Index provider FTSE Russell finalizes its annual index reconstitution today, making for brisk trading activity as well as some changes for some well-known exchange traded funds.
Each year on the final Friday of June, “stocks are added or deleted to the Russell 1000 large cap and Russell 2000 small cap, prompting fund managers to adjust their portfolios to reflect new weightings,” reports Reuters.
What HappenedThe iShares Russell 2000 ETF (NYSE: IWM), the largest small-cap ETF, tracks the aforementioned Russell 2000 Index. As of June 20, the technology and health care sectors combined for nearly 35 percent of IWM's weight, representing two of the ETF's top three sector allocations.
That could change because small-cap health care and technology stocks have been primary drivers of this year's small-cap resurgence, one that has seen IWM gain about 12 percent.
Why It's ImportantStocks graduating from the Russell 2000 Index could find their way to the Russell 1000 Index, which is tracked by the iShares Russell 1000 ETF (NYSE: IWB). IWB is already heavy on technology and health care names with those sectors representing 25.61 percent and 13.38 percent, respectively, of the fund's weight.
Hot Safest Stocks To Invest In 2022: Cambrex Corporation(CBM)
Cambrex Corporation, a life sciences company, provides various products and services for the development and commercialization of new and generic therapeutics worldwide. The company's products comprise active pharmaceutical ingredients and pharmaceutical intermediates that are used in the production of prescription and over-the-counter drug products, as well as other fine chemicals. It serves generic drug companies; and companies that discover and commercialize small molecule human therapeutics. The company sells its products directly, as well as through independent agents. Cambrex Corporation was founded in 1981 and is headquartered in East Rutherford, New Jersey.
So, with the biotech space solidly on the comeback trail, we asked three of our Motley Fool contributors which stocks they think are poised to keep churning higher in February and perhaps for the remainder of the year. They suggested Viking Therapeutics (NASDAQ:VKTX), Cambrex (NYSE:CBM), and Sarepta Therapeutics (NASDAQ:SRPT). Here's why. Cambrex Corp (NYSE:CBM)Q4 2018 Earnings Conference CallFeb. 13, 2019, 8:30 a.m. ET Operator In response to reporting of fourth-quarter and full-year quarterly results, shares of Cambrex Corporation (NYSE:CBM), a supplier to the life sciences industry, fell 11% as of 11:10 a.m. EST on Wednesday. Shares of Cambrex Co. (NYSE:CBM) have earned a consensus recommendation of “Hold” from the six brokerages that are covering the firm, Marketbeat reports. One equities research analyst has rated the stock with a sell rating, three have issued a hold rating and two have issued a buy rating on the company. The average 1-year price objective among brokerages that have covered the stock in the last year is $60.00. Down more than 37% since its September-2015 peak (and still within easy reach of new 52-week lows), it would be easy to liken a purchase of Under Armour Inc (NYSE:UAA, NYSE:UA) to catching a falling knife — you generally don’t want to do it. Bolstering the bearish case against Under Armour stock is the fact that even with the steep selloff, UAA shares are still priced at a frothy trailing P/E of 64 [the old ‘UA’ ticker now represents the class C shares; both are still investable]. There simply aren’t too many stocks the market is willing to value at that level for very long. And yet, if there was ever an exception to the market’s unspoken limits on price multiples, Under Armour stock is it. As uncomfortable as it may feel to do so, investors may just want to shut their eyes, hold their nose, and dive in. For those who’ve kept tabs on Under Armour stock for a while, they’ll know the past year or so has been uncharacteristically disappointing. UAA stock — while it was still UA — advanced 2,500% between March of 2009 and late 2015, entirely in step with revenue growth. It was a pace that was simply unsustainable though… revenue, as well as the stock’s rally. In its recently completed third quarter, year-over-year sales growth of 22% was, amazingly enough, relatively disappointing compared to the 28% growth driven in the same quarter a year earlier. Q2’s sales growth pace fell similarly. In fact, that slowing pace has been the norm for roughly a year now. It’s not apt to get better anytime soon either. In October, the company warned its sales-growth rate would fall to the lower 20%’s over the course of the next couple of years. Perhaps worse, margins have begun to dwindle, as the company finds itself spending more and more, but getting less bang for its buck. This is admittedly a tougher metric to gauge. Per-share profits for Under Armour stock tend to vary widely from one quarter to the next, with the company willing to spend big on team-based sponsorships and celebrity-based endorsements at the drop of a hat, usually in step with a rise to fame rather than on a cyclical basis. When one takes a step back and looks at the long-term numbers though, it becomes clear that Under Armour has prioritized growth over profits, paying small fortunes (and sometimes large fortunes) to affiliate with high-profile names like Steph Curry and Jordan Spieth. CEO Kevin Plank says it’s worth the all cost. The persistent weakness from UA and UAA stock, though, says the market isn’t so sure. There was a method to the madness this whole time. It just took Under Armour far longer to reap what it had been sowing for the pas! t several! years … momentum, and a solid foundation. They’re certainly relic ideas in the modern market, where most investors are looking for results in a matter of weeks rather than a matter of years. It has