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ETF Alternatives for Last Week’s Hot Stocks

Rather than go straight at stocks like Visa or Fossil, consider these exchange-traded funds instead

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Despite severe doubts about the global economy, the markets continue to rally. Last week was another good week for the broader indices. The S&P 500 gained 1% to finish at 1405.87, the fifth consecutive week of gains for the index. Year-to-date, the S&P 500 is up 10.2% and the Dow is just 7% off its all-time high of 14,164.

Amid the positive environment, InvestorPlace contributors recently made a bunch of stock recommendations: Here are my ETF alternatives to those picks.

Media Stocks

Portfolio Grader — Louis Navellier’s system for ranking stocks — highlighted three media stocks Monday, Aug. 6, whose rankings improved a grade in the previous week. Of the three, I’m focusing on Fisher Communications (NASDAQ:FSCI), a Seattle television and radio broadcaster that began in 1910, oddly enough, as a flour milling operation.

Today, FSCI owns 20 television stations and three radio stations in Washington and Oregon. Its Portland TV station (KATU) and Seattle TV station (KOMO) accounted for 60% of its $66 million in television revenue in the first two quarters of the year. Those two stations drive the bus.

For those looking for an ETF alternative to this tiny micro-cap, you’re not going to find anything that owns Fisher in a meaningful way — but media’s not a bad way to go, so I’d recommend you buy the PowerShares Dynamic Media Portfolio (NYSE:PBS), which owns 30 media companies, including Belo Corporation (NYSE:BLC), its nearest rival in terms of revenue.

If you are dead-set on wrapping FSCI into the fold, the iShares Russell Microcap Index Fund (NYSE:IWC) does hold Fisher — but at a tiny 0.13% weighting, alongside 1,346 other micro-cap stocks.


On Tuesday, Charles Sizemore made a compelling case for Visa (NYSE:V), arguing that its growth in emerging markets combined with a global move to a cashless society puts Visa in the middle of the action. In addition, the continued growth of e-commerce has it benefiting whether (NASDAQ:AMZN) or some other online retailer wins the day. Visa gets paid to process transactions, so as long as it continues to provide a seamless process, its major concern is that consumers keep spending.

Somewhere in the world, they always do.

Unless you’re interested in financial services in general, I’d go with the First Trust US IPO Fund (NYSE:FPX), which has Visa as its largest holding at a 10.51% weighting. Replicating the IPOX-100 US Index, its performance over the past three years earned a five-star rating by Morningstar among a group of 1,526 funds. I’ve never been a fan of IPOs, but this ETF proves they can perform while providing buy-and-hold investors a useful investment.


At midweek, InvestorPlace Assistant Editor Kyle Woodley explained why Fossil (NASDAQ:FOSL) was worth owning despite the severe volatility in high-end retailing.

Woodley quite rightly points out that Fossil, although often compared with Coach (NYSE:COH) and Tiffany (NYSE:TIF), is really a notch or two lower in terms of price point. Because of this, it’s harder for both the company and analysts to know where revenues and earnings are headed. In May, it provided a bleak 2012 outlook that sent its stock tumbling 40% on the news. Fast forward three months, and its stock jumped 31% on better-than-expected Q2 earnings, as well as a full-year adjusted earnings per share estimate of $5.34 — 7 cents higher than the consensus analyst estimate.

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