RPV - COWZ March Reconstitution: High-Quality Deep Value Play Remains

2024-03-16 23:00:19 ET

Summary

• COWZ underwent its scheduled quarterly rebalance on Friday, with changes effective Monday, March 18. In total, 22 stocks were substituted, and Energy exposure dipped by 5%.
• With its free cash flow yield strategy, COWZ consistently hits its targets: high-quality stocks trading at low valuations. It also has low overlap with most broad market ETFs like SPY.
• Growth remains a problem, with earnings per share for COWZ's newest holdings estimated to decline by 1.87% over the next year. As such, it's a pure value play.
• With $24.70 billion in assets under management, COWZ has attracted new competition in the form of VFLO, FLOW, and COWS. It's still too early to judge which one is best, but this article also evaluates all four ETFs fundamentally to highlight their differences.

Investment Thesis

For the second straight time, the Pacer US Cash Cows 100 ETF ( COWZ ) substituted nearly two dozen holdings in its 100-stock portfolio during its scheduled quarterly rebalancing process. One of the most significant changes was a 5% reduction in Energy exposure, down from 28% previously, which I listed as a key reason for my latest "hold" rating three months ago . As usual, quality and value metrics remain strong, as COWZ has a solid 9.05/10 profit score and trades at just 12.75x forward earnings, competitive with free cash flow ETF peers VFLO , FLOW , and COWS . It's one of the things I've come to appreciate about COWZ - it consistently hits its targets and is transparent about its strategy and objectives. ...

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