RCL Stock Hits 52-Week High: Should You Wait for a Dip or Buy Now?

Launched on 06/23/2005, the Invesco Leisure and Entertainment ETF (PEJ) is a smart beta exchange traded fund offering broad exposure to the Consumer Discretionary ETFs category of the market.

What Are Smart Beta ETFs?

Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.

Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.

If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.

These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.

Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.

Fund Sponsor & Index

Managed by Invesco, PEJ has amassed assets over $263.47 million, making it one of the larger ETFs in the Consumer Discretionary ETFs. PEJ, before fees and expenses, seeks to match the performance of the Dynamic Leisure & Entertainment Intellidex Index.

The Dynamic Leisure & Entertainment Intellidex Index is comprised of stocks of U.S. leisure and entertainment companies. The Index is designed to provide capital appreciation by thoroughly evaluating companies based on a variety of investment merit criteria, including fundamental growth, stock valuation, investment timeliness and risk factors.

Cost & Other Expenses

When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.

Operating expenses on an annual basis are 0.58% for this ETF, which makes it on par with most peer products in the space.

The fund has a 12-month trailing dividend yield of 0.39%.

Sector Exposure and Top Holdings

ETFs offer diversified exposure and thus minimize single stock risk, but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.

PEJ's heaviest allocation is in the Consumer Discretionary sector, which is about 48.70% of the portfolio. Its Telecom and Consumer Staples round out the top three.

Looking at individual holdings, Booking Holdings Inc (BKNG) accounts for about 5.70% of total assets, followed by Live Nation Entertainment Inc (LYV) and Royal Caribbean Cruises Ltd (RCL).

Its top 10 holdings account for approximately 48.04% of PEJ's total assets under management.

Performance and Risk

So far this year, PEJ has added about 28.34%, and is up about 36.89% in the last one year (as of 11/25/2024). During this past 52-week period, the fund has traded between $38.84 and $53.60.

The fund has a beta of 1.35 and standard deviation of 22.65% for the trailing three-year period, which makes PEJ a high risk choice in this particular space. With about 31 holdings, it has more concentrated exposure than peers.

Alternatives

Invesco Leisure and Entertainment ETF is a reasonable option for investors seeking to outperform the Consumer Discretionary ETFs segment of the market. However, there are other ETFs in the space which investors could consider.

Global X Video Games & Esports ETF (HERO) tracks SOLACTIVE VIDEO GAMES & ESPORTS INDEX and the VanEck Video Gaming and eSports ETF (ESPO) tracks MVIS GLOBAL VIDEO GAMING AND ESPORTS IND. Global X Video Games & Esports ETF has $105.67 million in assets, VanEck Video Gaming and eSports ETF has $276.71 million. HERO has an expense ratio of 0.50% and ESPO charges 0.56%.

Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Consumer Discretionary ETFs.

Bottom Line

To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.

Zacks Investment Research

Launched on 05/08/2007, the First Trust Consumer Discretionary AlphaDEX ETF (FXD) is a passively managed exchange traded fund designed to provide a broad exposure to the Consumer Discretionary - Broad segment of the equity market.

While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.

Additionally, sector ETFs offer convenient ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Consumer Discretionary - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 6, placing it in top 38%.

Index Details

The fund is sponsored by First Trust Advisors. It has amassed assets over $1.58 billion, making it one of the largest ETFs attempting to match the performance of the Consumer Discretionary - Broad segment of the equity market. FXD seeks to match the performance of the StrataQuant Consumer Discretionary Index before fees and expenses.

The StrataQuant Consumer Discretionary Index employs the AlphaDEX stock selection methodology to select stocks from the Russell 1000 Index.

Costs

Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.

Annual operating expenses for this ETF are 0.61%, making it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 0.80%.

Sector Exposure and Top Holdings

Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.

This ETF has heaviest allocation in the Consumer Discretionary sector--about 75.80% of the portfolio. Telecom and Industrials round out the top three.

Looking at individual holdings, United Airlines Holdings, Inc. (UAL) accounts for about 1.99% of total assets, followed by Carvana Co. (class A) (CVNA) and Royal Caribbean Cruises Ltd. (RCL).

The top 10 holdings account for about 15.84% of total assets under management.

Performance and Risk

Year-to-date, the First Trust Consumer Discretionary AlphaDEX ETF has added about 13.69% so far, and is up about 27.11% over the last 12 months (as of 11/25/2024). FXD has traded between $52.95 and $66.68 in this past 52-week period.

The ETF has a beta of 1.38 and standard deviation of 23.31% for the trailing three-year period, making it a medium risk choice in the space. With about 122 holdings, it effectively diversifies company-specific risk.

Alternatives

First Trust Consumer Discretionary AlphaDEX ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, FXD is a reasonable option for those seeking exposure to the Consumer Discretionary ETFs area of the market. Investors might also want to consider some other ETF options in the space.

