{"id":2961,"date":"2022-09-06T14:25:10","date_gmt":"2022-09-06T14:25:10","guid":{"rendered":"http:\/\/blog.valuengine.com\/?p=2961"},"modified":"2022-09-06T14:29:19","modified_gmt":"2022-09-06T14:29:19","slug":"should-you-consider-buying-single-stock-etfs","status":"publish","type":"post","link":"http:\/\/blog.valuengine.com\/index.php\/should-you-consider-buying-single-stock-etfs\/","title":{"rendered":"Should You Consider Buying Single-Stock ETFs?"},"content":{"rendered":"

The following news item is an excerpt from an Investment News Article dated August 18, 2022. The full article can be viewed HERE<\/a>.<\/span><\/p>\n

Massachusetts Secretary of the Commonwealth William Galvin announced a ‘sweep’ of firms offering the new ETFs, which he compared to gambling at a casino.<\/span><\/p>\n

With the first single-stock ETFs\u00a0only about a month old and the pipeline for new offerings suggesting that dozens more will be receiving approval from the Securities and Exchange Commission, Galvin\u2019s office is seeking to protect \u201cMain Street investors\u201d from harm by initiating a \u201csweep of complex single stock exchange traded fund offerings recently made public and offered through Massachusetts registered broker-dealers.\u201d\u00a0<\/span><\/p>\n

All of the approximately 5,000 stocks, 16 sector groups, 140 industries, and 500 ETFs have been updated on <\/b>www.ValuEngine.com<\/b><\/a><\/h5>\n
Free Two Week Trial to all 5,000 plus equities and ETFs covered by ValuEngine <\/b>HERE<\/b><\/a><\/h5>\n

\u201cThese are risky products, investing in only one stock, with no diversity cushion whatsoever,\u201d Galvin said in a prepared statement.<\/span><\/p>\n

\u201cFor nearly all Main Street investors, there is no difference between investing your money in single-stock ETFs and gambling with that money at a casino,\u201d he added. \u201cUnder no circumstances should an investor use these products as a long-term investment.\u201d<\/span><\/p>\n

Most in the ETF community consider this step to be an overreaction and political grandstanding.\u00a0 Nevertheless, almost all in the professional community wish to warn investors that these tools are for short-term traders only and should not be held by long-term investors.<\/span><\/p>\n

The first wave of leveraged ETFs was launched by AXS Investments in early October:<\/span><\/p>\n

Current ValuEngine reports on these stocks can be viewed <\/b>HERE<\/b><\/a><\/h5>\n

AXS <\/span>TSLA<\/b> Bear Daily ETF (Nasdaq: TSLQ);<\/span><\/p>\n

AXS 1.25X <\/span>NVDA<\/b> Bear Daily ETF (Nasdaq: NVDS);<\/span><\/p>\n

AXS 1.5X <\/span>PYPL<\/b> Bear Daily ETF (PYPS);\u00a0<\/span><\/p>\n

AXS 1.5X <\/span>PYPL<\/b> Bull Daily ETF (PYPT);\u00a0<\/span><\/p>\n

AXS 2X <\/span>NKE<\/b> Bear Daily ETF (NKEQ);\u00a0<\/span><\/p>\n

AXS 2X <\/span>NKE<\/b> Bull Daily ETF (NKEL);\u00a0<\/span><\/p>\n

AXS 2X <\/span>PFE <\/b>Bear Daily ETF (PFES); and\u00a0<\/span><\/p>\n

AXS 2X <\/span>PFE<\/b> Bull Daily ETF (PFEL).<\/span><\/p>\n

 <\/p>\n

Shortly thereafter, GraniteShares and Direxion Shares came out with the following:<\/span><\/p>\n

