Author: Matt Thalman

Stock Buybacks May Be Slowing, But Still At Record Levels

Posted on by Matt Thalman

Stock buybacks are off their 2018 pace when corporate America spent over $800 billion in share repurchases, but they are still high based on historical figures. One estimate, based on where share buybacks have been during the first two-quarters of 2019 point to companies spending roughly $740 billion in 2019 on share repurchase. For comparison, in 2017 companies spent $519 billion, in 2016 there was $536 billion spent, and in 2015 $572 billion was spent rebuying shares.

There are several reasons share buybacks are hitting even lofty levels than in the past. One is the tax cuts that went into effect last year, another being the fact that we are now in the tenth year of a bull market. At this point in a market cycle, there is a combination of company management teams not wanting to make large capital expenditures and not having any large projects they feel are worth spending money on.

Typically, we see large expenditures taking place during the first few years of a bull market, or shortly after a recession has come to an end because this is when new opportunities present themselves to companies for many different reasons. It could be because that is when capital is cheap due to low-interest rates, weaker businesses are struggling from the recession, so the price to purchase them is low, and or there are ‘fire’ sales as the remains companies that failed during the recession are sold off piece by piece.

Regardless of the reasons why corporate America has decided this is the time to buy-back stock, the fact remains record amounts of money are being spent. The benefits of stock buybacks are highly debated, but one thing is for sure, and that’s when companies spend money on stock buybacks, their earnings per share figures usually look better, even if the business itself isn’t growing. This is because when you have fewer pieces of the pie to split, each piece of the pie gets a little bigger. So, even if we are headed towards a recession, buying companies that are purchasing large amounts of their stock will keep their earnings per share figures somewhat healthy in the short run. So, let’s take a look at a few different ETFs that focus on companies who are buying back their stock. Continue reading "Stock Buybacks May Be Slowing, But Still At Record Levels" →

ETFs That Focus On Military-Friendly Companies

Posted on by Matt Thalman

Most people would agree that military life isn’t an easy one, both while serving and once someone becomes a veteran. But there are a few companies that are trying to make our service members lives easier both while they are serving in the armed forces and after they hang up their uniforms.

Obviously, while someone is a member of any of the branches of our military, they are using tools, weapons, vehicles, and technology built by an aerospace and defense company which makes their lives easier and ideally their jobs safer. Let’s take a look at a few Exchange Traded Funds that operate in the development and manufacturing of these products.

One of the larger aerospace and defense ETFs, based on assets under management is the iShares U.S. Aerospace & Defense ETF (ITA). The fund carries a 0.43% expense ratio, it holds 35 stocks, with the top ten representing 75.44% of the assets, (largely due to Boeing Company (BA) and United Technology (UTX) representing 22.97% and 15.52% of the fund respectively). ITA also has a nice 1.09% dividend yield, a weighted average market cap of $80.96 billion, and average trading volume of $30.15 million. The fund has also been in existence since 2006, and its ten-year average annual performance is a positive 19.44%, making this one of the better performing ETFs over the last decade. Year-to-date the fund is up 24.25%. Continue reading "ETFs That Focus On Military-Friendly Companies" →

Could Lithium Become The Best Performing Commodity

Posted on by Matt Thalman

Most investors know of the little car company called Tesla (TSLA) and how it is leading the industry in electric vehicles (EV’s). But what some may not know is that every single major car manufacturer around the world is attempting to compete with Tesla and produce EV’s themselves.

This increase in electric vehicle availability and production in the future is great for reducing carbon emissions caused by standard gas combustion engines. Furthermore, if the EV revolution takes hold like most believe it will, the impact on the oil markets will certainly be felt, but lower demand for one commodity will likely mean higher demand for another.

Lithium is a key component in the namesake battery, ‘lithium-ion-battery,’ which by the way, is currently the main battery used for high powered electronics and EV’s. While it's evident that small hand-held electronics (smartphones, tablets, laptops) continue to grow in popularity worldwide, those devices don’t require the same amount of lithium as what some predict the electric vehicle market will consume in just a few years.

