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Worst Performing ETFs in 2022

Like the best-performing Exchange Traded Funds of 2022, the worst-performing ETFs of the year were all leveraged.
It is no surprise that leveraged ETFs would be the best and worst-performing ETFs each year. But, interestingly, three of the top first worst performing ETFs were leveraged funds that are bullish big technology stocks, and the other two were ETFs that are short oil & gas companies.
2022 was a year we saw many divergences occur compared to the past almost ten years.
The technology-heavy index, the NASDAQ, was the worst-performing major index, while the slow and sleepy Dow Jones Industrial Average, while still down, was the best performer. The Dow Jones Industrial Average fell 8.8% as the S&P 500 dropped 19.4%, and the NASDAQ sank 33.1%.
Let’s look at which ETFs finished in the top five worst performers of 2022.

The worst performing Exchange Traded Fund of 2022 was the ProShares UltraShort Bloomberg Natural Gas ETF (KOLD) which ended the year down 88.62%. KOLD provides two times short exposure to an index that tracks natural gas by holding second-month futures contracts.
In 2022 the price of natural gas went through the roof as Russia invaded Ukraine. That invasion led to almost all of Europe imposing a ban on Russian oil and gas, which led to price increases for any other country that also banned the importation of Russian oil and gas.
While KOLD was the worst-performing ETF, the ProShares UltraShort Oil & Gas ETF (DUG) was the fourth worst ETF of 2022 after dropping 72.99%. DUG offers investors two times short exposure to a market-cap-weighted index of large US oil and gas companies.
Since Russia is one of the largest oil and gas producers in the world, the bans on buying their products sent the price of both oil and gas higher in 2022. Thus oil and gas companies based in the United States benefited, and DUG rose substantially.
But, most experts claim the Russian-Ukranie conflict was not the only reason we saw oil and gas prices climb. Some of the increase was likely due to increased demand as most of the world came out of Covid-19 restrictions, and more people felt comfortable traveling.
Regardless, oil and gas companies were one shining spot in 2022, and those who owned DUG did not do well.
DUG’s counterpart, the ProShares Ultra Oil & Gas ETF (DIG), which provides two times long exposure to the same large-cap US oil and gas companies that DUG shorts, was one of the best-performing ETFs of 2022. DIG increased by 123.99% in 2022, making it the second-best-performing ETF for the year.
The second worst-performing ETF of 2022 was the ProShares UltraPro QQQ ETF (TQQQ). TQQQ is a three times leveraged long ETF that provides exposure to a market-cap-weighted index that tracks the 100 largest non-financial companies which are listed on the NASDAQ. TQQQ lost 79.08% last year.
One of the best-performing ETFs of 2022 was the opposite of TQQQ, the ProShares UltraPro Short QQQ ETF (SQQQ), which shorts the same portfolio of companies with three times leveraged. SQQQ ended 2022 up 82.36%, making it the fourth best-performing ETF for the year.
Coming in as the third worst-performing ETF in 2022 was the ProShares Ultra NASDAQ Cloud Computing ETF (SKYU). SKYU is a two-times leveraged long ETF that offers exposure to an equally-weighted index of US companies that operate in the cloud computing industry.
The fund ended in 2022 down 75.95% as the whole technology industry got sold off as interest rates rose and valuations came back to reality.
The ProShares Ultra Semiconductors ETF (USD) was the fifth worst-performing ETF, which dropped 68.56%. USD offers two times long exposure to a market-cap-weighted index that tracks large US semiconductor companies.
Similar to SKYU, USD is a very industry-specific focused ETF that was sent lower due to interest rates, valuation reductions, and the industry’s history of struggling during recessions.

With many market participants expecting a mild recession in 2023, investors sold off stocks that typically don’t perform well in a slowing or negative economy.
Remember, past performance is not a sign of future performance. So don’t base any investment decisions on what performed well or poorly in the past.
Have a game plan and a thesis based on facts and data about why something should move higher or lower in the future.
Hopefully, you only owned the ETF winners of 2022 and not the losers. Regardless, best of luck and happy investing in 2023.
Matt ThalmanINO.com ContributorFollow me on Twitter @mthalman5513
Disclosure: This contributor did not hold a position in any investment mentioned above at the time this blog post was published. This article is the opinion of the contributor themselves. The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. This contributor is not receiving compensation (other than from INO.com) for their opinion.

