While funds like the Vanguard Value ETF (NYS:VTV) have allowed everyone to be "value" investors, going against the grain is the hallmark of many premier investors in the style. Often waiting years, if not decades, for their ideas to pan out, true value investors see the long-term picture for what it is. Generally, the stock market overreacts to both good and bad news, resulting in stock price movements that do not correspond with the company's or sector's long-term fundamentals. This results in an opportunity for value investors to profit when prices are depressed. Warren Buffet's famous "be greedy, when others are fearful," quote highlights this fact. For those looking for extreme, left for dead values, the following ETFs and sectors may be up your alley.
Downhill Since Fukushima
In the wake of Japan's Fukushima disaster, a variety of nations have begun plans to wind down their nuclear operations and stall new reactor projects. However, as the developed world begins its nuclear phase-out, the emerging world is under-going a massive building binge. Overall, The International Atomic Energy Agency predicts that by 2030, the world will have up to 803 GW worth of generation capacity. If the upper range is met, it would mean an 113% increase versus 2010s generation numbers.
However, despite nuclear's long-term potential, stocks within the sector have fallen hard since Japan's woes. The Global X Uranium ETF (ARCA:URA), which tracks a basket of uranium mining stocks, fell more than 60% during 2011, but still represents a great long-term play on the emerging world's love affair with atomic power. Similarly, the iShares S&P Global Nuclear Energy Index (ARCA:NUCL) is a good broad choice to play the sector.
The Arab Spring
Given the riots, social upheaval and political problems facing Egypt, it's no wonder why investors have shunned the battered nation. However, the nation is one of the largest economies in the Middle East and many analysts predict that Egypt will be one of the replacement nations for the BRICs. While the short-term road is bumpy, the elimination of the Mubarak regime is expected to be a long-term positive for the country. The Market Vectors Egypt Index ETF (ARCA:EGPT) fell around 50% during 2011 and tracks 28 different firms including Orascom Construction (OTCBB:ORSCY).
Capsized Growth
Slowing raw material demand from the emerging world, coupled with decreasing economic activity in the developed, has hurt the global shippers. Acting as a leveraged play on global growth, a variety of shipping firms like Navios Maritime (NYSE:NM) saw their fortunes sink along with the global economy. However, many firms within the sector are trading for less than their book values, and the Baltic dry index has been steadily increasing since the start of 2011. The Guggenheim Shipping ETF (ARCA:SEA) tracks a basket of 25 global shippers across both the dry bulk and liquids categories. Top holdings include Teekay LNG Partners (NYSE:TGP) and Nippon Yusen. The fund dropped about 46% during 2011, but now yields a delicious 6.65%.
A Platinum Play
As global uncertainty remains high, investors have stuffed their portfolios with gold. In doing so, an ounce of gold now trades for more than platinum. Historically, platinum has been the "money" metal, usually trading for a wide premium over gold; since 1997 platinum has often cost 50 to 100% more than gold, due to its scarcity of supply and sheer expense in mining it. However, as platinum prices have dipped, so have shares in its miners. The First Trust ISE Global Platinum Index (ARCA:PLTM) sunk about 50% in 2011, but should be great long-term bet. Platinum is seeing increased demand from both industrial and investment purposes. Analysts estimate that long-term platinum demand will grow, outstripping supply.
Value can be had in some pretty nasty places. The previous ideas are some of the most beaten down and unloved sectors currently on the market. However, each offers great long-term fundamentals and potential. For patient portfolios and investors, going against the herd can mean long-term profits.
No comments:
Post a Comment