In 2018 EV sales rose 81% over sales figures in 2017, this was primarily due to Tesla’s Model 3 hitting 139,000 units sold. The Model 3 had such a significant impact on the market due to its low cost, but still, highly fashionable appearance and other high-tech features and amenities that other lower-priced EV’s like the Toyota Prius and Nissan Leaf don’t offer.
The Model 3’s success shows that if you offer higher-end features and options in EV’s that consumers want, they will buy them. We recently saw Ford using a model of its Electric F 150 truck pull a 1.25-million-pound train. Tesla has shown models of its electric pickup truck, not to mention its Semi-truck electric vehicle.

With rapidly increasing numbers of EV’s being sold and now more options in terms of types of EV’s soon to hit the market, it's hard to see how the demand for lithium doesn’t increase in the coming years. Which is why now may be the best time to buy up some lithium-based Exchange Traded Funds and sit on them while other investors push the prices higher once they realize they missed the boat.

With that in mind, let’s take a look at a few lithium-based ETFs you can buy today. Continue reading "Could Lithium Become The Best Performing Commodity" →

ETFs That Let You Play The HOT IPO Market

Posted on by Matt Thalman

In 2019 the Initial Public Offering market has been on fire. We have seen huge pops in share prices from some of the big-name companies like Uber, Levi Strauss, Lyft, Pinterest, Zoom Video, CrowdStrike, Chewy, and of course Beyond Meat. And actually, Beyond Meat was the “biggest popping U.S. IPO since 2000”.

The vast number of fast-growing companies that have hit the market in 2019 and the promise that investors see from these stocks has caused some investors to take on more risk than they should when they rush in after the large pops and buy up shares of the already somewhat inflated stock.

This leads to the biggest challenge of investing in newly public companies, which is first determining which ones are the next Pet.coms and which ones could go on to become the next Amazon.com. The risk is extremely high with recently IPO’d stocks, and especially ones that have seen some of the increases we witnessed in the first half of the year because in most cases profits are still none existent. But a few different Exchange Traded Funds are available which will give you exposure to these hot new IPOs, but minimize your overall risk.

Instead of cherry-picking which recent IPO’d stock or stocks you think can become a monster winner from here, you can buy all of them and feel good knowing you will have some skin in the game. So, let's take a look at which ETFs you may want to research further. Continue reading "ETFs That Let You Play The HOT IPO Market" →

ETFs Paying 8% Plus Dividend Yields

Posted on by Matt Thalman

There are currently more than a handful Exchange Traded Funds that are paying more than an 8% dividend yield. And yes, you are reading that correctly, more than an 8% dividend yield. There are at least four ETF’s currently paying dividend yields above 8%, while a few others are paying yields even higher.

Furthermore, these ETF’s are investing what is surprisingly a wide range of different investments, meaning even if you’re not a fan of REITS or MLP’s, there is still may be an ETF, that’s paying a healthy yield, out there waiting for you. So, let’s take a look at a few of the different options.

First, we have what most would expect out of a high dividend-yielding ETF, an MLP ETF. The VanEck Vectors High Income MLP ETF (YMLP) is currently yielding 8.18% and has an expense ratio of just 0.82%. The fund has 18 holdings, all of which are MLP’s structured as C-corporations. Also, the weighted average market cap is only $1.36 billion, and the funds top nine holdings all fall in line at 7% to just over 8% fund weighting. Year to date the fund is up 18%, but only 2% over the last month and 3.85% over the previous year.

Another typical high dividend-paying investment is a REIT or Real-Estate-Investment-Trust. And you can imagine when one ETF owns 27 different REIT’s, the dividend gets a little juiced. One such ETF is the VanEck Vectors Mortgage REIT Income ETF (MORT) which has a yield of 7.4% but has an expense ratio of just 0.41%. MORT has 27 holdings with a weighted average market cap of $5.13 billion and has a year-to-date performance of 10.93% while being up just 1.55% over the last month and 11.61% over the last 12 months. MORT invests in mortgage REIT’s which are REIT’s that own mortgages or mortgage back securities. The risk with these investments is that we see outsized mortgage loan default rates, such as what we saw during the last recession. Continue reading "ETFs Paying 8% Plus Dividend Yields" →