The IWM iShares Russell 2000 ETF (NYSEACRA: IWM) is an exchange-traded fund (ETF) that seeks to track the investment results of the Russell 2000 Index. The Russell 2000 is composed of small-capitalization U.S. equities. The ETF was launched in May 2000, and its net assets were $24.3 billion as of March 4, 2016. The ETF's expense ratio is 0.2%. The top five sectors represent nearly 85% of the fund's assets. These are financials at 26.2% and information technology at 18%, followed by consumer discretionary, health care and industrials, with weightings of 14.1%, 13.9% and 12.6%, respectively.
The ETF's top five holdings are STERIS plc (NYSE: STE), CubeSmart (NYSE: CUBE), TreeHouse Foods, Inc. (NYSE: THS), Piedmont Natural Gas Company, Inc. (NYSE: PNY) and Vail Resorts, Inc. (NYSE: MTN). The combined weight of the five holdings represents 1.6% of the portfolio.
STERIS plc is a provider of infection prevention and procedural surgical products and services. These products and services are focused primarily on health care, pharmaceutical and research. The ordinary shares make up 0.36% of the ETF.
For the nine-month period ending Dec. 31, 2015, the company's revenue grew 14.8% from the year-ago period to $1.5 billion. However, selling, general and administrative expenses (SG&A) expanded at a faster clip than revenue, leading to income from operations falling by 28.5% to $113.6 million. Higher debt also boosted interest expenses from the previous year, lowering net income and leading to diluted earnings per share (EPS), dropping 48.7% to 80 cents.
STERIS and Synergy Health plc were merged as a U.K. corporation on Oct. 13. 2014. The new company became listed on the NYSE and started trading on Nov. 3, 2015, under the name STERIS plc. STERIS stock closed March 7, 2016, at $68 compared to $76.31 on Nov. 3, 2015. Over the last few months, this equates to a loss of 10.9%.
CubeSmart is a real estate investment trust (REIT), a publicly traded security that invests in real estate and pays out much of its income as dividends. The stock has a 0.33% weighting in the ETF. The company is a self-administered and self-managed real estate firm focused on the ownership, operation, acquisition and development of self-storage facilities in the United States.
In 2015, revenue rose 17.9% to $444.5 million, and operating income grew 32.3% to $107.9 million. Its funds from operations (FFO), a key metric for REITs, increased 34.6% to $212.5 million. The stock's price gain was better than 37% over the past year. Including dividends, the total return was more than 40%.
TreeHouse Foods, with a 0.31% weighting in the ETF, is a private label food and beverage manufacturer focused on customer brands and custom products. Its 2015 net sales were 8.8% higher, reaching $3.2 billion, while the company's operating income grew at a faster clip. It rose 9.9% to $239.7 million. Diluted EPS rose nearly 18% to $2.63. The stock rose about 5% over the past year. The company pays no dividends.
Piedmont Natural Gas Company
Piedmont Natural Gas has a 0.3% weighting in the ETF. The company distributes natural gas to over 1 million residential, commercial, industrial and power generation customers in portions of North Carolina, South Carolina and Tennessee. On Oct. 24, 2015, Piedmont agreed to be acquired by Duke Energy Corporation (NYSE: DUK) for $4.9 billion in cash, or $60 per share.
The company's 2015 operating revenue fell 6.7% to nearly $1.4 billion. However, operating income rose 2.9% to $185 million. Higher interest expense helped drive net income lower by approximately 5% to $137 million. Diluted EPS fell to $1.73 from $1.84.
Piedmont's stock price rose by more than 69% over the last year to close at $59.57 on March 7, 2015. It jumped from $42.22 to $57.82 following the announcement of the acquisition. The total return was 72.9% after the inclusion of dividends.
Vail Resorts is a mountain resort company, offering luxury stays at iconic properties. The stock has a 0.3% weighting in the portfolio. It is difficult to analyze fiscal first-quarter results, which ended Oct. 31, 2015, since this is a seasonally weak period. Examining the entire fiscal 2015 results, revenue rose 11.6% to $1.4 billion. Income from operations increased 79.5% to $210.5 million. Vail Resorts' diluted EPS more than tripled to $3.07. The fiscal year ended July 31, 2015. The share price gained more than 50% over the last year, and the total return was better than 56%.