The S&P 500 has beaten expectations throughout 2023, up more than 17% year to date. Whereas many market watchers anticipated tougher headwinds from rising rates, an earnings dip, and a possible recession, the index has continued to perform. That said, it’s relied perhaps too heavily on some key stocks, creating concentration risk. As such, investors may want to take a closer look at some examples of stocks in an equal weight ETF like BFOR which can mitigate that risk.
(BFOR ), tracks the Barron’s 400 index and applies an equal weight to it. The equal weight ETF applies fundamental factors as well. BFOR looks for the 400 firms that hit the highest scores based on its growth at a reasonable price GARP methodology. The strategy equal weights its holdings but does cap their sectors at 20% of its overall index. Taken together, that’s helped BFOR return 12.1% YTD.
Three Stocks to Watch in Equal Weight ETF BFOR
So what types of firms does BFOR end up holding? The ETF’s largest sector by weight, finance, sits at a 17% allocation, followed by electronic technology at 10.3% and producer manufacturing at 9%. Starting off, consider (SMCI).
The firm develops, produces, and delivers server and storage solutions with modular architecture globally. SMCI right now is seeing 32.8% five year diluted EPS growth, with a solid 18.4 forward P/e ratio, per YCharts. SMCI’s server tech supports and can benefit from cloud computing, Big Data, and “Internet of Things”-related trends. SMCI has returned a staggering 323% YTD.
BFOR also currently holds (NYCB). NYCB, a state-charted savings bank, operates throughout the United States offering multiple touchpoints for its banking services. It also produces multi-family loans in New York City itself. The firm has an intriguing forward P/e ratio of 9.4, with 61.8% quarterly YoY diluted EPS growth. The company’s returned 61.6% YTD, per YCharts.
Finally, BFOR holds consumer discretionary firm (ELF). ELF has returned 138% for those who bought it to start the year. The firm sells cosmetics for women marketed under three different brands. While most of its revenue does stem from the U.S. it does draw some from international sales as well. ELF right now has seen 244% quarterly year-over-year diluted EPS growth.
Those three firms join hundreds of others BFOR’s equal weight ETF approach. That’s helped BFOR hit some key buy signals right now based on its tech chart. The strategy’s 50-day Simple Moving Average (SMA) sits above its 200-day SMA, with its price above both. For those investors looking to avoid concentration risk, consider BFOR and the types of firms in which it invests.
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