Free Cash Flow, Dividends, and Buybacks Are on a Tear
As the market has rotated from overpriced large-cap tech stocks to underpriced small-cap value stocks, three of the best-performing metrics have been dividend yield, share buybacks, and inexpensive free cash flow. $COWZ is a mid-cap fund that tracks stocks with high free cash flow yields, and its performance has been accordingly stellar. Even after its huge recent rip, this fund could still have room to run. Here are some comparative metrics on COWZ vs QQQ:
QQQ P/E: 34.90
QQQ P/CF: 21.45
QQQ Yield: 0.54%
COWZ P/E: 16.90
COWZ P/CF: 6.74
COWZ Yield: 1.79%
This is a genuine value fund that's invested in stuff like LOW, TGT, MO, IBM, and HP, not one of those junk value funds based on EBITDA or book value and heavily invested in debt-ridden garbage like unprofitable energy companies. Normally I hesitate to buy something that's been on such a tear, but the genuine value on offer here makes this in fact quite a defensive investment, even at current levels. It's based on real earnings, not trumped-up EBITDA, and it buys businesses that return value to shareholders and pay you like an owner. This is probably my new go-to ETF.
Of course, in addition to value, this is also now de facto a momentum fund. The recent dramatic shift in momentum and the rebalancing of momentum ETFs in March means that momentum factor ETF buyers are now buying inexpensive value stocks like the ones held by COWZ, not overpriced tech stocks like the ones held by ARKK. That should remain true for at least the next six months, until the momentum funds rebalance again.
QQQ P/E: 34.90
QQQ P/CF: 21.45
QQQ Yield: 0.54%
COWZ P/E: 16.90
COWZ P/CF: 6.74
COWZ Yield: 1.79%
This is a genuine value fund that's invested in stuff like LOW, TGT, MO, IBM, and HP, not one of those junk value funds based on EBITDA or book value and heavily invested in debt-ridden garbage like unprofitable energy companies. Normally I hesitate to buy something that's been on such a tear, but the genuine value on offer here makes this in fact quite a defensive investment, even at current levels. It's based on real earnings, not trumped-up EBITDA, and it buys businesses that return value to shareholders and pay you like an owner. This is probably my new go-to ETF.
Of course, in addition to value, this is also now de facto a momentum fund. The recent dramatic shift in momentum and the rebalancing of momentum ETFs in March means that momentum factor ETF buyers are now buying inexpensive value stocks like the ones held by COWZ, not overpriced tech stocks like the ones held by ARKK. That should remain true for at least the next six months, until the momentum funds rebalance again.
Comment:
Sitting in COWZ like, "Pullback? What pullback?"
Comment:
It looks to me like this is priming to go on another tear.