GraniteShares 1.25x Long <\/span>TSLA<\/b> Daily ETF (SL)<\/span><\/p>\n

GraniteShares 1x Short <\/span>TSLA<\/b> Daily ETF (TSLI)<\/span><\/p>\n

GraniteShares 1.75x Long <\/span>AAPL<\/b> Daily ETF (AAPB)<\/span><\/p>\n

GraniteShares 1.5x Long <\/span>COIN <\/b>Daily ETF (CONL)<\/span><\/p>\n

 <\/p>\n

Direxion Daily <\/span>AAPL<\/b> Bear 1X Shares (AAPD)<\/span><\/p>\n

Direxion Daily <\/span>AAPL<\/b> Bull 1.5X Shares (AAPU)<\/span><\/p>\n

Direxion Daily <\/span>TSLA <\/b>Bear 1X Shares (TSLS)<\/span><\/p>\n

Direxion Daily <\/span>TSLA<\/b> Bull 1.5X Shares (TSLL)<\/span><\/p>\n

There are a number of additional filings out there but as of this writing, these 16 constitute the selection set in the US. However, only seven different stocks are covered: Apple (<\/span>AAPL<\/b>); Coinbase (<\/span>COIN); <\/b>Nike (<\/span>NKE<\/b>); Nvidia (<\/span>NVDA<\/b>); PayPal (<\/span>PYPL<\/b>); and Tesla <\/span>(TSLA).\u00a0 <\/b>While ValuEngine does not rate these new trading vehicles, each stock is covered with a comprehensive report.\u00a0\u00a0<\/span><\/p>\n

