ETFs (exchange-traded funds) are a convenient way to invest in several securities, such as stocks, bonds, or commodities. They are a cost-effective investment option, as they usually have lower expense ratios compared to traditional mutual funds. ETFs also provide investors with greater flexibility and liquidity since they are traded on stock exchanges. Today, we have shortlisted two ETFs – First Trust S&P 500 Diversified Free Cash Flow ETF (FCFY) and First Trust Nasdaq Retail ETF (ISHP) – with more than 10% upside potential projected by analysts over the next twelve months.
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Let’s take a deeper look at these two ETFs.
First Trust S&P 500 Diversified Free Cash Flow ETF (FCFY)
The FCFY ETF tracks the performance of the S&P 500 Sector-Neutral FCF Index. This index is composed of companies within the S&P 500 Index (SPX) that have the highest relative free cash flow yield within their respective Global Industry Classification Standard (GICS) sectors. GICS is a method that categorizes companies in specific sectors and industry groups based on business operations.
FCFY has $1.26 million in assets under management (AUM), with the top 10 holdings contributing 26.93% of the portfolio. Importantly, it has a low expense ratio of 0.6%. The FCFY ETF has returned 12.02% in the past six months.
Overall, the FCFY ETF has a Moderate Buy consensus rating. Of the 103 stocks held, 75 have Buys, 25 have a Hold rating, and three have a Sell rating. At $27.14, the average FCFY ETF price target implies an 11.42% upside potential.
First Trust Nasdaq Retail ETF (ISHP)
The First Trust Nasdaq Retail ETF is now known as the First Trust S-Network E-Commerce ETF. The ETF seeks to match the price and yield of the S-Network Global E-Commerce Index, which consists of companies involved in content navigation, online retail, online marketplace, and e-commerce infrastructure businesses.
The ISHP ETF has $5.49 million in AUM and an expense ratio of 0.6%. Its top 10 holdings contribute 20.34% of the portfolio. Over the past six months, ISHP ETF has generated a return of 17.16%.
On TipRanks, ISHP has a Moderate Buy consensus rating based on 47 Buys, 12 Holds, and two Sells assigned in the last three months. At $40.01, the average ISHP ETF price target implies a 10.21% upside potential.
Concluding Thoughts
ETFs are a low-cost, diversified, and transparent way to participate in the market. Investors looking for potential ETF recommendations could consider ISHP and FCFY due to the upside potential expected by analysts.
