In this week’s StockPointer content analysis (attached) we look at the iShares Transportation Average ETF (IYT), which we manually created using the PF Scan function. The recent decline in the price of oil over the past several months has recently led to lots of attention in the financial media. One article published last Thursday by CNBC (http://www.cnbc.com/id/102183367) identifies decreasing oil prices as a potential opportunity for companies in the transportation sector, as they might be able to take advantage of the down trend to reduce costs.
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StockPointer’s PF Scan tool allows us to determine the market’s growth expectations. The PF Scan for the iShares Transportation Average ETF (IYT) and its constituents is presented in the attached PDF. We’ll note that IYT (the “PF” symbol represents the weighted average position) is presently trading at a premium of 39% (FGV/EV), on the left-hand side of the graph. This implies that the market is anticipating earnings growth from these companies. As a whole, Current Operating Value only makes up 61% of Market Value of Total Capital (EV). It is worth noting that only two companies (UAL & DAL) in the ETF aren’t priced with implied growth expectations, as they trade at a discount relative to their EV.
Three-quarters of IYT’s constituents have been able to create shareholder wealth over the last 12 months. The weighted average EPI of 1.5 conveys that. IYT’s largest holding, Fedex (FDX), was not however able to generate wealth over the same period.
This week’s content analysis has been able to show how you might use PF Scan to quickly gain perspective on the growth expectations implicit within a portfolio, and each of its constituents.