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Good Stocks to Buy for 2023? 2 Software Stocks to Know

Last year was challenging for tech stocks due to various macroeconomic headwinds, including multi-decade high inflation, the Fed’s aggressive rate hikes, and geopolitical instability owing to Russia’s invasion of Ukraine. The tech-heavy Nasdaq Composite lost more than 25% over the past year. However, with inflation showing signs of cooling recently, the Fed is expected to

Good Stocks to Buy for 2023? 2 Software Stocks to Know Read More »

2 Biotech Stocks Under $100 to Buy Now

The biotech industry has thrived amid the pandemic. Moreover, the National Biotechnology and Biomanufacturing Initiative of the Biden-Harris Administration is expected to fuel the industry’s future expansion. Additionally, biotechnologies are becoming essential for meeting all nations’ basic needs, such as providing for their populations’ food, fuel, and medical conditions, safeguarding the environment, and producing the

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2 Retail Names With Higher Prices Ahead

We’ve seen a better start to the year for the major market averages, with the S&P 500 (SPY) up over 3% year-to-date and the Nasdaq Composite enjoying an even more impressive 4.5% return.
While some of these gains could be whittled away if we see a disappointing CPI report with higher-than-expected inflation, this is certainly a welcome departure from last year’s mess, with both indexes down over 20% for the first time since 2008.
Unfortunately, not all stocks have participated, and one sector that continues to remain in the doghouse from a sentiment standpoint is the Retail Sector.
Within the sector, the restaurant group has outperformed on hopes of peak inflation and improving demand (lower gas prices), but other retail brands like Chico’s FAS (CHS), with the stock being one of the worst performers year-to-date.

While this is partially attributed to the company’s softer holiday sales numbers, the sell-off is starting to look overdone, and a lot looks priced in here, with the stock trading at a mid-single-digit PE ratio.
Meanwhile, within the restaurant space, Wingstop (WING) may be an outperformer but it is positioned to continue its outperformance with aggressive unit growth and deflation in its core commodity (bone-in chicken wings).
This allowed it to price less aggressively than peers and capture market share despite a challenging backdrop where traffic growth has been elusive, especially while gas prices are hovering above $4.00/gallon.
Let’s take a closer look at both names below:
Wingstop (WING)
Wingstop (WING) began as a small buffalo-style chicken wing restaurant in Texas and has since grown to 1,800+ restaurants, with more than 95% of its system being franchised.
Since going public, the company has outperformed nearly all other restaurant stocks with a 640% return in just seven years.
This move is largely justified by the stock posting a ~20% compound annual EPS growth rate and consistently growing its restaurant base at a double-digit pace.
However, the company is still growing and innovating, releasing a new chicken sandwich this year, maintaining an industry-leading digital sales mix (62%), and entering new markets.
In the company’s most recent quarterly report, Wingstop posted sales of $92.7 million (+41% year-over-year), and quarterly earnings per share [EPS] of $0.45, tying its previous record.
The strong sales performance has positioned Wingstoop to report annual EPS of $1.67 this year, a 23% increase during a year when many companies have struggled just to maintain earnings.
This divergence is related to benefiting from bone-in-wing deflation, which lifted margins in the period and gave the company the flexibility to price below the industry average.
The ability to price conservatively and still maintain strong margins is a huge benefit, given that most brands have no choice but to raise prices, which has impacted demand.
Understandably, many investors might see the stock as fully valued at ~75x FY2023 earnings estimates ($2.00).
However, WING has consistently grown annual EPS at 20% per year; its execution has been near flawless, and in a recessionary environment, I would expect the rare growth stories out there to command a premium multiple.
That said, although I believe that Wingstop could hit new all-time highs above $185.00 per share this year and I continue to like the long-term growth story (4,000+ restaurants globally), I believe the ideal area to buy the stock is closer to its 200-day moving average ($130.00), so I will be watching this area to start a new position.
Chico’s FAS (CHS)
Chico’s FAS (CHS) is a $580 million company in the Retail-Apparel industry group with a portfolio of three brands: Chico’s, White House Black Market [WHBM], and Soma, with the latter being its intimate segment.
The stock has seen a significant fall from grace over the past several years, with its share price falling 80% from a high of $17.00 in 2012.
However, things appear to be finally turning around. This turnaround has been helped by a complete revamp of the management team, focusing on growing its digital sales (up ~1000 basis points vs. 2020 levels), and right-sizing its store fleet, closing under-performing stores with 18 permanent net closures on a year-over-year basis as of Q3 2022.
Unfortunately, while key operating metrics and its financial results are trending in the right direction (2021 marked its best gross margins since 2017), the stock has come under pressure due to worries about consumer spending in more discretionary categories.
This was exacerbated by the company’s Q4 sales coming in a little softer than expected, with the most recent update suggesting sales would come in at $510 million at the mid-point vs. a previous outlook of $454 million.
The result is that the stock is one of the worst performers year-to-date in the Retail Sector (XRT), and FY2022 annual EPS estimates of $0.88 look too ambitious.

