- My Forums
- Tiger Rant
- LSU Recruiting
- SEC Rant
- Saints Talk
- Pelicans Talk
- More Sports Board
- Coaching Changes
- Fantasy Sports
- Golf Board
- Soccer Board
- O-T Lounge
- Tech Board
- Home/Garden Board
- Outdoor Board
- Health/Fitness Board
- Movie/TV Board
- Book Board
- Music Board
- Political Talk
- Money Talk
- Fark Board
- Gaming Board
- Travel Board
- Food/Drink Board
- Ticket Exchange
- TD Help Board
Customize My Forums- View All Forums
- Show Left Links
- Topic Sort Options
- Trending Topics
- Recent Topics
- Active Topics
Started By
Message
Is A Surge in The Energy Sector Coming??...
Posted on 7/16/24 at 9:47 am
Posted on 7/16/24 at 9:47 am
After the release of recent CPI inflation data, the results came in lower than what analysts expected, and now some analysts are suggesting the probability of interest rate cuts has increased significantly, to almost 90% in September.
So why is this important? Here’s their premise: As interest rates fall conservative type investors are going to start seeking other investments to provide themselves with a strong dividend and it is very common to see moves into high free cash flow stocks, most notably utility and energy stocks.
So What Is "Free Cash Flow"?
Free cash flow (FCF) represents the cash that a company generates after accounting for cash outflows to support operations and maintain its capital assets. It’s a measure of a company’s financial health and profitability, indicating how much cash is available for the company to repay creditors, pay dividends, or reinvest in the business.
Energy stocks are not just going to benefit from interest rate cuts, there's also a potential that this AI momentum could start getting reflected into the sector very soon. The assumption is with the rising demand for AI Computing there's a direct positive correlation with demand for energy in the coming years. Electricity production will likely have to increase.
Two ways for smaller investors to take advantage of this emerging trend is to look into 2 ETFs that focus on free cash flow stocks: Pacer U.S. Cash Cows 100 ETF (COWZ) and VictoryShares Free Cash Flow ETF (VFLO).
Compare: COWZ vs. VFLO
Both ETFs focus on companies with high free cash flow, but their sector exposures reflect different strategic tilts. VFLO leans more towards healthcare, while COWZ has a stronger presence in the energy sector.
So why is this important? Here’s their premise: As interest rates fall conservative type investors are going to start seeking other investments to provide themselves with a strong dividend and it is very common to see moves into high free cash flow stocks, most notably utility and energy stocks.
So What Is "Free Cash Flow"?
Free cash flow (FCF) represents the cash that a company generates after accounting for cash outflows to support operations and maintain its capital assets. It’s a measure of a company’s financial health and profitability, indicating how much cash is available for the company to repay creditors, pay dividends, or reinvest in the business.
Energy stocks are not just going to benefit from interest rate cuts, there's also a potential that this AI momentum could start getting reflected into the sector very soon. The assumption is with the rising demand for AI Computing there's a direct positive correlation with demand for energy in the coming years. Electricity production will likely have to increase.
Two ways for smaller investors to take advantage of this emerging trend is to look into 2 ETFs that focus on free cash flow stocks: Pacer U.S. Cash Cows 100 ETF (COWZ) and VictoryShares Free Cash Flow ETF (VFLO).
Compare: COWZ vs. VFLO
Both ETFs focus on companies with high free cash flow, but their sector exposures reflect different strategic tilts. VFLO leans more towards healthcare, while COWZ has a stronger presence in the energy sector.
5
Posted on 7/16/24 at 10:28 am to Nole Man
Good post.
Our CEO really started pushing our direction as a company to gear towards more FCF a few years ago.
I like you points about the energy market.
Our CEO really started pushing our direction as a company to gear towards more FCF a few years ago.
I like you points about the energy market.
Posted on 7/16/24 at 12:14 pm to notiger1997
This earlier article in the year on COWZ kind of got me started in looking into this investment philosophy.
Analysts Indicate Upward Trends
Analysts Indicate Upward Trends
Posted on 7/16/24 at 3:10 pm to Nole Man
Hope not, SLEMCO took out all my electronics last time they had a surge. Have a whole house protector now but don’t want to have to test it.
Posted on 7/16/24 at 6:11 pm to Kjnstkmn
I'm feelin' more of a move into COWZ and QQQ in my future!
Posted on 7/16/24 at 6:52 pm to Nole Man
A Florida State fan moving in cows isn’t usually a good thing.
Posted on 7/16/24 at 7:23 pm to Nole Man
Sometimes I read something on here that makes logical sense. Then I buy it and it only goes down. But I got a good feeling about this one and threw a few shares of each in the portfolio just to guarantee it goes down. Sorry guys.
Kidding of course. I appreciate the analysis behind the pick. I did buy a few shares of each.
Kidding of course. I appreciate the analysis behind the pick. I did buy a few shares of each.
Posted on 7/16/24 at 7:56 pm to Drizzt
quote:
A Florida State fan moving in cows isn’t usually a good thing.
LOL! Well played.
I might have used "A Florida State fan assuming a position in cows isn’t usually a good thing".
This post was edited on 7/17/24 at 9:28 am
Posted on 7/22/24 at 8:36 am to Drizzt
It just got worse!
"A Florida State fan moving in CALF(s) isn’t usually a good thing".
That's right. You heard it here first.
Pacer US Small Cap Cash Cows 100 ETF(CALF)
Why?
It's clear the move from large cap to mid/small cap stocks has started. Some investors have been buying the dip since the last week of June in anticipation of the rotation. And it's continuing. Mid/small cap stocks joining the Bull Run basically.
