The Zacks Analyst Blog Highlights: First Trust NASDAQ Global Auto Index Fund, SPDR S&P Retail ETF, iShares Transportation Average ETF and S&P Equal Weight Financial ETF - Press Releases
For Immediate Release
Chicago, IL – January 08, 2015 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include the First Trust NASDAQ Global Auto Index Fund (CARZ-Free Report), SPDR S&P Retail ETF (XRT-Free Report), iShares Transportation Average ETF (IYT-Free Report) and S&P Equal Weight Financial ETF (RYF-Free Report).
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Here are highlights from Wednesday’s Analyst Blog:
4 Sector ETFs to Watch in 2015
With the U.S. economy growing at the best clip in 11 years in the third quarter of 2014 and witnessing the fastest annual job growth since late 1999, we can easily pronounce the year 2014 to be a favorable one for the domestic economy.
The world’s largest economy left a mark of bullishness in every economic indicator, be it consumer confidence, housing numbers, manufacturing activities, corporate profits and currency. Despite a frozen start, the U.S. closed the year on a strong note.
Like many other economists, we believe that the U.S. economy is presently in an early phase of the recovery and about to enter the ‘mid-cycle phase’ in 2015, which is probably the most lengthy phase of a business cycle as per Fidelity. In the early phase, an economy normally follows a simulative policy just like the U.S. and activity takes speed. In the mid-cycle phase, growth picks up and policies tend to remain neutral which might be the case for the U.S. in 2015.
This shift in the recovery phase will get us a new set of sector winners in the New Year. Though the Fed is still ‘patient’ on rate hike issues, it will likely hike rates at some point this year and present us with different sector leaders and laggards (read: Market Beating Sector ETFs of 2014).
Below, we have highlighted four sectors and the related ETFs that promise substantial expected growth rate for 2015 and could be better plays in the near term.
First Trust NASDAQ Global Auto Index Fund (CARZ-Free Report)
Rebounding from the lows experienced in 2014, the auto industry is forecast to skyrocket as much as 32.6% as per Zacks Earnings Trend in 2015 – the best growth rate projected among the 16 sectors analyzed under the S&P 500 group.
Auto earnings were down more than 7% in 2014 but are projected to soar more than 50% in the first quarter of 2015. Early promotional deals and a discounting frenzy on cars and trucks in the holiday season, job market, multi-year low gas prices and a still-low interest rate environment, which is set to fizzle out soon, put the space in top gear right now (read: Holiday Season Driving Up Auto Sales: ETFs and Stocks to Consider).
As a result, the pure play auto ETF, CARZ that provides global exposure to 36 auto stocks should benefit from this trend. U.S. companies make up about 25% of the space. Notably, this $30 million ETF was down 5% in 2014 and offers value now.
SPDR S&P Retail ETF (XRT-Free Report)
If that was the predicted growth rate for the auto industry, one can easily realize that consumers’ have finally started to loosen their purse strings. A Bloomberg article noted several economists’ views and summarized that “instead of growing at the 2.2% average seen so far during this expansion, increases will be more in line with the 2.9% seen in the six years through 2007”.
Per the article, stock and housing market gains were mostly seized by the wealthy class in the initial stage of recovery but a pickup in expenditures will spread across the income stream now.
Consumer spending will receive the much-needed impetus from low inflation, perked-up job market, low interest rates and plunge in fuel prices. Bloomberg indicated that personal consumption will rise 2.7% in 2015, representing a nine-year best.
Overall consumer discretionary space grew 10.1% in 2014 and is forecast to grow 16.5% in 2015. Investors can bank on this winning trend via top-ranked retail ETF XRT, which boasts a Zacks ETF Rank #2 (Buy), among others (read: Top Performing ETFs of 2014 and 3 Great Picks for Next Year).
iShares Transportation Average ETF (IYT-Free Report)
A decade-high economic growth rate which cycled into higher activities and five-year low oil prices provided a big-time boost to transportation stocks in 2014. The sector has seen earnings growth of 15.7% in 2014 and is racing on to attain an 18.4% jump in 2015 with Q1 likely to register a considerable share of the growth.
IYT was one of the big beneficiaries of this trend having surged about 25% in 2014. IYT currently has a Zacks ETF Rank #1 (Strong Buy).
S&P Equal Weight Financial ETF (RYF-Free Report)
Though the financial sector has seen earnings contracting by about 1% in 2014, it is set to end the losing streak in the New Year with a projected growth rate of 16.3%. Positive sentiment across banks thanks to strong loan growth, higher trading income and improving credit quality, and last but not the least, prospects of a rise in interest rates will go in favor of the sector in 2015.
Investors seeking to cash in on this trend may consider investing in the top-ranked ETF RYF. The overlooked product, with just $145 million in assets, was up 15% in 2014 and looks to grab more gains in the New Year (read: 3 Top Ranked Financial ETFs Surging to 52-Week High).
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FT-NDQ GL AUTO (CARZ): ETF Research Reports
SPDR-SP RET ETF (XRT): ETF Research Reports
ISHARS-TRAN AVG (IYT): ETF Research Reports
GUGG-SP5 EW FIN (RYF): ETF Research Reports
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