That said, while FY2022 annual EPS estimates could come in lower than expected, Chico’s FAS is still on track to see a 100% increase in annual EPS year-over-year ($0.84 vs. $0.40), and based on these earnings, the company is trading at just ~5.5x FY2022 earnings estimates.
This is a dirt-cheap valuation for a company that expects to grow annual EPS again next year, with its Soma segment continuing to thrive and ongoing work to increase market share in its other two brands.
So, while holiday sales were a little lighter than hoped, I see Chico’s FAS as a Buy below $4.45, with it sitting at just ~4.8x FY2023 earnings estimates ($0.93).
While several of the best deals are gone, with many sectors beginning to rebound after a rough 2022, Chico’s FAS is one example of a turnaround story at a very attractive price, and Wingstop is an example of a growth story that should continue to thrive given its exceptional execution.
That said, I prefer to buy on pullbacks when the S&P 500 is trading in a cyclical bear market, so I see the ideal buy points for both stocks being $4.45 and $130.00, respectively.
Taylor DartINO.com Contributor
Disclaimer: This article is the opinion of the contributor themselves. Taylor Dart is not a Registered Investment Advisor or Financial Planner. This writing is for informational purposes only. It does not constitute an offer to sell, a solicitation to buy, or a recommendation regarding any securities transaction. The information contained in this writing should not be construed as financial or investment advice on any subject matter. Taylor Dart expressly disclaims all liability in respect to actions taken based on any or all of the information in this writing.

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Are Stocks Stuck in a Trading Range til February?

Please enjoy this updated version of weekly commentary from the Reitmeister Total Return newsletter. Steve Reitmeister is the CEO of StockNews.com and Editor of the Reitmeister Total Return.
Click Here to learn more about Reitmeister Total Return

Stocks are likely going to be stuck in a trading range until the next Fed announcement on Wednesday February 1st.
Because investors have been burned many times before getting bullish in hopes of a Fed pivot that did not arrive.
So even with signs of moderating inflation providing a modest lift to stocks of late…there is a limit to the upside until investors hear from the Fed again. There is also limit to the downside. And this begets a trading range.
Let’s discuss the shape of the trading range and possible outcomes after the Fed announcement. All that and more is on tap for this week’s Reitmeister Total Return commentary.
Market Commentary
In many ways the trading range has already been in place for the past month flitting between 3,800 and 4,000 for the S&P 500.
And this is likely to stay in place as investors are fearful of reading the Fed tea leaves wrong as they have so many times this year. So even though there were welcome signs of moderating wage inflation (public enemy #1 to the Fed) there are enough whispers from the Fed that their job is far from done.
One such whisper from the Fed recently came from Atlanta Fed President, Ralph Bostic. During his speech he shared that interest rates will get above 5% and hold there for a while. He was then asked for how long would they remain elevated above 5% for which he stated emphatically. “three words: a long time”.
This harkens back to December 14th when the market was on the verge of a breakout above the 200 day moving average before Powell slammed the door on that notion. He too repeated the 3 word mantra (a long time) over and over again when discussing their plans for higher rates.
Plain and simple, Powell said that they fear damage from long term inflation much more than the downsides that come with a recession. And thus will remain aggressively hawkish until inflation is back down to the 2% target for good.
Investors got the memo loud and clear in mid December leading to a -6% bearish run for stocks. However, bit by bit investors are forgetting the Feds message as stocks float back higher in the range.
The main thing creating a lid on stock prices at the moment is a combination of the 200 day moving average at 3,990 followed by the psychologically important 4,000 level. You could call that a double reinforced resistance level that will be hard to crack without clear and decisively bullish news from the Fed.
Right now, from a Fed policy perspective I see little reason for investors to get seriously more bullish at this time. That’s because of the consistency of the higher rates for “a long time” mantra.
Also consider that from an economic perspective there are more and more signs of a recession forming early in 2023. Let’s refer to 3 key pieces of data from the past week that speak loudly to worsening economic conditions:
First, was ISM Manufacturing declining to 48.4 last week as New Orders lower at 45.2 means that the worst is yet to come. (Remember under 50 = contraction).
Second, we find that things are not much better on the services side of the ledger as ISM Services dropped abruptly from 56.5 to 49.6. And here again, the forward looking New Orders component was markedly worse at 45.2.
Let’s remember that the above services report was during December…the holiday shopping season when consumers normally put aside any concerns to spend lavishly on their families. However, there was much less “ho, ho, ho” in these results and much more “humbug”.
Lastly, on the economic front, the NFIB Small Business Optimism index was, well, NOT optimistic. That comes through loud and clear as it came in at a six month low of 89.8 when under 100 = contraction.
Here too we see these business owners not feeling good about what lies ahead as the 6 month business conditions outlook worsened with 51% predicting lower results ahead. The only positive to be found in this report is still ample job openings which likely keeps pressure on higher wages…which will keep the Fed on the offensive against inflation a good while longer.
To sum it up, I expect stocks to remain in this 3,800 to 4,000 trading range until we hear from the Fed. Or more specifically I think it will be very hard to break above that range.
On the downside, stocks could tumble lower before the Fed chimes in if the upcoming inflation reports are hotter than expected. That’s because investors would wisely read that information to mean that the Fed would stay aggressively hawkish a good while longer…thus increasing odds of recession and stock market downside.
This means we should put the following dates on our calendar:
1/12/23 = Consumer Price Index
1/18/23 = Producer Price Index
2/1/23 = Fed Rate Hike Decision and Powell Speech
Don’t give much credence to moves higher in the range for now as it likely will be all for not when the Fed takes the mic on February 1st. However, it is also possible that stocks crack lower before that if CPI or PPI shows inflation being too sticky which provides a forgone conclusion of what the Fed will on 2/1.
Long story short, the smart money still rides on recession forming with deeper bear market in coming months. Please trade accordingly.
Click Here to learn more about Reitmeister Total Return
Wishing you a world of investment success!
Steve Reitmeister… but everyone calls me Reity (pronounced “Righty”)CEO, StockNews.com & Editor, Reitmeister Total Return

