Changing My Stance And Loading Up On SCHD (Archive)
Changing my stance as SCHD’s valuation, exposures and risk-reward skew turn compelling.
This 5-Minute Pitch was originally published on Seeking Alpha before the launch of the Hunting Alphas website. It is shared here to showcase my previous work and track record. New 5-Minute Pitches published on this site will not be disseminated anywhere else.
Elevator Pitch
- Early last year, I thought SCHD would underperform the S&P500. This has played out as SCHD made negative alpha vs S&P500 of 8.53%. But now I am bullish SCHD.
- I like SCHD's relative underweights vs SPY in: a) Technology due to its premium valuations b) Payment Processing due to decelerating growth c) Retail as that is yet to rebound.
- I like SCHD's relative overweights vs SPY in: a) Asset Management & Custody Banks as I anticipate higher activity b) Soft Drinks & Beverages due to strong growth prospects.
- Valuations wise, SCHD is trading at a 28% discount to the S&P500, providing a good margin of safety.
- Risks wise, SCHD has no exposure to Microsoft, Apple or NVIDIA and positive earnings surprises in these companies can hinder SCHD's alpha vs S&P500.
Read the full article here.
Disclosures and Disclaimers
Past performance ≠ future results. Not investment advice. See full Disclaimer.
Comments ()