With 2012 just beginning, now's a smart time to gauge how the stocks you're interested in are likely to do this year and beyond. By knowing what stock analysts and fellow investors expect from a stock, you'll be smarter about whether you should buy it for your portfolio -- or sell it if you already own it.
Today, let's take a look at Direxion Daily Financial Bull 3x
Forecasts on Direxion Daily Financial Bull 3x
|Forward P/E for Financial Sector as Defined by S&P||11.3|
|Average CAPS Rating (out of 5) for Financial Services Stocks||***|
|CAPS Rating for Direxion ETF||*|
Sources: Morningstar, Motley Fool CAPS.
Will the Direxion ETF recover in 2012?
As go financials, so goes the Direxion Daily Financial Bull 3x. That's a general rule of thumb, although the triple-leveraged nature of the ETF also puts a wrinkle in the equation. After all, even when financials fell sharply last year, the bearish Direxion Daily Financial Bear 3x
That said, analysts have high hopes for financials this year. According to The Wall Street Journal, forecasts put Bank of America's
But those expectations may be too high. Bloomberg reported that estimates for the six largest lenders suggest an average increase in profits of 57%. Yet those same analysts got things wrong last year, as even the relatively healthy Wells Fargo
For Direxion Daily Financial Bull 3x to thrive this year, it needs an almost straight-up move in financial stocks. Given that the ETF is designed for daily traders, it's dangerous to consider it a smart play to hold throughout 2012.
If you want exposure to only the best financial stocks, an ETF won't get the job done. Join the thousands who've already read the Motley Fool's latest special report on the financial industry to find out which banks the smartest investors are buying now. The report is free, but it won't be there forever, so check it out today.
Click here to add Direxion Daily Financial Bull 3x to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.
Fool contributor Dan Caplinger doesn't own shares of the companies mentioned. The Motley Fool owns shares of Wells Fargo and Bank of America and has created a covered strangle position on Wells Fargo. Motley Fool newsletter services have recommended buying shares of Goldman Sachs. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool has a disclosure policy.