About the Author
Steve is better known to the StockNews audience as “Reity”. Not only is he the CEO of the firm, but he also shares his 40 years of investment experience in the Reitmeister Total Return portfolio. Learn more about Reity’s background, along with links to his most recent articles and stock picks.

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Three Best Energy Dividend Picks After a Big 2022

Last year, the energy sector was the only market sector to post a positive return—and it did a heck of a job! The Energy Select Sector SPDR (XLE) gained 60% last year.

One-year gains like that may make you cautious about committing to energy this year, but I believe your portfolio should continue to hold an above-average energy weight.

Let’s look at some of the fundamentals…

The mega-cap energy companies give a good view of the sector. With a $440 billion market cap, Exxon Mobil Corp (XOM) is one of the ten largest U.S. companies. Exxon is an integrated energy company with operations that include drilling for oil and gas, refining, and even retail. For the 2022 third quarter, the company reported earnings of $19.7 billion—yes, the company made almost $20 billion in one quarter!—and had $24 billion of cash flow from operations. For comparison, Alphabet (GOOG), with twice the market cap, earned $14 billion for the quarter. Despite appreciating by 65% over the past year, XOM trades at a P/E of 8.

Chevron Corp (CVX), with a $340 billion market cap, also operates as a fully integrated energy company. Chevron earned $11 billion in the third quarter, with $12.3 billion of free cash flow. After gaining 43% over the last year, CVX trades at a P/E of 9.

These large-cap energy companies will remain very profitable at current energy commodity prices. If oil and natural gas prices go up during the year (which I think is very probable), the share prices could post similar gains. I think both will beat the Wall Street estimates for fourth-quarter results.

However, I have a better idea for the energy sector for 2023. I predict energy midstream will generate very attractive total returns. Midstream companies operate gathering systems, pipelines, and terminals. The business operates on a fee basis with long-term contracts. Revenues and cash flow to pay dividends are stable and growing.

In the midstream sector, you find corporations and master limited partnerships (MLPs). Currently, I favor MLPs. Both camps have the same growth prospects, but the MLPs start the year with higher current yields.

Midstream companies will grow dividends by high single digits this year. Combine that growth with similar starting yields, and you end up with total returns in the mid teens.

Here are three MLPs with near 10% yields:

Crestwood Equity Partners LP (CEQP)

NuStar Energy LP (NS)


MLPs do come with Schedules K-1 for tax reporting. They also pay tax-advantaged distributions. If you don’t want the hassles of K-1 reporting or want to own MLP investments in a qualified retirement account, I recommend the InfraCap MLP ETF (AMZA). AMZA pays stable monthly dividends and yields 8.6%—and there is a good chance of a dividend increase when the fund announces its January dividend.
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What’s Next for mRNA Vaccine Makers

Before the coronavirus pandemic, most of us had never heard of mRNA vaccines, which is not surprising.

