Invesco BuyBack Achievers ETF

PKW

Market cap $1.47B

PKW targets over 200 US 'Buyback Achievers,' favoring value stocks with strong cash balances and a cyclical tilt, especially towards financials. The Invesco Buyback Achievers ETF employs full replication for accurate index tracking but has an elevated turnover rate that averages 70% p.a. PKW suits value-oriented investors seeking exposure to companies with robust buyback activity, but it isn't ideal for those prioritizing yield or portfolio stability.

S&P 500 dividend growth remains sturdy. But more and more companies are leaning into share repurchase programs as avenues for returning capital to shareholders.

I reiterate my 'Buy' rating on PKW, citing its low valuation and strong momentum despite macro uncertainty and sector headwinds. PKW's focus on companies with significant share buybacks provides bullish corporate signals and has delivered YTD outperformance versus the S&P 500. The ETF's portfolio is underweight large-cap growth and tech, but compelling valuations (P/E < 14, PEG 1.54x) and solid EPS growth support the thesis.

These funds steer clear of typical value metrics that are based on price ratios.

Invesco BuyBack Achievers ETF focuses on U.S. companies that have reduced shares outstanding by at least 5% in the past year. I perform a back test of buyback yield. The PKW ETF has a value-oriented portfolio, heavily weighted in financials and consumer discretionary sectors, with significant exposure to mid-cap stocks.

The record year for share-repurchase authorizations highlights strong free cash flow and well-capitalized US large caps, with low M&A trends favoring buybacks. I reiterate a buy rating on the Invesco BuyBack Achievers ETF, despite its moderate to high expense ratio and mixed liquidity. PKW offers a value-oriented portfolio with a low P/E ratio, though it has a cyclical risk profile and concentration in Consumer Discretionary.

The Invesco BuyBack Achievers ETF focuses on companies with consistent share buybacks, offering a value-oriented portfolio with a P/E ratio of 14.3x. PKW's portfolio is diversified across sectors, with significant overweight in consumer discretionary and industrials, and underweight in technology, consumer staples, and utilities. PKW's low valuation and high growth profile make it an attractive alternative to typical dividend and value ETFs.

PKW's strategy is focused on U.S. companies that are executing share repurchase programs. PKW's portfolio has a value tilt. It has an adjusted EY higher than that of IVV. Its quality is comparatively strong, but its growth characteristics are lagging. With a few robust years in the books, PKW was nonetheless unable to consistently outperform IVV and a few peers.

Stock buybacks are back in vogue this year. Stock buybacks by S&P 500 companies increased 9.9% year over year and 8.1% sequentially in the first quarter of 2024.

Corporate buybacks have been rising fast in America thanks to upbeat earnings and higher cash flow generation.