{"id":3246,"date":"2024-01-11T22:50:20","date_gmt":"2024-01-11T22:50:20","guid":{"rendered":"http:\/\/blog.valuengine.com\/?p=3246"},"modified":"2024-01-12T01:19:01","modified_gmt":"2024-01-12T01:19:01","slug":"turning-the-page-to-2024","status":"publish","type":"post","link":"http:\/\/blog.valuengine.com\/index.php\/turning-the-page-to-2024\/","title":{"rendered":"Turning the Page to 2024"},"content":{"rendered":"

Farewell and thank you to 2023 which exceeded almost everybody\u2019s expectations after a dismal 2022 and predictions of a dire recession.\u00a0 This blog was more positive than most, projecting a 5% to 10% gain for the S&P 500 vs. the actual price gain of 23.9%.\u00a0 Now it\u2019s on to 2024.\u00a0 Let\u2019s start with our quarterly look at benchmark index ETFs.<\/span><\/p>\n

The ETF reports on ValuEngine that follow market benchmarks provide a side benefit in writing market analyses.\u00a0 They are a window to implicit forecasts for 3-, 6- and 12-month forecasts that VE models make for each benchmark\u2019s ETF portfolio holdings.\u00a0 This is because the ratings and projections combine bottom-up constituent analysis with analyses of the historical price movements of the ETF in different market environments. \u00a0 This empowers us to provide both looks back and share our model\u2019s views on that which lies ahead.\u00a0\u00a0<\/span><\/p>\n

All 5,000 stocks, 16 sector groups, 140 industries, and 500 ETFs have been updated.<\/b><\/h6>\n
Two-week free trial:<\/b>\u00a0www.ValuEngine.com<\/b><\/a><\/h6>\n

The benchmark indexes and ETFs analyzed here are:<\/span><\/p>\n

    \n
  1. The S&P 500 Index representing US Large Cap. The ETF is iShares\u2019 <\/span>SPY<\/b>;<\/span><\/li>\n
  2. RSP<\/b>, an equally weighted S&P 500 ETF representing an equally weighted version of the S&P 500;<\/span><\/li>\n
  3. The S&P 400 MidCap Index representing US MidCap. The ETF is SPDR\u2019s <\/span>MDY<\/b>;<\/span><\/li>\n
  4. The Russell 2000 Index representing US Small Cap. The ETF is iShares\u2019 <\/span>IWM<\/b>;<\/span><\/li>\n
  5. The Russell 1000 Large Cap Growth Index. The ETF is iShares\u2019 <\/span>IWF<\/b>;<\/span><\/li>\n
  6. The Russell 1000 Large Cap Value Index. The ETF is iShares\u2019 <\/span>IWD<\/b>;<\/span><\/li>\n
  7. The Nasdaq-100, constructed as an index using the top 100 non-financial stocks with primary listing on the Nasdaq. It is now regarded as the premier US Big Tech Index. The ETF is Invesco <\/span>QQQ.<\/b>\u00a0<\/span><\/li>\n<\/ol>\n

    All historical data are as of <\/span>12\/29\/2023<\/span><\/p>\n

    ENTER FIRST TABLE<\/strong><\/p>\n240111 Blog first table<\/a>\n

    Current ValuEngine reports on these stocks or ETFS can be viewed<\/b>\u00a0HERE<\/b><\/a><\/h6>\n

