Chart analysis of an ETF that focuses on a small sliver of the materials market suggests the fund could be poised for a big rally, according to Wolfe Research. Analyst Rob Ginsberg said in a July 24 note that the Invesco MSCI Global Timber ETF (CUT) appears to be on the verge of a breakout. "The ETF has carved out a very compelling multi year base and is on the verge of breaking out through $34.
The level has acted as resistance going back two years and has sent price lower of the prior two tests YTD. Is the third time the charm? We like its chances," the note said. The fund has traded above $34 per share several times this year, but has yet to break through and close above $35.
The timber ETF closed at $33.56 per share on Wednesday. While "timber" is in the name, "paper" might be a more apt description of the fund.
The ETF invests in many companies that make paper and packaging. Smurfit WestRock and International Paper are two of its biggest holdings. CUT launched in 2007 and is a relatively small ETF, with about $55 million in assets, according to FactSet.
It comes with an expense ratio of 0.67%. The upturn for CUT could be related to the broader market rotation, which is benefiting raw material producers.
The iShares U.S. Basic Materials ETF (IYM) is up 0.
7% in July, compared to a decline of 0.6% for the S & P 500 . — CNBC's Michael Bloom contributed reporting.
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