Vanguard Consumer Discretionary ETF (VCR) tracks MSCI US Investable Market Consumer Discretionary 25/50 Index and the Consumer Discretionary Select Sector SPDR ETF (XLY) tracks Consumer Discretionary Select Sector Index. Vanguard Consumer Discretionary ETF has $6.36 billion in assets, Consumer Discretionary Select Sector SPDR ETF has $22.54 billion. VCR has an expense ratio of 0.10% and XLY charges 0.09%.

Bottom Line

To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.

Zacks Investment Research

Here are three stocks with buy rank and strong momentum characteristics for investors to consider today, November 22:

StoneX Group Inc. SNEX: This global financial services network provider has a Zacks Rank #1 and witnessed the Zacks Consensus Estimate for its current year earnings increasing 8.7% over the last 60 days.

StoneX Group Inc. Price and Consensus

StoneX Group Inc. price-consensus-chart | StoneX Group Inc. Quote

StoneX Group's shares gained 28.3% over the last three months compared with the S&P 500’s advanced of 6.7%. The company possesses a Momentum Score of A.

StoneX Group Inc. Price

StoneX Group Inc. price | StoneX Group Inc. Quote

monday.com Ltd. MNDY: This software development company has a Zacks Rank #1 and witnessed the Zacks Consensus Estimate for its current year earnings increasing 15.9% over the last 60 days.

monday.com Ltd. Price and Consensus

monday.com Ltd. price-consensus-chart | monday.com Ltd. Quote

monday.com's shares gained 12.9% over the last six months compared with the S&P 500’s advanced of 12.8%. The company possesses a Momentum Score of A.

monday.com Ltd. Price

monday.com Ltd. price | monday.com Ltd. Quote

Norwegian Cruise Line Holdings Ltd. NCLH: This cruise company has a Zacks Rank #1 and witnessed the Zacks Consensus Estimate for its current year earnings increasing 1.9% over the last 60 days.

Norwegian Cruise Line Holdings Ltd. Price and Consensus

Norwegian Cruise Line Holdings Ltd. price-consensus-chart | Norwegian Cruise Line Holdings Ltd. Quote

Norwegian Cruise Line Holdings' shares gained 52.9% over the last three months compared with the S&P 500’s advanced of 5.5%. The company possesses a Momentum Score of A.

Norwegian Cruise Line Holdings Ltd. Price

Norwegian Cruise Line Holdings Ltd. price | Norwegian Cruise Line Holdings Ltd. Quote

See the full list of top ranked stocks here

Learn more about the Momentum score and how it is calculated here.

Zacks Investment Research

Here are three stocks with buy rank and strong value characteristics for investors to consider today, November 22:

StoneX Group Inc. SNEX: This global financial services network provider carries a Zacks Rank #1, and has witnessed the Zacks Consensus Estimate for its current year earnings increasing 8.7% over the last 60 days.

StoneX Group Inc. Price and Consensus

StoneX Group Inc. price-consensus-chart | StoneX Group Inc. Quote

StoneX Group has a price-to-earnings ratio (P/E) of 12.78 compared with 24.65 for the S&P. The company possesses a Value Score of B.

StoneX Group Inc. PE Ratio (TTM)

StoneX Group Inc. pe-ratio-ttm | StoneX Group Inc. Quote

Norwegian Cruise Line Holdings Ltd. NCLH: This cruise company carries a Zacks Rank #1, and has witnessed the Zacks Consensus Estimate for its current year earnings increasing 1.9% over the last 60 days.

Norwegian Cruise Line Holdings Ltd. Price and Consensus

Norwegian Cruise Line Holdings Ltd. price-consensus-chart | Norwegian Cruise Line Holdings Ltd. Quote

Norwegian Cruise Line Holdings has a price-to-earnings ratio (P/E) of 16.35 compared with 23.70 for the industry. The company possesses a Value Score of A.

Norwegian Cruise Line Holdings Ltd. PE Ratio (TTM)

Norwegian Cruise Line Holdings Ltd. pe-ratio-ttm | Norwegian Cruise Line Holdings Ltd. Quote

Artisan Partners Asset Management Inc. APAM: This investment management company carries a Zacks Rank #1, and has witnessed the Zacks Consensus Estimate for its current year earnings increasing 3.9% over the last 60 days.

Artisan Partners Asset Management Inc. Price and Consensus

Artisan Partners Asset Management Inc. price-consensus-chart | Artisan Partners Asset Management Inc. Quote

Artisan Partners Asset Management has a price-to-earnings ratio (P/E) of 13.43 compared with 15.20 for the industry. The company possesses a Value Score of B.

Artisan Partners Asset Management Inc. PE Ratio (TTM)

Artisan Partners Asset Management Inc. pe-ratio-ttm | Artisan Partners Asset Management Inc. Quote

See the full list of top ranked stocks here.

Learn more about the Value score and how it is calculated here.

Zacks Investment Research

Bassett Furniture Industries, Incorporated BSET implemented workforce reductions to better align its cost structure with current business levels. These reductions, achieved through layoffs and retirements, are expected to generate annual savings of approximately $2.5 million.

