S&P 500 Reclaims 4,500 Level: 5 Best Stocks in ETF
The S&P 500 Index reached 4,500 for the first time in more than 15 months as bulls continued to roar. A cooler-than-expected inflation report revived hopes that the Fed is nearing the end of its interest rate increases. Additionally, favorable macroeconomic developments and optimism about the transformational power of artificial intelligence (AI) are driving market optimism.
SPDR S&P 500 ETF Trust SPY, the proxy version of the S&P 500 Index, has risen 17.5% so far this year. We have highlighted five stocks from different sectors that have gained more than 50% this year and have a Zacks Rank #1 (Strong Buy) or #2 (Buy). These companies have also witnessed positive estimate revisions for the current fiscal year. These are Nvidia NVDA, Carnival Corporation CCL, PulteGroup Inc. PHM, West Pharmaceutical Services Inc. WST and Copart, Inc. CPRT.
Technology remained the major outperformer, followed by the cyclical sectors. Inflation in the United States cooled down for the 12th consecutive month in June. The Consumer Price Index rose 3% year over year, marking the lowest rate since early 2021, and 0.2% over the last month. Although inflation has dropped from a peak of 9.1%, it is still significantly above the Federal Reserve's 2% target (read: 5 ETFs to Gain as Inflation Drops to a 2-Year Low).
Easing inflation indicates that the economy is stabilizing and interest rates may be declining. This could boost investor confidence and encourage more investments in the stock market. Lower inflation often leads to lower interest rates, which can reduce borrowing costs for companies, potentially leading to higher profits and, in turn, higher stock prices. Economic activity continued to expand at a modest pace, with robust job gains and a low unemployment rate and moderated inflation.
Consumer confidence unexpectedly jumped to an 18-month high in June amid lingering fears of a recession. The U.S. housing sector has also shown immense improvement, with homebuilder confidence reaching its highest level in almost a year.
Despite the fact that the Federal Reserve has raised rates this year, interest rates have largely remained low.
Let’s take a closer look at the fundamentals of SPY.
SPY in Focus
SPDR S&P 500 ETF Trust holds 503 stocks in its basket, with each accounting for no more than 7.5% of the assets. This suggests a nice balance across each security and prevents heavy concentration. The fund is widely spread across sectors with information technology, healthcare, financials and consumer discretionary accounting for a double-digit allocation each.
SPDR S&P 500 ETF Trust has AUM of $421 billion and charges 9 bps in fees per year. The product trades in a heavy volume of around 79 million shares a day on average, ensuring higher liquidity with a tight bid/ask spread, leading to lower trading costs for investors. SPY has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook (see: all the Large Cap Blend ETFs here).
Below we have highlighted the abovementioned five best-performing stocks in the ETF.
Best-Performing Stocks of SPY
Nvidia is the worldwide leader in visual computing technologies and the inventor of graphic processing unit or GPU. The stock has jumped 214.6% so far this year. It saw a positive earnings estimate revision of 4 cents over the past 90 days for the fiscal year ending January 2024, with an estimated growth of 129.9%.
Nvidia makes up for 3.02% of the assets in SPY and has a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Carnival operates as a cruise and vacation company. As a single economic entity, Carnival Corporation & Carnival plc forms the largest cruise operator in the world. Carnival is the world’s leading leisure travel firm and carries nearly half of the global cruise guests. The stock has surged 120% so far this year and accounts for 0.05% of the total assets.
Carnival saw its earnings estimate being revised upward from a loss of 31 cents to a loss of 16 cents for the fiscal year ending November 2023. It has an expected earnings growth rate of 96.6% and a Zacks Rank #1.
PulteGroup is engaged in homebuilding and financial services businesses, primarily in the United States. The stock makes up 0.05% of the assets in the SPY portfolio.
PulteGroup saw a solid earnings estimate revision of 9 cents over the past 30 days for this year and carries a Zacks Rank #1 (read: 7 ETF Areas to Gain from a Rebounding Housing Market).
West Pharmaceutical is a leading global manufacturer with respect to the design and production of technologically advanced, high-quality, integrated containment and delivery systems for injectable drugs and healthcare products. The stock has rallied 63% this year so far and makes up for 0.07% of the SPY portfolio.
West Pharmaceutical saw a positive earnings estimate revision of a penny over the past 30 days for this year and has a Zacks Rank #2 (Buy).
Copart provides online auctions and a wide range of remarketing services to process and sell salvage and clean title vehicles. The stock has gained 49% and accounts for a 0.1% share in the SPY portfolio.
Copart saw a positive earnings estimate revision of 3 cents over the past 90 days for the fiscal year ending July 2023, with an estimated growth of 10.3%. It has a Zacks Rank #1.
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Carnival Corporation (CCL) : Free Stock Analysis Report
NVIDIA Corporation (NVDA) : Free Stock Analysis Report
PulteGroup, Inc. (PHM) : Free Stock Analysis Report
Copart, Inc. (CPRT) : Free Stock Analysis Report
SPDR S&P 500 ETF (SPY): ETF Research Reports
West Pharmaceutical Services, Inc. (WST) : Free Stock Analysis Report