    OBSERVATIONS<\/b><\/p>\n

      \n
    1. The dominant leadership of large cap technology and communication stocks came back with a vengeance in 2023 capping off what has been a 5-year run since the end of 2018.\u00a0 Even with the bear market in 2022, the leadership went up so much more in the few positive months in the market than other stocks that the higher decline during the first six months of 2022 was quickly reversed. <\/span>QQQ, <\/b>the Invesco ETF that tracks the Nasdaq-100, beat every other benchmark index in every time period.<\/span><\/li>\n
    2. Our predictive model expects much of the same during the next 12 months. Both QQQ <\/b>and the broader IWF <\/b>representing large cap growth receive the system\u2019s highest rating of 5 <\/b>(Strong Buy). <\/b><\/li>\n
    3. Our valuation model, however, considers the portfolios of stocks held by these ETFs to be very overvalued.\u00a0 Especially noteworthy is the fact that only 19% of the 100 stocks in QQQ <\/b>are considered undervalued.<\/li>\n
    4. The S&P 500 Equal Weight Index tracked by RSP <\/b>underperformed its capitalization-weighted underlying index SPLG <\/b>(the lowest fee of the ETFs that track the S&P 500) by 12% in 2023, the most in any calendar year since the index\u2019s inception.\u00a0 This may be a warning sign that the S&P 500 leadership is very narrow.\u00a0 Historically, major corrections have followed narrow leadership.<\/li>\n
    5. Looking at the 1-month price gain row, the leadership began to reverse with IWM, <\/b>which tracks the small-cap Russell 2000 benchmark, gaining 12%. MDY<\/b>, tracking the S&P Midcap 400, gained just shy of 9%. This\u00a0 compares to just 6% for QQQ.<\/b><\/li>\n
    6. Small Cap (IWM) <\/b>stocks are very cheap relative to large cap stocks on a relative basis \u2013 especially by historical standards.\u00a0 This is true both according to traditional valuation measures and ValuEngine\u2019s proprietary valuation model. Breadth is also something to consider as IWM <\/b>outperformed the equal-weighted S&P ETF (RSP<\/b>) on a 12-month basis.<\/li>\n<\/ol>\n

      Also, as has been the case lately, there has been distinct differentiation between return performance among the S&P 500 GICS Sectors as characterized by the Select Sector SPDR ETFs as shown here:<\/span><\/p>\n

       <\/p>\n\n\n\n\n\n\n\n\n\n\n\n\n\n
      Symbol<\/b><\/td>\nName<\/b><\/td>\n1 Year Returns<\/b><\/td>\n3 Year Returns<\/b><\/td>\n5 Year Returns<\/b><\/td>\nDiv. Yield %<\/b><\/td>\n\u00a0Standard Deviation<\/b><\/td>\nP\/E Ratio<\/b><\/td>\n# of Holdings<\/b><\/td>\n<\/tr>\n
      XLK<\/b><\/td>\nTechnology<\/span><\/td>\n60.37%<\/b><\/td>\n14.93%<\/span><\/td>\n27.05%<\/b><\/td>\n0.8%<\/span><\/td>\n23.1%<\/span><\/td>\n36.5<\/span><\/td>\n66<\/span><\/td>\n<\/tr>\n
      XLF<\/b><\/td>\nFinancial<\/span><\/td>\n13.64%<\/span><\/td>\n11.14%<\/span><\/td>\n12.14%<\/span><\/td>\n1.9%<\/span><\/td>\n21.2%<\/span><\/td>\n17.1<\/span><\/td>\n73<\/span><\/td>\n<\/tr>\n
      XLV<\/b><\/td>\nHealth Care<\/span><\/td>\n2.70%<\/span><\/td>\n8.50%<\/span><\/td>\n11.75%<\/span><\/td>\n1.6%<\/span><\/td>\n14.6%<\/b><\/td>\n23.1<\/span><\/td>\n65<\/span><\/td>\n<\/tr>\n
      XLE<\/b><\/td>\nEnergy<\/span><\/td>\n1.26%<\/span><\/td>\n35.86%<\/b><\/td>\n13.70%<\/span><\/td>\n3.6%<\/b><\/td>\n30.5%<\/span><\/td>\n7.8<\/b><\/td>\n25<\/span><\/td>\n<\/tr>\n
      XLY<\/b><\/td>\nConsumer Discretionary<\/span><\/td>\n43.73%<\/span><\/td>\n4.87%<\/span><\/td>\n14.02%<\/span><\/td>\n0.9%<\/span><\/td>\n24.8%<\/span><\/td>\n27.9<\/span><\/td>\n54<\/span><\/td>\n<\/tr>\n
      XLI<\/b><\/td>\nIndustrial<\/span><\/td>\n19.25%<\/span><\/td>\n10.76%<\/span><\/td>\n14.36%<\/span><\/td>\n1.6%<\/span><\/td>\n20.1%<\/span><\/td>\n24.5<\/span><\/td>\n80<\/b><\/td>\n<\/tr>\n
      XLC<\/b><\/td>\nCommunication Services<\/span><\/td>\n58.05%<\/span><\/td>\n3.62%<\/span><\/td>\n13.12%<\/span><\/td>\n0.8%<\/span><\/td>\n21.2%<\/span><\/td>\n27.4<\/span><\/td>\n23<\/span><\/td>\n<\/tr>\n
      XLU<\/b><\/td>\nUtilities<\/span><\/td>\n-7.28%<\/span><\/td>\n4.20%<\/span><\/td>\n7.07%<\/span><\/td>\n3.4%<\/span><\/td>\n18.1%<\/span><\/td>\n22.3<\/span><\/td>\n31<\/span><\/td>\n<\/tr>\n
      XLP<\/b><\/td>\nConsumer Staples<\/span><\/td>\n-1.10%<\/span><\/td>\n4.88%<\/span><\/td>\n10.14%<\/span><\/td>\n2.7%<\/span><\/td>\n14.7%<\/span><\/td>\n24.6<\/span><\/td>\n39<\/span><\/td>\n<\/tr>\n
      XLB<\/b><\/td>\nMaterials<\/span><\/td>\n13.33%<\/span><\/td>\n8.61%<\/span><\/td>\n13.74%<\/span><\/td>\n2.0%<\/span><\/td>\n21.8%<\/span><\/td>\n16.5<\/span><\/td>\n30<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n
      Current ValuEngine reports on these stocks or ETFS can be viewed<\/b>\u00a0HERE<\/b><\/a><\/h6>\n

