Three ETFs To Watch This Week: VDE, PPH, FXE

by on January 31, 2011 | ETFs Mentioned:

Most markets inched higher last week, but hit a bit of road bump on Friday after investors digested news of declining consumer sentiment for January and a worse-than-expected GDP report. Gold and oil both traded lower during the week, but both commodities were able to stage a small rallies on Friday amidst all the uncertainty that weighted down equities. International markets didn’t fare too well last week either, with civil unrest continuing to develop in Egypt, Standard and Poor’s downgrading Japan, and a suicide bomber attack in Moscow’s Domodedovo airport which killed at least 35 people and injured more than 100.

This week is stacked with earnings reports from major industry leaders as well a handful of economic reports including ISM Manufacturing Index, personal income, and construction spending. Below we profile three ETFs that will be in for an active week:

Vanguard Energy ETF (VDE)

Why VDE Will Be In Focus: This fund has Exxon Mobil Corporation as its top individual holding at just over 20% allocation, and the industry heavyweight is scheduled  to report earnings results on Monday before the opening bell. VDE tracks the MSCI US Investable Market Energy 25/50 Index, which consists of large, medium, and small U.S. companies in the energy sector [see VDE Holdings]. Analysts are expecting the oil giant to deliver earnings per share somewhere in the range of $1.36 to $1.72. Likewise, revenues are expected to come in at around $97 billion compared to last years results of $89 billion. As global demand from oil is expected to continue increasing into 2011, Exxon is well positioned going forward given their size and recent purchase of Ellora Energy, an oil and gas exploration and production company. Additionally, the company is planning to invest upwards of $25 billion in new prospects and developments to help meet the growing demand for energy  worldwide. VDE will come into focus Monday for investors as the company reports results and offers commentary about the energy sector as a whole going forward.

HOLDRS Merrill Lynch Pharmaceutical (PPH)

Why PPH Will Be In Focus: Pharmaceutical giant Pfizer, which accounts for 17% of PPH’s holdings, reports earnings before the bell on Tuesday [see Five Facts About HOLDRS Every ETF Investor Must Know] . The company will have its new CEO, Ian Read, addressing analysts and investors during its earnings report. Pfizer’s results and commentary will be watched by many as the company will address how it will adjust it’s strategy and revenue plans going forward, given that its blockbuster drug Lipitor will soon loose U.S. patent protection. The company is expected to haul in $17 billion in revenue and analysts are expecting earnings per share of 46 cents. Pfizer’s earnings report will focus on the company’s research and development plans going forward, as well addressing its recently pending acquisition of King Pharmaceutical Inc., which specializes in abuse-resistant pain medicines. PPH will likely see an increasing in trading volume as a handful of other pharmaceuticals, such as Merck, report earnings this week and give industry insights and expectations going into 2011 and beyond [see PPH Holdings].

Rydex CurrencyShares Euro Currency Trust (FXE)

Why FXE Will Be In Focus: The fund will come into focus as the European Central Bank announces its decision regarding interest rates on Thursday at 7:45 am (ET). FXE tracks the Euro by following the EUR/USD exchange rate [see FXE Fundamentals]. Analyst consensus is for the rate to remain unchanged at 1%. Traders and investors will be paying more attention to the press conference following the rate decision, during which the bank’s president, Jean-Claude Trichet, will make an official statement as well as answer questions from the media. While the market is expecting for the rate to remain unchanged given the worrisome debt situations of Ireland, Spain, and Portugal, it’s not impossible for the euro to spike in either direction following the ECB press conference. Considering the recent run-up that FXE has enjoyed, combined with currency market risks/volatility, it’s recommended for traders to stay out of FXE until the entire press conference is over [also see Time For A Leveraged Euro ETF?].

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Disclosure: No positions at time of writing.