The following table compares them from a top-level perspective.\u00a0 All data are as of August 28, 2022.<\/span><\/p>\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n
<\/td>\nAAPL<\/b><\/td>\nCOIN<\/b><\/td>\nNKE<\/b><\/td>\nNVDA<\/b><\/td>\nPFE<\/b><\/td>\nPYPL<\/b><\/td>\nTSLA<\/b><\/td>\n<\/tr>\n
Stock<\/span><\/td>\nApple\u00a0<\/b><\/td>\nCoinbase<\/b><\/td>\nNike<\/b><\/td>\nNvidia<\/b><\/td>\nPfizer<\/b><\/td>\nPaypal<\/b><\/td>\nTesla<\/b><\/td>\n<\/tr>\n
ValuEngine Rating<\/span><\/td>\n3<\/b><\/td>\n1<\/b><\/td>\n3<\/b><\/td>\n3<\/b><\/td>\n3<\/b><\/td>\n2<\/b><\/td>\n5<\/b><\/td>\n<\/tr>\n
VE 1 mo. Forecast\u00a0<\/span><\/td>\n-0.3%<\/span><\/td>\n-1.1%<\/span><\/td>\n-0.1%<\/span><\/td>\n-0.2%<\/span><\/td>\n0.3%<\/span><\/td>\n-0.9%<\/span><\/td>\n2.5%<\/b><\/td>\n<\/tr>\n
VE 3 mo. Forecast\u00a0<\/span><\/td>\n3.6%<\/span><\/td>\n0.4%<\/span><\/td>\n2.8%<\/span><\/td>\n3.9%<\/b><\/td>\n0.1%<\/span><\/td>\n-0.1%<\/span><\/td>\n2.4%<\/span><\/td>\n<\/tr>\n
VE 1 Yr Forecast\u00a0<\/span><\/td>\n-3.8%<\/span><\/td>\n-12.6%<\/span><\/td>\n-1.2%<\/span><\/td>\n-1.9%<\/span><\/td>\n3.5%<\/span><\/td>\n-10.3%<\/span><\/td>\n31.6%<\/b><\/td>\n<\/tr>\n
Historic 1 mo. Price Return<\/span><\/td>\n16.2%<\/span><\/td>\n35.3%<\/b><\/td>\n6.6%<\/span><\/td>\n8.8%<\/span><\/td>\n-11.6%<\/span><\/td>\n29.8%<\/span><\/td>\n-58.2%<\/span><\/td>\n<\/tr>\n
Historic 3 mo. Price Return<\/span><\/td>\n7.9%<\/b><\/td>\n-11.9%<\/span><\/td>\n-7.0%<\/span><\/td>\n-16.0%<\/span><\/td>\n-14.3%<\/span><\/td>\n8.7%<\/span><\/td>\n-62.5%<\/span><\/td>\n<\/tr>\n
Historic 6 mo. Price Return<\/span><\/td>\n-2.3%<\/span><\/td>\n-65.2%<\/span><\/td>\n-21.0%<\/span><\/td>\n-35.2%<\/span><\/td>\n-1.5%<\/b><\/td>\n-17.2%<\/span><\/td>\n-67.3%<\/span><\/td>\n<\/tr>\n
Historic 1-Yr. Price Return\u00a0<\/span><\/td>\n5.4%<\/b><\/td>\n-74.7%<\/span><\/td>\n-35.8%<\/span><\/td>\n-30.4%<\/span><\/td>\n-1.1%<\/span><\/td>\n-67.9%<\/span><\/td>\n-61.0%<\/span><\/td>\n<\/tr>\n
Historic 5-Yr Ann. Price Rtn<\/span><\/td>\n29.5%<\/span><\/td>\n-124.3%<\/span><\/td>\n13.3%<\/span><\/td>\n30.0%<\/span><\/td>\n8.4%<\/span><\/td>\n7.8%<\/span><\/td>\n52.5%<\/b><\/td>\n<\/tr>\n
Volatility<\/b><\/td>\n30.6%<\/span><\/td>\n88.8%<\/span><\/td>\n26.0%<\/span><\/td>\n47.2%<\/span><\/td>\n24.3%<\/b><\/td>\n39.8%<\/span><\/td>\n63.1%<\/span><\/td>\n<\/tr>\n
Sharpe Ratio\u00a0<\/span><\/td>\n0.96<\/b><\/td>\n-1.40<\/span><\/td>\n0.51<\/span><\/td>\n0.63<\/span><\/td>\n0.35<\/span><\/td>\n0.20<\/span><\/td>\n0.83<\/span><\/td>\n<\/tr>\n
Beta<\/b><\/td>\n1.20<\/span><\/td>\n3.86<\/span><\/td>\n1.02<\/span><\/td>\n1.70<\/span><\/td>\n0.61<\/b><\/td>\n1.48<\/span><\/td>\n1.00<\/span><\/td>\n<\/tr>\n
Div. Yield<\/span><\/td>\n0.6%<\/span><\/td>\n0.0%<\/span><\/td>\n1.1%<\/span><\/td>\n0.1%<\/span><\/td>\n3.5%<\/b><\/td>\n0.0%<\/span><\/td>\n0.0%<\/span><\/td>\n<\/tr>\n
Earnings Growth<\/span><\/td>\n4.0%<\/span><\/td>\n-70.1%<\/span><\/td>\n7.4%<\/span><\/td>\n-4.1%<\/span><\/td>\n-4.0%<\/span><\/td>\n9.0%<\/span><\/td>\n50.2%<\/b><\/td>\n<\/tr>\n
Trailing P\/E Ratio<\/span><\/td>\n26.6<\/span><\/td>\nNeg. Earnings<\/span><\/td>\n29.9<\/span><\/td>\n43.3<\/span><\/td>\n7.5<\/b><\/td>\n31.5<\/span><\/td>\n98.1<\/span><\/td>\n<\/tr>\n
P\/S Ratio<\/span><\/td>\n6.7<\/span><\/td>\n2.5<\/b><\/td>\n3.6<\/span><\/td>\n13.3<\/span><\/td>\n2.6<\/span><\/td>\n4.1<\/span><\/td>\n13.3<\/span><\/td>\n<\/tr>\n
Valuation Decile<\/span><\/td>\n9th<\/span><\/td>\n10th<\/span><\/td>\n6th<\/span><\/td>\n10th<\/span><\/td>\n3rd<\/span><\/td>\n2nd<\/b><\/td>\n2nd<\/b><\/td>\n<\/tr>\n
Earnings Surprise Decile<\/span><\/td>\n5th<\/span><\/td>\n10th<\/span><\/td>\n3rd<\/span><\/td>\n5th<\/span><\/td>\n3rd<\/span><\/td>\n5th<\/span><\/td>\n2nd<\/b><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n
Current ValuEngine reports on these stocks can be viewed <\/b>HERE<\/b><\/a><\/h5>\n