Example: The Russell 2000 index ticker IWM has surged almost 8% in the past week while the S&P 500 has fallen by around 1.2%. IWM saw the second largest inflow of money amongst the entire Market.
In following with the thread's theme, CALF invests in small cap stocks, but with strong FCF. Looking at the fund's performance since the pandemic crash, it not only crushed IWM, as well as the S&P 500.
Not saying dump tech and large tech for all small caps. The recent downturn was likely a simple cooling off period, a good time to take profit, buy on the dip and pull back so we can go higher.
BUT: A small (i.e. 5-10%) position in mid/small cap stocks/ETFs like CALF deserves further consideration.
From an analyst report I can get:
Fund Description
CALF tracks an index of 100 companies out of the S&P Small Cap 600 Index selected and weighted by free cash flow. CALF provides access to the US small-cap space with a twist. Starting with the S&P Small Cap 600 Index, CALF screens out financial companies with the exception of REITs and companies projected to have negative free cash flows or earnings in the next two years. It ranks the remaining firms by trailing 12-month free cash flow yield, takes the top 100 companies, and weights them by their trailing cash flow yield. Weightings are capped at 2% of the weight of the Index for any individual company. Generally, high cash flows indicate that a company has a healthy business and can afford to pay dividends or invest in new opportunities. The Index is reconstituted and rebalanced quarterly.
"A Florida State fan moving in CALF(s) isn’t usually a good thing".
That's right. You heard it here first.
Pacer US Small Cap Cash Cows 100 ETF(CALF)
Why?
It's clear the move from large cap to mid/small cap stocks has started. Some investors have been buying the dip since the last week of June in anticipation of the rotation. And it's continuing. Mid/small cap stocks joining the Bull Run basically.
Example: The Russell 2000 index ticker IWM has surged almost 8% in the past week while the S&P 500 has fallen by around 1.2%. IWM saw the second largest inflow of money amongst the entire Market.
In following with the thread's theme, CALF invests in small cap stocks, but with strong FCF. Looking at the fund's performance since the pandemic crash, it not only crushed IWM, as well as the S&P 500.
Not saying dump tech and large tech for all small caps. The recent downturn was likely a simple cooling off period, a good time to take profit, buy on the dip and pull back so we can go higher.
BUT: A small (i.e. 5-10%) position in mid/small cap stocks/ETFs like CALF deserves further consideration.
From an analyst report I can get:
Fund Description
CALF tracks an index of 100 companies out of the S&P Small Cap 600 Index selected and weighted by free cash flow. CALF provides access to the US small-cap space with a twist. Starting with the S&P Small Cap 600 Index, CALF screens out financial companies with the exception of REITs and companies projected to have negative free cash flows or earnings in the next two years. It ranks the remaining firms by trailing 12-month free cash flow yield, takes the top 100 companies, and weights them by their trailing cash flow yield. Weightings are capped at 2% of the weight of the Index for any individual company. Generally, high cash flows indicate that a company has a healthy business and can afford to pay dividends or invest in new opportunities. The Index is reconstituted and rebalanced quarterly.
Posted on 7/22/24 at 10:59 am to Nole Man
quote:
VFLO leans more towards healthcare,
We're on the leading edge of the Boomers starting to die off. As we get further into that, healthcare demand is going to rise considerably so it's probably a good idea to get into healthcare funds now if you have money you want to put into long-term funds.
Posted on 7/22/24 at 11:20 am to Bard
That makes perfect sense. From what I can gather, VFLO might be the single best ETF to consider if you're looking at funds that focus on FCF stocks. I'm seriously looking to put maybe 5-10% of the non-retirement portfolio in VFLO and CALF.
Posted on 7/22/24 at 12:31 pm to Nole Man
quote:
That makes perfect sense. From what I can gather, VFLO might be the single best ETF to consider if you're looking at funds that focus on FCF stocks. I'm seriously looking to put maybe 5-10% of the non-retirement portfolio in VFLO and CALF.
I'll admit this thread is great, but as a newb it leaves me with lots of questions as most is over my head. Thanks though as this has been a interesting read.
With that said, why not in your retirement plan if you feel they are more of a long term play? Thanks.
Posted on 7/22/24 at 1:00 pm to HagaDaga
quote:
I'll admit this thread is great, but as a newb it leaves me with lots of questions as most is over my head. Thanks though as this has been a interesting read.
With that said, why not in your retirement plan if you feel they are more of a long term play? Thanks.
I learn a lot from the forum every day. Read stuff. Research it. Sometimes make moves.
In my case, most of my retirement money is in variable rate annuities and a company 401k where you have limited choices and these aren't part of them. They could be options for those that might have self-directed retirement accounts like ROTH IRAs for example.
My non-retirement Fidelity account is where I can purchase stocks/ETFs/Mutual funds like this. They have great research tools. I like to watch for market trends and try to find solid performers with potential. Occasionally buy.
Posted on 7/23/24 at 1:11 pm to Nole Man
I’ve owned ConEd $ED and $D Dominion for a long time. I’ve been adding to the $D position quite a bit the last two years because of the drop.
Neither has moved up very much. I keep hearing the reason to buy, but I haven’t seen it play out yet.
Neither has moved up very much. I keep hearing the reason to buy, but I haven’t seen it play out yet.
Posted on 7/23/24 at 3:17 pm to Motownsix
Page 1 of 1
Popular
Back to top
Follow TigerDroppings for LSU Football News