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5 Secret Santa ETFs & Stocks to Buy for Christmas

Sweta Killa

The broad stock market is on a tumultuous ride ahead of Christmas with the S&P 500 and Dow Jones on track for the worst December since the Great Depression in 1931. Heightened volatility and uncertainty related to lingering U.S.-China trade tensions, slowing economic growth in Europe and Japan, troubles in emerging markets as well as threats of global slowdown have resulted in market gyrations.   

The sell-off worsened following the Fed action to raise rates for the fourth time this year defying Trump’s tweet against the rate hikes. The central bank hinted two lift-offs in 2019, down from the previous projection of three increases. This came as negative news for stocks as the market was anticipating one rate hike for next year.

However, the weak trend might reverse to end the year given that there are still hopes of a Santa rally that would provide boost to the stocks. A Santa rally refers to the increase in stock prices in the final week of the calendar year (i.e. between Christmas and New Year’s Day) that extends into the first two days of the New Year (read: Will Fed Play Santa Claus for Wall Street? ETFs in Focus).

Against such a backdrop, while most of the stocks and ETFs have been plunging over the past one month, there are some hidden gems or Secret Santa as we call them that could surprise investors with big returns this Christmas. We have highlighted some of these in detail below:

ETFs

Here, we have chosen five ETFs that have underperformed over the past one-month period but have a Zacks ETF Rank #1 (Strong Buy) or 2 (Buy).

Invesco S&P SmallCap Health Care ETF PSCH – Down 11.4%

This fund targets the small-cap stocks in the healthcare sector by tracking the S&P SmallCap 600 Capped Health Care Index. It is a home to 68 securities. The product has amassed $960.2 million in its asset base and trades in a good average daily volume of around 139,000 shares. It charges 29 bps a year from investors and has a Zacks ETF Rank #2 (Buy) with a High risk outlook (read: Healthcare ETFs Sink on JNJ News, ACA Ruling: What’s Ahead?).

SPDR S&P Retail ETF XRT – Down 11.2%

This product tracks the S&P Retail Select Industry Index, holding 95 securities in its basket. The fund has amassed $398.4 million in its asset base and charges 35 bps in annual fees. Volume is extremely solid, exchanging nearly 6.8 million shares in hand a day on average. The fund has a Zacks ETF Rank #2 with a Medium risk outlook.

iShares Core S&P Small-Cap ETF IJR – Down 11.2%

This fund offers exposure to U.S. small-cap stocks and follows the S&P SmallCap 600 Index. It holds 602 stocks in its basket, charging investors 7 bps in annual fees. The ETF has AUM of $38.2 billion and trades in average daily volume of 4.1 million shares. It has a Zacks ETF Rank #1 (Strong Buy) with a Medium risk outlook (read: Small-Cap ETFs & Stocks to Outperform This Holiday Season).

iShares Edge MSCI USA Value Factor ETF VLUE – Down 8.7%

With AUM of $3.5 billion, the fund offers exposure to 150 large and mid-cap U.S. stocks with lower valuations based on fundamentals. It has amassed $3.5 billion in its asset base, while charges 15 bps in annual fees. VLUE has a Zacks Rank #1 with a Medium risk outlook.

SPDR S&P Aerospace & Defense ETF XAR – Down 7.8%

It offers equal-weight exposure to 33 stocks by tracking the S&P Aerospace & Defense Select Industry Index. It has been able to manage $1.3 billion in its asset base, while trades in average daily volume of around 159,000 shares. It charges 35 bps in annual fees and has a Zacks ETF Rank #2 with a Medium risk outlook.

Stocks

Here, we have used the Zacks Stock Screener to find five picks that are in the red from a one-month look but carry a Zacks Rank #1 or 2, VGM Style Score of B or better, and a top-ranked Zacks Industry in the top 25%, and have witnessed positive earnings estimate revision for this fiscal year in a month.

Unum Group UNM – Down 16.2%

Unum Group provides financial protection benefit solutions in the United States, the United Kingdom, and internationally. The stock has seen positive earnings estimate revision of a penny for this year in a month with an expected earnings growth of 21.91%. It has a market cap of $6.37 billion and belongs to a top-ranked Zacks industry (top 2%). The stock has shed about 16.2% in the past one-month period. UNM has a Zacks Rank #2 and a VGM Score of A.

HMS Holdings Corp HMSY – Down 15.4%

This is a leading provider of cost containment solutions in the U.S. healthcare marketplace. The stock has seen positive earnings estimate revision of penny for this year over the past 30 days with an expected growth rate of 43.66%. It has a market cap of $2.49 billion and falls in the top-ranked Industry (top 24%). HMS Holdings has a Zacks Rank #1 and a VGM Score of B. You can seethe complete list of today’s Zacks #1 Rank stocks here.

The Mosaic Company MOS – Down 12.6%

It is one of the world's leading crop nutrition companies with a focus on potash and phosphate, two of three most vital nutrients. With a market cap of $11.69 billion, the company has seen solid earnings estimate revision of 4 cents over the past 30 days for this year with an expected earnings growth rate of 75.23%. The stock belongs to the top-ranked industry (top 17%). It has a Zacks Rank #2 and a VGM of A (read: Top ETF Deals for This Holiday Season).

Rent-A-Center Inc. RCII – Down 9.8%

With a market cap of $697.3 million, Rent-A-Center leases household durable goods to customers on a rent-to-own basis. The company has seen solid earnings estimate revision of 5 cents for this year in a month with an expected earnings growth of 285.19%. The stock belongs to the top-ranked Industry (top 9%), and has a Zacks Rank #1 and a VGM Score of A.

Suburban Propane Partners L.P. SPH – Down 9.5%

This publicly traded Delaware limited partnership is engaged in the retail and wholesale marketing of propane and related appliances and services. The stock saw positive earnings estimate revision of 4 cents for this fiscal year over the past 30 days, with an expected earnings growth of 27.42%. It has a market cap of $1.29 billion and falls in the top-ranked Industry (top 17%). SPH has a Zacks Rank #2 with a VGM Score of B.

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