Observations<\/span><\/p>\n

    \n
  1. Tesla gets ValuEngine\u2019s highest rating of 5 for 6-to-12-month year-ahead performance.\u00a0 Tesla also comes up strong on the model\u2019s valuation decile despite high traditional valuation ratios due to high earnings growth rate vs. mammoth relative price decline. Coinbase gets the lowest rating of 1.\u00a0 <\/span><\/li>\n
  2. Coinbase is the most volatile stock by far with an annualized volatility of 89% and a Beta of 3.86 which is almost unheard of.\u00a0 Pfizer is the least volatile stock with a very low Beta. It is undervalued by most metrics but only rated as average on both timeliness of investment and valuation by ValuEngine.<\/li>\n
  3. Apple has the best historic Sharpe ratio but is a relatively neutral investment now according to our models.<\/li>\n<\/ol>\n
    Financial Advisory Services based on ValuEngine research available: \u00a0 <\/b>www.ValuEngineCapital.com<\/b><\/a><\/h5>\n

    Conclusions<\/b><\/p>\n

    The purpose of the analysis of the seven stocks currently available in single-stock ETFs was purely to provide background and analytic context for the underlying stocks. <\/span>COIN <\/b>is only available in a long ETF (<\/span>CONL<\/b>).\u00a0 Despite the fact that the models make it a stock that we recommend, long holders may wish to consider divesting.\u00a0 Adding leverage to a stock with that kind of volatility is a difficult argument to make.\u00a0 The model\u2019s recommendations are for no less than a 1-month holding period and generally for holding between three and twelve months, not for a day.\u00a0 Again, these vehicles are intended for intraday or at most two-day trading.\u00a0 The reasons for this are that the compounding math of holding daily futures over a week or more is suicidal, and the management fees are among the highest of all ETFs. The results generated are far from the results you\u2019d expect if you were to hold the stocks directly for a month. Unless one is a skilled day trader, it would be wise not to play with explosives.<\/span><\/p>\n

     <\/p>\n

    By Herbert Blank<\/b><\/h5>\n
    Senior Quantitative Analyst, ValuEngine Inc<\/b><\/h5>\n
    www.ValuEngine.com<\/b><\/a><\/h5>\n
    support@ValuEngine.com<\/b><\/h5>\n
    _______________________________________________<\/b><\/h5>\n
    All of the approximately 5,000 stocks, 16 sector groups, 140 industries, and 600 ETFs have been updated on <\/b>www.ValuEngine.com<\/b><\/a><\/h5>\n
    Financial Advisory Services based on ValuEngine research available through <\/b>ValuEngine Capital Management, LLC<\/b><\/a><\/h5>\n
    Free Two Week Trial to all 5,000 plus equities covered by ValuEngine <\/b>HERE<\/b><\/a><\/h5>\n
    Subscribers log in <\/b>HERE<\/b><\/a><\/h5>\n","protected":false},"excerpt":{"rendered":"

    The following news item is an excerpt from an Investment News Article dated August 18, 2022. The full article can be viewed HERE. Massachusetts Secretary of the Commonwealth William Galvin announced a ‘sweep’ of firms offering the new ETFs, which he compared to gambling at a casino. With the first single-stock ETFs\u00a0only about a month … Read more<\/a><\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[130,1,39],"tags":[2053,51,1576,2055,2054,1760,1761,1719,1731,1804,600,2048,2047,77,2044,2057,2050,2049,2056,2045,2046,1510,1713,2058,2051,402,2052,2043,28,1656,1659,63],"_links":{"self":[{"href":"http:\/\/blog.valuengine.com\/index.php\/wp-json\/wp\/v2\/posts\/2961"}],"collection":[{"href":"http:\/\/blog.valuengine.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/blog.valuengine.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/blog.valuengine.com\/index.php\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"http:\/\/blog.valuengine.com\/index.php\/wp-json\/wp\/v2\/comments?post=2961"}],"version-history":[{"count":3,"href":"http:\/\/blog.valuengine.com\/index.php\/wp-json\/wp\/v2\/posts\/2961\/revisions"}],"predecessor-version":[{"id":2964,"href":"http:\/\/blog.valuengine.com\/index.php\/wp-json\/wp\/v2\/posts\/2961\/revisions\/2964"}],"wp:attachment":[{"href":"http:\/\/blog.valuengine.com\/index.php\/wp-json\/wp\/v2\/media?parent=2961"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/blog.valuengine.com\/index.php\/wp-json\/wp\/v2\/categories?post=2961"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/blog.valuengine.com\/index.php\/wp-json\/wp\/v2\/tags?post=2961"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}