PBJ - PBJ: This High Growth Food And Beverage ETF Is Still Too Expensive
2024-06-16 04:30:03 ET
Summary
- PBJ tracks a proprietary Index of 30 U.S. stocks in the food and beverage industry. Its expense ratio is 0.57% and the ETF has $113 million in assets under management.
- In previous reviews, I've identified buying opportunities for those interested in trading PBJ, as its relatively weak quality suggests it's not an appropriate long-term hold.
- The Index reconstitutes quarterly, meaning short-term opportunities are always possible. However, PBJ's valuation is only slightly better than XLP's, the higher-quality and lower-cost S&P 500 Consumer Staples ETF.
- Despite impressive growth and momentum features for a defensive product, PBJ is nowhere close to offering the required margin of safety to justify a "buy rating".
- I evaluate PBJ's detailed fundamentals against four Consumer Staples ETFs to make this case.
Investment Thesis
On January 14, 2024, I recommended readers avoid the Invesco Dynamic Food & Beverage ETF ( PBJ ) due to severe valuation problems. Although its selections offered more growth potential than those in the Consumer Staples Select Sector ETF ( XLP ), they were more volatile and of lesser quality, and this thesis has played out nicely over the last five months. Since that article was published, PBJ has lagged behind XLP, the Vanguard Consumer Staples ETF ( VDC ), and the Fidelity MSCI Consumer Staples ETF ( FSTA ) by 7-8%....
PBJ: This High Growth Food And Beverage ETF Is Still Too Expensive