Three ETFs for Those Who Missed the Rally

Three ETFs for Those Who Missed the Rally

These three have been cut in half and look cheap.

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Reviewed by: etf.com Staff
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Edited by: Ron Day

In modern markets, with modern equipment (our phones and laptops) to monitor them, some of the best long-term values among ETFs are likely to be found where few are looking. After all, most headlines are now about what is going well. All-time highs get more attention than multi-year lows. Investors naturally want to find out if something that just doubled in price can double again, and again.  

This is human nature, especially in investing. People tend to want to buy what just went up. To be more specific, they want to turn back time (like the old song by Cher) and own what went up before it spiked in price. Or they're asking their investment advisor why they didn’t own it.

MOO, LIT

So, with that fear of having missed out (FOHMO?) in mind, at a time when records are being set in some market areas while others fall apart, let’s look at the results of a simple screen I did using etf.com’s ETF screening tool

I looked at some of the worst performing non-leveraged, non-inverse ETFs over the past three years, and then drilled down to find the ones that are selling at “dirt-cheap” valuations as a result. Naturally, these might be cheap on paper, but have less-obvious warts, so this filtering process is just step one of a deeper research process any investor should undergo. Here are a few that I pulled from the wreckage.

If the idea of an ETF whose portfolio sells at under 0.8 times sales, down 33% from its high point two years ago, and yielding 4.2% prompts you to want to do more research, say “moo!” That’s the symbol for the Van Eck Agribusiness ETF (MOO), holds a basket of approximately 55 stocks spanning businesses including agrichemicals, animal health and fertilizers, seeds and traits, farm irrigation equipment and farm machinery.  

The $1.3 billion Global X Lithium & Battery Tech ETF (LIT) is down a cumulative 45% over the past three years. And that’s the good news! I say that because LIT had a strong rally starting a few years ago, peaking in November of 2021, before a peak-to-trough slide of more than 60%. 

What happened? A classic case of too much supply from mining, compared to demand for lithium which ultimately was less than expected. And having lots of lithium inventory is not like a clothing company having some extra jeans to sell. Storage costs and the fluctuating demand for electric vehicles, along with the wild volatility in stocks like Albemarle and Tesla which are two of the industry's largest, all played a role here.  

A is for China A-Shares

The Xtrackers Harvest CSI 300 China A-Shares ETF (ASHR) is a $1.7 billion ETF, but despite its size, could be considered “out of favor” currently. It debuted back in 2013 with much fanfare, as it allowed investors to access the previously off-limits China A-share market, companies that trade directly on China exchanges. Until that time, Chinese stocks were typically purchased directly or via ETFs by going to the Hong Kong stock exchange.  

Fast forward to today, and investors are grappling with whether China will remain investable, given increasing global tensions. At 13 times trailing earnings, and off 39% “haircut” the past three years, the age-old decision about buying what is uncomfortable to buy is applicable here.

The headlines may proclaim a bull market, and for some segments of the global equity landscape, that is plain to see. But it is still a market of stocks, and those stocks are also collected into neat, compact baskets we call ETFs. In some cases, including those noted above, there might be reason for investors to look well below the headlines, where they might just find some very out of favor market segments that are potentially long-term winners. 

Rob Isbitts' Wall Street career spans 5 decades and multiple roles, all dedicated to providing clarity to investors by busting classic myths and providing uncommon perspective. He did so as a fiduciary investment advisor, Chief Investment Officer and fund manager for 27 years before selling his practice in 2020. His efforts now focus exclusively on investment research, education and multimedia. He started ETFYourself and SungardenInvestment to provide straightforward commentary and access to his investment intellectual property for portfolio construction, stocks and ETFs. Originally from New Jersey, Rob and his wife Dana have 3 adult children and have lived in Weston, Florida for more than 25 years.