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S&P 500 Hit New Records: Buy These High-Beta ETFs & Stocks

Sweta Killa

Amid global growth concerns, looming Brexit issues and an unresolved trade spat with China, the U.S. market bulls are still raging. This is especially true as better-than-expected earnings have renewed confidence in the stock market. Upbeat results from Twitter Inc TWTR, Coca-Cola Co KO, United Technologies Corp UTX and Lockheed Martin Corp LMT eased fears of a profit recession.

Notably, the S&P 500 Index and the Nasdaq Composite hit new all-time record closings on Apr 23. With this, the S&P 500 climbed nearly 25% from a low reached on Christmas Eve while Nasdaq is up more than 30% (read: : A Spread of Top-Ranked ETFs That Crushed the Market in Q1).

Additionally, investors are feeling optimistic about the global economy given signs of improving growth in China with new measures and reforms, as well as steady albeit slowing growth in the U.S. economy. The Fed’s decision of not raising interest rates this year after seven hikes over the past two years also bolstered investors’ sentiment. Further, an oil price surge and bouts of upbeat data globally are providing strong support to the bulls.

While every corner of the market is enjoying the ascent, high-beta stocks and ETFs are outperforming.

Why?

Beta measures the price volatility of stocks or funds relative to the overall market. It has a direct relationship to market movements. A beta of more than 1 indicates that the price tends to move higher than the broader market and is extremely volatile while a beta of less than 1 indicates that the price of the stock or fund is less volatile than the market.

That said, high-beta stocks seek to capitalize on continued growth with market-beating returns. This is because when markets soar, high-beta stocks experience larger gains than the broader market counterparts and thus, outpace their rivals. However, these exhibit a higher level of volatility.

Given the bullishness, investors could find the following ETFs and stocks intriguing:

ETF Picks

Using our database, we have chosen top-ranked ETFs that have a Zacks Rank #1 (Strong Buy) or 2 (Buy) and AUM of at least $50 million to ensure better tradability and liquidity.

SPDR S&P Biotech ETF XBI

This ETF offers exposure to the biotechnology segment of the healthcare space by tracking the S&P Biotechnology Select Industry Index (read: Biotechnology Market on a Tear: 5 ETFs in Spotlight).

Zacks Rank: #2
Beta: 1.83
AUM: $4.2 billion
Expense Ratio: 0.35%
YTD Performance: 21.1%

Invesco DWA Technology Momentum ETF PTF

This product follows the DWA Technology Technical Leaders Index and offers exposure to the technology stocks that are showing relative strength (momentum).

Zacks Rank: #2
Beta: 1.29
AUM: $147.2 million
Expense Ratio: 0.60%
YTD Performance: 32.4%

Vanguard Russell 2000 Growth Index ETF VTWG

This fund offers exposure to the growth segment of the U.S. small-cap market by tracking the Russell 2000 Growth Index.

Zacks Rank: #2
Beta: 1.28
AUM: $298.6 million
Expense Ratio: 0.20%
YTD Performance: 20.2%

First Trust Materials AlphaDEX Fund FXZ

This product tracks the StrataQuant Materials Index, which is a modified equal-dollar weighted index to identify and select stocks from the Russell 1000 Index that may generate positive alpha relative to traditional passive style indices through the use of the AlphaDEX screening methodology.

Zacks Rank: #2
Beta: 1.26
AUM: $148.5 million
Expense Ratio: 0.64%
YTD Performance: 18%

Invesco Russell MidCap Pure Growth ETF PXMG

This fund follows the Russell Midcap Pure Growth Index, which consists of securities with strong growth characteristics selected from the Russell Midcap Index (read: 5 Mid-Cap ETFs Scaling New Highs).

Zacks Rank: #1
Beta: 1.23
AUM: $606.8 million
Expense Ratio: 0.39%
YTD Performance: 31%

Stocks Picks

For stocks, we have chosen those that have a top Zacks Rank, a VGM Score of A, and belongs to a top-ranked Zacks industry along with high beta.

Ranger Energy Services Inc. RNGR

It is a provider of well service rigs and services primarily in the United States and focuses on unconventional horizontal well completion and production operations.

Zacks Rank: #2
Zacks Industry Rank: Top 38%
Beta: 3.47
Market Cap: $113.5 million
YTD Performance: 43.3%

OneMain Holdings Inc. OMF

This is a consumer financial services holding company.

Zacks Rank: #2
Zacks Industry Rank: Top 14%
Beta: 2.51
Market Cap: $4.49 billion
YTD Performance: 35.7%

DXP Enterprises Inc. DXPE

It is a leading products and service distributor that adds value and total cost savings solutions to industrial customers throughout the United States, Canada, Mexico and Dubai. You can see the complete list of today’s Zacks #1 Rank stocks here.

Zacks Rank: #1
Zacks Industry Rank: Top 40%
Beta: 2.48
Market Cap: $771.13 million
YTD Performance: 57.5%

NCR Corporation NCR

This company is a leader in omni-channel solutions, turning everyday interactions with businesses into exceptional experiences.

Zacks Rank: #2
Zacks Industry Rank: Top 10%
Beta: 1.94
Market Cap: $3.49 billion
YTD Performance: 27.1%

Avid Technology Inc. AVID

It develops, markets, sells and supports a wide range of software and systems for creating and manipulating digital media content (read: 5 Top-Ranked ETFs & Stocks to Bloom in Spring).

Zacks Rank: #1    
Zacks Industry Rank: Top 4%
Beta: 1.88
Market Cap: $328 billion
YTD Performance: 64.4%

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