been worth the wait — and expense — for Under Armour though. Next Page Case in point: Under Armour was recently awarded a 10-year contract by Major League Baseball to provide uniforms for its teams, beginning in 2020. At 40 players on the expanded roster for 30 MLB teams, with different home and away-game jerseys, there’s a little money to be made with the deal. The real value of the contract, however, is the power of putting the Under Armour logo on the front of those jerseys, providing a constant stream of subtle but powerful advertising. Apparel licensing rights will provide the bulk of subsequent payoff. It’s unlikely Under Armour would have been able to sway Major League Baseball, however, if it hadn’t become the behemoth it has become over the course of the past few years. As Fortune‘s John Kell explained it: “As Under Armour gets bigger, it makes it tougher for the company to boost sales at a pace that investors were used to. But there’s one advantage that investors seem to be ignoring. The bigger business means Under Armour can compete for key contracts with sports leagues, individual athletes, and universities. Those deals are important for a brand to become more top of mind with shoppers.” From here, life actually gets a little easier and relatively less expensive for Under Armour. The next new frontier for Under Armour is its direct-to-consumer business, or as it’s more commonly called, e-commerce. The company drove $408 million worth of internet-based sales during the third quarter, or roughly 28% of Under Armour’s total revenue for Q3. That’s actually relatively more e-commerce than most brands are able to drive for themselves, b! ut Under ! Armour wants more. It’s also getting more. Direct-to-consumer sales were up 29% last quarter, marking another improvement in its e-commerce growth pace even as the pace of sales through brick-and-mortar locales continues to slow. It’s a key solution to the apparel maker’s problem of thinning margins. Online, Under Armour sells at retail prices rather than wholesale prices. Whatever the case, e-commerce is another facet that simply wouldn’t have worked quite as well were Under Armour not the readily recognizable name it is now. To be fair, UAA/UA still aren’t even close to being contenders for any value awards. This is a growth story, and Under Armour stock is priced as a growth stock. There is growth ahead though, and perhaps of more interest to shareholders, there’s now enough scale that margins could take a turn towards respectability again without crimping the company’s capacity to pay for those much-needed endorsements and sponsorships. Think of it as a coming-of-age story, if you’re truly in for the long run. Just know it’s an idea that isn’t reflected in most analysts’ opinion. As of this writing, James Brumley did not hold a position in any of the aforementioned securities. Clorox (NYSE:CLX) ends its fiscal year with a whimper, not a bang. Under Armour (NYSE:UAA)(NYSE:UA) shares rise on a strong second quarter and there are reasons for optimism. Gartner (NYSE:IT) pops more than 10% on its own strong second quarter. In this episode of MarketFoolery, Asit Sharma analyzes those stories and shares why having a good brand is helpful, but not always enough. Under Armour (NYSE: UAA), a branded performance apparel, footwear, and accessories company, faces competition in most categories. But this is a company where annual profit growth is expected to exceed 28% -- and its subscription box experiment is likely to contribute. We are a leading provider of SaaS solutions that enable our retailer and branded manufacturer customers to integrate, manage and optimize their merchandise sales across hundreds of online channels. Through our platform, we enable our customers to connect with new and existing sources of demand for their products, including e-commerce marketplaces, such as Amazon, eBay, Jet.com, Newegg and Sears, search engines and comparison shopping websites, such as Google, Microsoft's Bing and Nextag, and emerging channels, such as Facebook and Pinterest. Our suite of solutions, accessed through a standard web browser, provides our customers with a single, integrated user interface to manage their product listings, inventory availability, pricing optimization, search terms, data analytics and other critical functions across these channels. Advisors' Opinion: Omnitude (CURRENCY:ECOM) traded up 1.3% against the U.S. dollar during the 1 day period ending at 18:00 PM E.T. on March 9th. Over the last seven days, Omnitude has traded 2.1% higher against the U.S. dollar. Omnitude has a total market capitalization of $3.73 million and $24,521.00 worth of Omnitude was traded on exchanges in the last day. One Omnitude token can currently be bought for $0.0668 or 0.00001691 BTC on major exchanges including IDEX and BitForex. Shares of ChannelAdvisor Corp (NYSE:ECOM) have received a consensus recommendation of “Buy” from the eight brokerages that are covering the firm, MarketBeat Ratings reports. One investment analyst has rated the stock with a hold recommendation and six have assigned a buy recommendation to the company. The average twelve-month price objective among analysts that have issued a report on the stock in the last year is $18.17. ChannelAdvisor Corp (NYSE:ECOM)Q4 2018 Earnings Conference CallFeb. 13, 2019, 8:00 a.m. ET Operator Get a free copy of the Zacks research report on ChannelAdvisor (ECOM) For more information about research offerings from Zacks Investment Research, visit Zacks.comHot Safest Stocks To Invest In 2022: Just Hold Your Nose and Dive Into Under Armour Inc (UAA)
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Advisors' Opinion: Hot Safest Stocks To Invest In 2022: ChannelAdvisor Corporation(ECOM )
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