Just look at Adobe's numbers for proof of this. Revenue growth has been in the double-digit range for a long time, and will remain there for a lot longer, because secular visual consumption trends are far from being over. At the same time, Adobe can get away with price hikes and huge gross margins, because there's hardly any competition in the space. Thus, this is a big margin, big growth company that will ultimately stay on a big profit growth trajectory for a lot longer.What will that result in? A winning trajectory for ADBE stock in the long run. Thus, near-term weakness in ADBE stock is nothing more than a long-term buying opportunity.As of this writing, Luke Lango was long SHOP, OKTA, TTD, PINS, SPLK, CHGG and ADBE. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Recession-Resistant Services Stocks to Buy * 7 Hot Penny Stocks to Consider Now * 7 Tech Stocks You Should Avoid Now The post 7 Momentum Stocks to Buy On the Dip appeared first on InvestorPlace.
The extended bull run the past decade saw growth stocks sprint past their value counterparts as investors piled their capital on growth-oriented equities like technology. The disparity in performance is evident in exchange-traded funds like the iShares Edge MSCI USA Value Factor ETF (VLUE) and the iShares Edge MSCI USA Momentum Factor ETF (MTUM). The former has been trading higher in recent days as investors are shifting to a risk-off mode and looking at value-oriented equities to stave off losses during a market downturn.
A comparison of the iShares Russell 2000 Growth ETF (IWF) versus the iShares Russell 1000 Value ETF (IWD) indicates growth stocks are maintaining a long-running edge over value rivals. Add to that, value stocks are increasingly inexpensive, according to a slew of recent data points. Growth stocks are often associated with high-quality, prosperous companies whose earnings are expected to continue increasing at an above-average rate relative to the market.