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Dip Into Deere: ETF Alternatives for Hot Stock Picks

Find out how to bundle industrial, food, biotech and radio stocks

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The PowerShares Dynamic Food & Beverage Portfolio (PBJ) is composed of 30 U.S. food and beverage companies, and is benchmarked to an index that uses a combination of investment criteria to select the ultimate holdings. General Mills is weighted at 4.95%, 44 basis points higher than Kraft. Its former stablemate — Mondelez International (MDLZ) — has a weighting of 4.96%, the third-largest in the portfolio. PBJ has generated annualized total returns of 8.8% since June 2005, or 290 basis points higher than the S&P 500. That’s important because its annual expense ratio of 0.63% is slightly higher than I generally like to recommend.


San Diego-based Illumina (ILMN) develops technology that assists scientists in their study of molecular medicine. InvestorPlace chief technical analyst Sam Collins has a price target of $85, about 10% above where it’s currently trading. Long-term, he sees even more profits available for those willing to hold for an extended period. If you’re like me and aren’t completely in tune with biotechs, an ETF alternative seems like an excellent choice.

Some biotech ETFs have pretty high expenses, but at 0.35%, the Market Vectors Biotech ETF (BBH) isn’t one of them at 0.35%. The fund invests in 25 of the largest U.S.-listed biotech companies, and ILMN is the eighth-largest holding at 4.63%. The top 10 holdings account for 65% of BBH’s assets, providing investors with a very focused investment. While I mentioned above that I like to spread out my bets, in this case the idiom “in for a penny, in for a pound” comes to mind. If you’re going to play the biotech game, you might as well play for keeps.

Radio Stocks

Dan Burrows tackled radio stocks on Aug. 16, and out of three possibilities — Pandora (P), Sirius XM (SIRI) and Cumulus Media (CMLS) — he only thinks the home to Howard Stern is worth buying. His rationale: Pandora is overcooked and Cumulus isn’t growing enough, but Sirius XM is a relative bargain based on its 30% discount to its own five-year average P/E.

However, if you’re game on all three stocks, buy the Global X Top Guru Holdings Index ETF (GURU), which owns both Pandora and Cumulus as well as Liberty Media (LMCA), which owns 52% of Sirius XM’s stock. The equal-weighted fund combs 13F SEC filings looking for conviction investment ideas of prominent hedge fund managers. All three are top 20 holdings with weightings of no less than 2.06%. It isn’t cheap at 0.75%, but if you think hedge funds know what they’re doing, this is a good way of capturing pure-play radio stocks.

As of this writing, Will Ashworth did not hold a position in any of the aforementioned securities.

Article printed from InvestorPlace Media,

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