Sunday, December 17, 2006

Investing in 2007, mid caps

In the last section, we looked at the small cap category and examined the growth, blend and value segments. In this category, we will look at midcap ETFs. As noted earlier, this analysis looks at the sector as a whole and doesnt look at individual stocks. It is always possible to have a mispriced stock within each category.

In the past segments, we looked at vanguard ETFs for our analysis. Since there isnt any comparable vanguard funds in the midcap section, we will look at the iShares section instead. By definition, a midcap stock is a stock with valuation between 1 and 5 billion.

Midcap value:
IWS is the ETF we will analyze for this article. As noted in the first article of this segment, this ETF has notched about 20% return already this year. The top holdings of this segment are as follows:

ETR, Entergy Corp has a P/E of 20.5 and a market cap of 19 billion.
EOP, Equity Office Properties Trust has a large P/E and a market cap of 16.9 billion.
AEP, American Electric Power Co., Inc has a P/E of 24.8 and a market cap of 16.67 billion
PCG, PG&E Corp. has a P/E of 17.48 and a market cap of 16.52 billion
XRX, Xerox Corp. has a P/E of 13.48 and a market cap of 16.44 billion
PLD, Prologis REIT has a P/E of 24.75 and a market cap of 15.13 billion
EQR, Equity Residential REIT has a P/E of 18.97 and a market cap of 15 billion
VNO, Vornado Realty Trust REIT has a P/E of 36 and a market cap of 17.47 billion
EIX, Edison International has a P/E of 12.84 and a market cap of 14.69 billion
F, Ford Motor Co. has a market cap of 13 billion


Midcap blend:
IWR is the ETF in this segment. This ETF has notched about 16.5% return already this year. The top holdings of this segment are as follows:

HD, Harley-Davidson, Inc. has a P/E of 18 and a market cap of 18 billion
CELG, Celgene Corp. has a P/E of 400 and a market cap of 21 billion
ETR, y Corp.
JCP, JC Penney Co., Inc. has a P/E of 15 and a market cap of 17 billion
Thermo Electron Corp.
EOP, Equity Office Properties Trust has a large P/E and a market cap of 16.9 billion.
AGN, Allergan, Inc. has a market cap of 18.5 billion
ERTS, Electronic Arts, Inc. has a market cap of 16.3 billion and a P/E of 90.
YUM, Yum! Brands, Inc. has a P/E of 20.29 and a market cap of 15.51 billion.
COH, Coach, Inc. has a P/E of 30.7 and a market cap of 15.45 billion


Midcap growth:
IWP is the ETF in the midcap growth segment. This ETF has returned about 13% this year. The top holdings in this group are as follows.

HD, Harley-Davidson, Inc. has a P/E of 18 and a market cap of 18 billion
CELG, Celgene Corp. has a P/E of 400 and a market cap of 21 billion
JCP, JC Penney Co., Inc. has a P/E of 15 and a market cap of 17 billion
AGN, Allergan, Inc. has a market cap of 18.5 billion
ERTS, Electronic Arts, Inc. has a market cap of 16.3 billion and a P/E of 90.
YUM, Yum! Brands, Inc. has a P/E of 20.29 and a market cap of 15.51 billion.
COH, Coach, Inc. has a P/E of 30.7 and a market cap of 15.45 billion
AMT, American Tower Corp.-Class A has a market cap of 15.6 billion
FRX, Forest Laboratories, Inc has a P/E of 23 and a market cap of 16.15 billion
AES, AES Corp. has a P/E of 42 and a market cap of 14.9 billion

Summary:

The advantage of midcaps is that one gets a larger concentration of stocks that have good capitalization. If one has both large cap and small caps, a concentration of mid caps will be in the portfolio but to a far lesser extent.

Again, as we have seen in the other segments, the value segment has managed to outperform the blend and the growth segments. Overall, the value segment carries a lower P/E and P/B compared to the other segments.

Next article:

In the next article, we will look at international stocks and the prospects for them.

1 comment:

Anonymous said...

nice blog but xrx is now a growth story not value. dodge&cox done sold out and growth funds are the new owners.