2 ETFs That May Be Poised For Profit-Taking After Robust Gains

 | Mar 16, 2021 06:07

Prices of a range of stocks as well as exchange-traded funds (ETFs) have appreciated significantly since the start of 2021. In many cases, valuation levels have become overstretched. Similarly, short-term technical charts point to overbought levels.

Therefore, as we get ready to wrap up the first quarter of the year, some investors might take advantage of the recent returns and rotate some profits in those names into more undervalued assets. Today, we introduce two ETFs where such profit-taking might be around the corner.

h2 Invesco Dynamic Leisure and Entertainment ETF/h2

Current Price: $54.78
52-Week Range: $17.60 - $55.25
Dividend Yield: 0.69%
Expense Ratio: 0.64%

The pandemic's effect on various sectors has been different. Initially, travel, leisure and hospitality industries were among the worst affected. But, with positive vaccine developments, share prices of sectors in these segments have recovered significantly.

Different countries might have slightly varying definitions of industry classifications. Yet, they typically include companies that operate in entertainment, e-sports, gaming, lodging, restaurants, sports facilities, travel and tourism.

In the U.S., several indices enable investors to gauge the health of these businesses. They include:

  • Dow Jones Travel & Leisure — up over 12% year-to-date (YTD);
  • Dow Jones Travel & Tourism — up over 18% YTD;
  • Dow Jones Airlines — up over 31% YTD;
  • Dow Jones Gambling — up over 26% YTD;
  • Dow Jones Broadcasting & Entertainment — up over 12% YTD;

Similarly, the Invesco Dynamic Leisure and Entertainment ETF (NYSE:PEJ) is also up about 18% YTD. It hit a record high on Mar. 15. Therefore, in the coming weeks, profit-taking in several of the names that make up the fund is likely.

PEJ, which follows the Leisure & Entertainment Intellidex index, has 32 stocks. Since its inception in June 2005, funds under management have reached $1.85 billion.