      Observations<\/b><\/p>\n

        \n
      1. After a dismal 2022, the market recovered with a vengeance in 2023. Closing out the year with nine consecutive weeks of gains, the S&P 500\u00ae finished with an impressive 26% return for the year. The relentless strength of the Magnificent Seven powered those gains throughout, pushing the mega-cap S&P 500 Top 50 up an astonishing 38%.<\/span><\/li>\n
      2. Thanks to optimism that the Fed would be able to engineer a soft landing, overall market sentiment improved drastically in the last two months of the year. This broadened the rally, with the S&P MidCap 400\u00ae and S&P SmallCap 600\u00ae both rising 16% for 2023.<\/li>\n
      3. Most sectors posted gains, led by Information Technology, up an astounding 58%, with Communication Services close behind, up 56%.<\/li>\n
      4. Two Sectors posted negative returns for 2023: Consumer Staples and Utilities<\/li>\n<\/ol>\n

        With so much attention focused on seven stocks, the other stocks in the top 10 in <\/span>QQQ <\/b>and\/or <\/span>SPY<\/b> were out of the limelight. But we\u2019ll take a quick look at them here in comparison with Apple (<\/span>AAPL<\/b>), the largest of the holdings in both <\/span>QQQ <\/b>\u00a0and <\/span>SPY.<\/b>\u00a0<\/span><\/p>\n

        The four remaining stocks include:\u00a0<\/span>
        \n<\/span><\/p>\n

        Broadcom Inc. (<\/span>AVGO) <\/b>designs, develops, and supplies various semiconductor devices with a focus on complex digital and mixed signal complementary metal oxide semiconductor based devices and analog III-V based products worldwide. The company operates in two segments, Semiconductor Solutions and Infrastructure Software.\u00a0 Broadcom Inc. was founded in 1961 and is headquartered in Palo Alto, California.<\/span><\/p>\n