Although scientists had been experimenting with the technology for literally decades (reminiscent of fusion), the technology had never progressed beyond the laboratory and into widespread medical use. But now, many of us have been vaccinated against COVID-19 with mRNA vaccines.

However, the gold mine that was COVID vaccine quickly petered out. Here’s what’s next for these biotech companies…

For those of you unfamiliar on how exactly mRNA vaccines, here is a quick description from the Mayo Clinic website:

This type of vaccine uses genetically engineered mRNA to give your cells instructions for how to make the S protein found on the surface of the COVID-19 virus. After vaccination, your muscle cells begin making the S protein pieces and displaying them on cell surfaces. This causes your body to create antibodies. If you later become infected with the COVID-19 virus, these antibodies will fight the virus. After delivering instructions, the mRNA is immediately broken down. It never enters the nucleus of your cells, where your DNA is kept.

The two most-used mRNA vaccines currently come from Moderna (MRNA) and the joint venture formed by Pfizer (PFE) and BioNTech (BNTX).

After riding high for much of the pandemic, the mRNA vaccine pioneers came down to earth hard in 2022. By mid-June 2022, the stock prices for both Moderna and Germany’s BioNTech had more than halved.

The Next Act for mRNA Technology Companies

But luckily for these companies, mRNA technology is more than a one-trick pony. It’s possible to use mRNA to trigger immune responses to other bodily invaders, including influenza and even cancer.

In fact, an announcement a few weeks ago from Moderna and partner Merck (MRK) has reignited interest in these companies. The two companies—jointly working on this project for six years—published a promising set of melanoma trial results in mid-December. The data released showed that a combination of the Moderna’s experimental cancer vaccine and Merck’s immunotherapy drug, Keytruda, reduced the risk of death or recurrence of melanoma in high-risk patients by 44%, compared with treatment using only Keytruda.

The results sent Moderna stock soaring 27% in the two trading days after their release.

The results emboldened Merck and Moderna to embark on a much larger Phase 3 trial (the Phase 2 trial involved only 157 patients). The companies will also test the combination against other kinds of cancer. “We believe that this should work in many tumor types, not only melanoma,” Moderna CEO Stéphane Bancel said in an interview.

Keep in mind, though, that unlike your typical vaccine, these shots will treat, not prevent, the disease.

In brief, here’s how a cancer vaccine would work: you get the tissue from a patient’s tumor, sequence it, and then, over a six-week period of time, you manufacture a vaccine that matches the top 10 to 20 mutations. The tailor-made vaccine stimulates a person’s immune system to selectively target those cancer cells.

Huge Potential

So, after five decades of failed attempts, cancer vaccines may be set for a breakthrough.

The nearly $17 billion jump in Moderna’s market value over two days following the announcement reflected investors’ hopes that cancer vaccines can work and become as common as the company’s mRNA vaccines.

Analysts from Jeffries say that the later-stage melanoma treatment market could be worth up to $5 billion (or between $9 and $15 per share in earnings) to Moderna. That figure may turn out to be far too conservative if mRNA vaccine technology works against other types of tumors.

Of course, there is no guarantee that the next phase of the Moderna/Merck clinical trials will be as encouraging as the last. And, even if the vaccine does work against melanoma, can the results be duplicated when tried against other types of cancers?

I think it can. Targeting multiple antigens decreases the odds that cancer cells will mutate in ways that make the vaccine useless, because the immune system will be attacking on multiple fronts. That makes personalized vaccines a great fit for fast-mutating cancers.

But we shall find out for sure in the years ahead.

Meanwhile, here’s how I look at both Moderna and BioNTech, which is working on its own half dozen or so cancer vaccines with companies like Regeneron Pharmaceuticals (REGN).

While many innovative biotech companies are struggling to raise funds, a successful coronavirus vaccine has left Moderna with roughly $7 billion of net cash. BioNTech has double that amount. The companies can now apply both their cash and the knowhow they gained during the pandemic to other urgent medical needs like cancer treatments.

Neither company is a low-risk investment. However, both Moderna and BioNTech look cheap when you consider the potential for cancer vaccines. Both Moderna around $175 a share and BioNTech at about $150 a share seem like reasonable bets.
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The 4 Most Attractive Long-Term Stock Picks

The stock market witnessed heightened volatility last year due to lingering macroeconomic and geopolitical headwinds. While inflation cooled for two consecutive months, minutes from the Federal Reserve’s December meeting show that policymakers expect to continue increasing rates in 2023 and keep them higher for ‘some time’ until the 2% inflation target is met. Bloomberg’s monthly

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