Here's my ETF Pick of the Week
PowerShares Dynamic Pharma (PJP)
PJP is a basket of companies selected by a model based on a variety of investment criteria including growth, stock valuation, timeliness and risk factors. This ETF contains about 30 companies fairly evenly weighted. 57% are large cap, 24% midcap with the balance small cap companies. The top holding in PJP is Genentech and it also holds other established biotech companies such as Amgen (AMGN), Gilead (GILD), and Biogen (BIIB). PJP also offers a healthy mix of traditional companies like Johnson & Johnson (JNJ) and also generics such as Perrigo (PRGO) and Watson Pharma (WPI).
Reasons for Selection:
1. Despite being viewed as a defensive sector, the healthcare sector and pharmaceutical companies have been beaten up pretty badly since the beginning of the year leading to attractive valuations.
2. Pharmaceutical companies have demonstrated good momentum recently and have largely exceeded earnings expectations.
3. PJP offers investors’ good balance with a total of thirty companies and its top ten holdings are weighted in a range of 3% to5%. It also provides exposure to traditional pharma, generic, biotech, and specialty pharma companies.
4. PJP is the best performer among the three leading pharmaceutical ETFs and is trading at a p/e of just over 15 with a 16% return on equity and a 0.6% yield.
Catalyst: Global money managers are rotating back into healthcare sector
Risk Factor: Moderate - Aggressive
Tip: For a global approach, consider adding the iShares Global Healthcare Sector ETF (IXJ) to your portfolio.
Thank You!
Carl T. Delfeld
President, ChartwellETF.com
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