Stumbling Upon a ‘Cash Cow’ ETF

********************************************

Special Announcement from the Publisher

I am thrilled to announce the launch of our Eagle Investing Network YouTube Channel. You’ll find lots of great videos to help you navigate the markets and become a better investor. Click here now to check it out — and be sure to subscribe so you don’t miss any new videos, as we will put them up at least on a weekly basis.

********************************************

You may not know that the common expression “cash cow” was coined by the great management guru Peter F. Drucker in the 1960s to refer to a product or business that continues to retain its sizable market share, even as the market itself is stagnant or declining.

Such a business or product is able to continually churn out profits with little maintenance, investment or oversight, in much the same way that a cow is able to generate milk virtually endlessly if simply provided with grass for grazing. Meanwhile, the funds that are generated are then able to be used by the parent company for investment or research and development purposes.

Nowadays, it seems that many investors are looking for their own cash cows in a time when the Treasury yield curve inversion reached levels not seen since 2007. All eyes are now fixed on what Fed Chairman Jerome Powell will say at the upcoming Jackson Hole conference in Wyoming, as many investors are wondering what Chairman Powell’s remarks will do to the bond market.

Of course, there are exchange-traded funds (ETFs) that will do well if bond yields begin to come back down due to a slowing economy. One such ETF is the Pacer US Cash Cows 100 ETF (BATS: COWZ).

Exclusive Seven Tips to Day-Trade with a Signal

This ETF is focused on the belief that companies with a high free cash flow are the most stable ones. The fund’s managers begin with the Russell 1000 index and then screen companies via their average projected free cash flows and earnings for the next two fiscal years. Companies with negative cash flow or earnings are removed. Then, the qualifying companies are ranked according to their 12-month free cash flow yield. The ETF index is then comprised of the top 100 names. Each security is capped at 2% of the index.

The top holdings in the portfolio are McKesson Corporation (NYSE: MCK), CVS Health Corporation (NYSE: CVS), Cisco Systems, Inc. (NASDAQ: CSCO), Nucor Corporation (NYSE: NUE), Moderna, Inc. (NASDAQ: MRNA), General Dynamics Corporation (NYSE: GD) and Gilead Sciences, Inc. (NASDAQ: GILD).

As of Aug. 23, COWZ has risen 14.59% over the past month and 7.05% for the past three months. It is currently up 29.76% year to date.

Chart courtesy of www.stockcharts.com

The fund has amassed $7.45 billion in assets under management and has an expense ratio of 0.49%.

In short, while COWZ does provide investors with access to potential “cash cows,” this kind of ETF may not be appropriate for all portfolios. Thus, interested investors always should conduct their due diligence and decide whether the fund is suitable for their investing goals.

As always, I am happy to answer any of your questions about ETFs, so do not hesitate to send me an email. You just may see your question answered in a future ETF Talk.

Exclusive ETF Talk: Strike Oil While the Market’s Hot!

Big Announcement!

Finally, I’m excited to announce that I’ll be speaking at the W3BX conference, Oct. 10-13, in Las Vegas. Join some of the biggest names in the industry, including my colleagues Bryan Perry and Jon Johnson, along with our Publisher Roger Michalski, to learn more about investing in blockchain, cryptos, NFTs, Metaverse, mining and all things Web Three.

The Web Three sector is expected to grow from $3.2 billion to $81.5 billion by 2030. The more you know about it, the more potential money you can make from this explosion.

Click here now to learn more about the conference and be sure to enter the code “EAGLE” when you register to save 20%. I’ll see you in Vegas!

Jim Woods

Jim Woods is a 20-plus-year veteran of the markets with varied experience as a broker, hedge fund trader, financial writer, author and newsletter editor. Jim is the editor of Successful Investing, the Bullseye Stock Trader, and The Deep Woods (formerly the Weekly ETF Report). His books include co-authoring, “Billion Dollar Green: Profit from the Eco Revolution,” and “The Wealth Shield: How to Invest and Protect Your Money from Another Stock Market Crash, Financial Crisis or Global Economic Collapse.” He’s also ghostwritten many books and articles, as well as edited content for some of the investment industry’s biggest luminaries. His articles have appeared on many leading financial websites, including StockInvestor.com, InvestorPlace.com, Main Street Investor, MarketWatch, Street Authority, Human Events and many others. Jim formerly worked with Investor’s Business Daily founder William J. O’Neil, helping to author training courses in the CANSLIM stock-picking methodology. The independent firm TipRanks rates Jim the No. 3 financial blogger in the world (out of more than 6,000). TipRanks calculates that, since 2012, he's made 361 successful recommendations out of 499 total, earning a success rate of 72% and a +15.3% average return per recommendation. He is known in professional and personal circles as “The Renaissance Man,” because his expertise includes such varied fields as composing and performing music; Western horsemanship, combat marksmanship, martial arts, auto racing and bodybuilding. Jim holds a BA in philosophy from the University of California, Los Angeles, and is a former U.S. Army paratrooper. A self-described “radical for capitalism,” he celebrates the virtue of making money from his Southern California horse ranch.