USCF ETF Trust – USCF SummerHaven SHPEI Index Fund (ARCA:BUY), a USD$0.00 small-cap, operates in the capital markets industry, which now face the choice of either being disintermediated or proactively disrupting their own business models to thrive in the future. Many banks and capital markets firms, particularly the large, complex institutions, have been simplifying their business and operating models over the last few years, both for economic reasons and to reduce organizational complexity. Financial services analysts are forecasting for the entire industry, a relatively muted growth of 8.85% in the upcoming year , and an overall negative growth rate in the next couple of years. Unsuprisingly, this is below the growth rate of the US stock market as a whole. Is now the right time to pick up some shares in capital markets companies? Below, I will examine the sector growth prospects, and also determine whether USCF ETF Trust – USCF SummerHaven SHPEI Index Fund is a laggard or leader relative to its financial sector peers. View our latest analysis for USCF ETF Trust – USCF SummerHaven SHPEI Index Fund
What’s the catalyst for USCF ETF Trust – USCF SummerHaven SHPEI Index Fund’s sector growth?
The threat of disintermediation in the capital markets industry is both real and imminent, taking profits away from traditional incumbent financial institutions. Over the past year, the industry saw growth in the teens, beating the US market growth of 10.79%. Given the lack of analyst consensus in USCF ETF Trust – USCF SummerHaven SHPEI Index Fund’s outlook, we could potentially assume the stock’s growth rate broadly follows its capital markets industry peers. This means it is an attractive growth stock relative to the wider US stock market.
Is USCF ETF Trust – USCF SummerHaven SHPEI Index Fund and the sector relatively cheap?
The capital markets sector’s PE is currently hovering around 17x, relatively similar to the rest of the US stock market PE of 20x. This means the industry, on average, is fairly valued compared to the wider market – minimal expected gains and losses from mispricing here. However, the industry returned a higher 13.57% compared to the market’s 10.46%, potentially illustrative of past tailwinds. Since USCF ETF Trust – USCF SummerHaven SHPEI Index Fund’s earnings doesn’t seem to reflect its true value, its PE ratio isn’t very useful. A loose alternative to gauge USCF ETF Trust – USCF SummerHaven SHPEI Index Fund’s value is to assume the stock should be relatively in-line with its industry.
What this means for you:
Are you a shareholder? Capital markets stocks are currently expected to grow slower than the average stock on the index. This means if you’re overweight in this sector, your portfolio will be tilted towards lower-growth. If growth was one of your main investment catalyst in the sector, now would be the time to revisit your holdings in USCF ETF Trust – USCF SummerHaven SHPEI Index Fund. Keep in mind the sector is trading relatively in-line with the rest of the market, which may mean you’ll be selling out at a reasonable price.
Are you a potential investor? The financial sector’s below-market growth and average valuation hardly makes it an exciting investment case. If you’re looking for a high-growth stock with potential mispricing, it seems like capital markets companies like USCF ETF Trust – USCF SummerHaven SHPEI Index Fund isn’t the right place to look. However, if you’re interested in the stock for other reasons, I suggest you research more into the company’s cash flow as well as its financial health in order to gain a holistic view of the stock.
For a deeper dive into USCF ETF Trust – USCF SummerHaven SHPEI Index Fund’s stock, take a look at the company’s latest free analysis report to find out more on its financial health and other fundamentals. Interested in other financial stocks instead? Use our free playform to see my list of over 600 other financial companies trading on the market.