        Costco Wholesale Corporation (<\/span>COST)<\/b>, together with its subsidiaries, engages in the operation of membership warehouses in the US and more than a dozen other countries. The company offers branded and private-label products in a range of merchandise categories.\u00a0Costco Wholesale Corporation was founded in 1976 and is based in Issaquah, Washington.<\/span><\/p>\n

        JPMorgan Chase & Co. (<\/span>JPM) <\/b>operates as a financial services company worldwide. It operates through four segments: Consumer & Community Banking (CCB), Corporate & Investment Bank (CIB), Commercial Banking (CB), and Asset & Wealth Management (AWM). The company also provides ATM, online and mobile, and telephone banking services. JPMorgan Chase & Co. was founded in 1799 and is headquartered in New York, New York.<\/span><\/p>\n

        Adobe Inc., (<\/span>ADBE<\/b>) together with its subsidiaries, operates as a diversified software company worldwide. It operates through three segments: Digital Media, Digital Experience, and Publishing and Advertising.\u00a0Adobe Inc. was founded in 1982 and is headquartered in San Jose, California.<\/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\n
        \u00a0<\/span><\/td>\nAPPL<\/b><\/td>\nAVGO<\/b><\/td>\nJPM<\/b><\/td>\nCOST<\/b><\/td>\nADBE<\/b><\/td>\n<\/tr>\n
        Stock Name<\/b><\/td>\nApple Inc<\/span><\/td>\nBroadcom Inc<\/span><\/td>\nJP Morgan Chase<\/span><\/td>\nCostco Whole Corp<\/span><\/td>\nAdobe Systems<\/span><\/td>\n<\/tr>\n
        Market Cap, (Bllns.)<\/span><\/td>\n2994.37<\/b><\/td>\n522.56<\/span><\/td>\n491.76<\/span><\/td>\n292.9<\/span><\/td>\n271.63<\/span><\/td>\n<\/tr>\n
        ValuEngine Rating<\/span><\/td>\n3<\/span><\/td>\n3<\/span><\/td>\n3<\/span><\/td>\n3<\/span><\/td>\n4<\/span><\/td>\n<\/tr>\n
        VE Forecast 3-mo. Price Return<\/span><\/td>\n2.88%<\/span><\/td>\n3.66%<\/b><\/td>\n0.92%<\/span><\/td>\n2.77%<\/span><\/td>\n3.62%<\/span><\/td>\n<\/tr>\n
        VE Forecast 1-yr. Price Return<\/span><\/td>\n0.86%<\/span><\/td>\n-3.39%<\/span><\/td>\n-3.26%<\/span><\/td>\n-2.67%<\/span><\/td>\n6.34%<\/b><\/td>\n<\/tr>\n
        Last mo. Price Return<\/span><\/td>\n1.67%<\/span><\/td>\n18.65%<\/b><\/td>\n10.23%<\/span><\/td>\n12.29%<\/span><\/td>\n-3.37%<\/span><\/td>\n<\/tr>\n
        Last 3 mo. Price Return<\/span><\/td>\n12.45%<\/span><\/td>\n34.39%<\/b><\/td>\n17.29%<\/span><\/td>\n16.84%<\/span><\/td>\n17.00%<\/span><\/td>\n<\/tr>\n
        Last 6 mo. Price Return<\/span><\/td>\n1.55%<\/span><\/td>\n29.41%<\/b><\/td>\n18.59%<\/span><\/td>\n24.15%<\/span><\/td>\n23.32%<\/span><\/td>\n<\/tr>\n
        Historic 1-Yr. Price Return<\/span><\/td>\n48.55%<\/span><\/td>\n100.11%<\/b><\/td>\n27.68%<\/span><\/td>\n44.59%<\/span><\/td>\n76.73%<\/span><\/td>\n<\/tr>\n
        Historic 5-Yr Ann. Price Return<\/span><\/td>\n28.96%<\/b><\/td>\n27.22%<\/span><\/td>\n6.78%<\/span><\/td>\n18.82%<\/span><\/td>\n17.80%<\/span><\/td>\n<\/tr>\n
        Volatility<\/span><\/td>\n30.12%<\/span><\/td>\n30.35%<\/span><\/td>\n28.51%<\/span><\/td>\n22.70%<\/b><\/td>\n34.20%<\/span><\/td>\n<\/tr>\n
        Sharpe Ratio<\/span><\/td>\n0.96<\/b><\/td>\n0.9<\/span><\/td>\n0.24<\/span><\/td>\n0.83<\/span><\/td>\n0.52<\/span><\/td>\n<\/tr>\n
        Beta<\/span><\/td>\n1.29<\/span><\/td>\n1.13<\/span><\/td>\n1.14<\/span><\/td>\n0.77<\/b><\/td>\n1.34<\/span><\/td>\n<\/tr>\n
        Undervaluation Percentile<\/span><\/td>\n77<\/span><\/td>\n90<\/b><\/td>\n57<\/span><\/td>\n80<\/span><\/td>\n71<\/span><\/td>\n<\/tr>\n
        P\/B Ratio<\/span><\/td>\n48.18<\/span><\/td>\n21.78<\/span><\/td>\n1.95<\/b><\/td>\n11.2<\/span><\/td>\n103.48<\/span><\/td>\n<\/tr>\n
        P\/E Ratio<\/span><\/td>\n30.79<\/span><\/td>\n29.01<\/span><\/td>\n10.36<\/b><\/td>\n43.8<\/span><\/td>\n46.65<\/span><\/td>\n<\/tr>\n
        P\/S Ratio<\/span><\/td>\n7.81<\/span><\/td>\n14.59<\/span><\/td>\n2.19<\/span><\/td>\n1.19<\/b><\/td>\n14.00<\/span><\/td>\n<\/tr>\n
        PEG Ratio<\/span><\/td>\n4.19<\/span><\/td>\n2.32<\/b><\/td>\n–<\/span><\/td>\n8.57<\/span><\/td>\n3.55<\/span><\/td>\n<\/tr>\n
        EPS Growth<\/span><\/td>\n7.36%<\/span><\/td>\n12.50%<\/span><\/td>\n-5.08%<\/span><\/td>\n5.11%<\/span><\/td>\n13.14%<\/b><\/td>\n<\/tr>\n
        Div. Yield<\/span><\/td>\n0.00%<\/span><\/td>\n1.88%<\/span><\/td>\n2.47%<\/b><\/td>\n0.62%<\/span><\/td>\n0.00%<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n
        Current ValuEngine reports on these stocks or ETFS can be viewed<\/b>\u00a0HERE<\/b><\/a><\/h6>\n