The company has reduced its headcount by 11% in the past year, indicating ongoing efforts to streamline operations. It anticipates recording a $500,000 severance charge related to this initiative in the current quarter.

BSET Progresses on Restructuring Plan to Drive Savings

The company also stated that BSET is progressing with its five-point restructuring plan announced on July 10, 2024. This initiative is expected to result in annual cost savings between $5.5 million and $6.5 million.

The plan focuses on driving organic growth through Bassett-branded retail locations, expanding omni-channel capabilities and enhancing customization options. BSET has completed the consolidation of its Virginia-based wood production facilities and has seen improved performance from the remaining operations in the past two months.

Bassett plans to optimize inventory, drop underperforming product lines and invest in upgrading retail locations. The company has also shut down Noa Home, its Canada-based e-commerce furniture initiative, and is in the process of liquidating the remaining inventory.

BSET has reinforced its commitment to the restructuring plan with the recent cutbacks, despite the difficult decisions involving long-time associates. While there has been no noticeable increase in orders, the actions already taken have led to improved results. The company is pleased with the reception of its new products at the Fall High Point Furniture Market and anticipates these items will be available in retail stores by early 2025.

BSET remains focused on achieving the cost reductions previously outlined. With the workforce reductions included, the company now anticipates annual savings to be between $8 million and $9 million.

BSET’s Price Performance

Shares of the company have gained 13.1% in the past three months against the Zacks Furniture industry’s 0.1% fall. The company is benefiting from its ongoing restructuring initiatives aimed at fostering growth amid uncertain economic conditions. BSET has made progress with its plan to reduce costs and strengthen operations for top-line growth. The strategy leverages Bassett’s brand quality, design expertise and service, with a focus on driving long-term revenue growth and profitability.

The five-point plan is set to be completed by the end of the fourth quarter. The company has been streamlining operations, cutting expenses and investing in new products and services, with a commitment to returning to profitability.

BSET’s Zacks Rank

Currently, BSET carries a Zacks Rank #4 (Sell).

Stocks to Consider

Here are some better-ranked stocks from the Zacks Consumer Discretionary sector.

Carnival Corporation & plc CCL currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks Rank #1 stocks here.

CCL has a trailing four-quarter earnings surprise of 318.1%, on average. The stock has surged 73.3% in the past year. The Zacks Consensus Estimate for CCL’s fiscal 2024 sales indicates growth of 16.6% from year-ago levels.

Norwegian Cruise Line Holdings Ltd. NCLH currently carries a Zacks Rank #2 (Buy). NCLH has a trailing four-quarter earnings surprise of 4.2%, on average. The stock has surged 80.9% in the past year.

The Zacks Consensus Estimate for NCLH’s 2024 sales and earnings per share (EPS) indicates growth of 10.2% and 127.1%, respectively, from year-ago levels.

Royal Caribbean Cruises Ltd. RCL currently carries a Zacks Rank #2. RCL has a trailing four-quarter earnings surprise of 16.2%, on average. The stock has surged 124.7% in the past year.

The Zacks Consensus Estimate for RCL’s 2024 sales and EPS indicates growth of 18.6% and 71.6%, respectively, from year-ago levels.

Zacks Investment Research

Marriott International, Inc. MAR recently announced an agreement with New Development Group to open its second EDITION-branded hotel in Shanghai. The move underscores Marriott’s strategic focus on leveraging high-growth urban markets to strengthen its foothold in Greater China. The company looks forward to opening the property in 2026.

Located on Suzhou Creek in the Putuo district, adjacent to Changfeng Park, the luxury lifestyle hotel will likely comprise 278 luxurious guest rooms, including three bespoke restaurants and two sophisticated bars. It will also offer amenities like a swimming pool, spa, state-of-the-art gym and meeting studios.

Bart Buiring, managing director of Luxury, Greater China at Marriott International, highlighted Shanghai's status as one of the world's most vibrant and exciting destinations. He emphasized that the collaboration with New Development Group to introduce the second EDITION Hotel in the city marks a significant addition to Marriott's luxury portfolio in Greater China.

With its modern elegance and exceptional service, the Shanghai EDITION, Changfeng Park, aims to cater to travelers seeking unique, high-end experiences. The property is positioned to become a key addition to Marriott's growing luxury portfolio, which already includes over 70 hotels across Greater China.

More Focus on MAR’s Expansion

Marriott is consistently trying to expand its presence worldwide and capitalize on the demand for hotels in international markets. The company plans to expand its global portfolio of luxury and lifestyle brands. At the end of the third-quarter 2024, Marriott's development pipeline totaled nearly 3,800 hotels, with approximately 585,000 rooms. Nearly 220,000 rooms were under construction. During the quarter, the company added roughly 16,000 rooms to its worldwide lodging portfolio.

In 2024, Marriott anticipates net room growth to be approximately 6.5%. The hotel company is trying to strengthen its presence outside the United States, especially in Asia, Latin America, the Middle East and Africa.

Price Performance of Marriott Stock