        Observations<\/b><\/p>\n

          \n
        1. I\u2019ll bet you didn\u2019t know that Broadcom (<\/span>AVGO<\/b>) now has the fourth highest market capitalization in <\/span>QQQ <\/b>after the stock rose more than 100% last year.\u00a0 For the year ahead we rate it <\/span>3 <\/b>(Hold) looking for another strong first quarter before it tails off.<\/span><\/li>\n
        2. All four of these stocks are rated at least 3 <\/b>by ValuEngine with ADBE <\/b>rated 4 <\/b>(Buy).<\/li>\n
        3. 4 of the 5 have 5-year annualized price returns higher than that of QQQ<\/b>\u2019s 16.6%.\u00a0 Only non-Nasdaq JPM <\/b>underperformed both QQQ<\/b> and SPY <\/b>for that period.\u00a0 JPM <\/b>is also the only one of the 5 with weaker earnings growth than QQQ <\/b>and SPY.<\/b><\/li>\n
        4. Somewhat counterintuitively all five stocks (including AAPL<\/b>) are considered undervalued by the ValuEngine valuation model.\u00a0 Using traditional metrics, only JP Morgan Chase would be considered undervalued.<\/li>\n<\/ol>\n
          Financial Advisory Services based on ValuEngine research available:\u00a0<\/b><\/h6>\n
          www.ValuEngineCapital.com<\/b><\/a><\/h6>\n

          CONCLUSIONS<\/b><\/p>\n