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The Zacks Analyst Blog Highlights: Energy Select Sector SPDR, iShares U.S. Home Construction, iShares Dow Jones Transportation and Financial Select Sector

Zacks Equity Research

For Immediate Release

Chicago, IL –January 14, 2019 – 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: Energy Select Sector SPDR XLE, iShares U.S. Home Construction ETF ITB, iShares Dow Jones Transportation Average Fund IYT and Financial Select Sector SPDR Fund XLF.

Here are highlights from Friday’s Analyst Blog:

4 Sector ETF Picks to Bet on Ahead of Q4 Earnings

The fourth-quarter reporting cycle is around the corner with a few major banks set to report next week. Earnings for the S&P 500 Index are expected to grow 10.7% year over year on 5.2% higher revenues. This represents a notable deceleration from the average 25% earnings growth in the first three quarters of 2018.

In fact, the magnitude of earnings revision has moved down from 15.9% at the start of the quarter, representing higher estimate cuts than the preceding four quarters. The downtrend can be attributed to uncertain global economic backdrop that compounded with the market’s pre-existing worries about Fed policy and global trade (read:Dovish Fed Minutes Should Boost These ETFs).

However, seven of the 16 Zacks sectors are expected to post double-digit earnings growth with energy remaining the top contributor with 64.3% earnings growth. This is followed by earnings growth expectation of 26.6% for construction, 22.7% for transportation, 19.6% for finance and 19.2% for retail.

Given this, we have highlighted one ETF from some of these sectors that could make great plays as the earnings season unfolds. Each of these ETFs have a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold).

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Energy

Energy Select Sector SPDR: This is the largest and most-popular ETF in the energy space with AUM of $14.4 billion. Its expense ratio comes is 0.13%. The fund follows the Energy Select Sector Index and holds 30 securities in its basket. In terms of industrial exposure, oil, gas & consumable fuels accounts for nearly 89.6% of the portfolio, while energy equipment & services takes the remainder. The product has a Zacks ETF Rank #2 with a High risk outlook (read: A Pack of ETFs to Buy for 2019).

Construction

iShares U.S. Home Construction ETF:This fund provides a pure play to home construction stocks by tracking the Dow Jones U.S. Select Home Construction Index. It holds a basket of 48 stocks with double-digit concentration on the top two firms that account for 13.7% share each. The product has amassed $972.2 million in its asset base and charges 43 basis points (bps) in annual fees. It has a Zacks ETF Rank #3 with a High risk outlook.

Transportation

iShares Dow Jones Transportation Average Fund:This ETF follows the Dow Jones Transportation Average Index and offers exposure to the broad transportation sector. The fund holds a small basket of 20 stocks with railroads, air freight & logistics, airlines and trucking taking the top four spots. The fund has accumulated $603.3 million in its asset base and charges 43 bps in annual fees. It has a Zacks ETF Rank #3 with a High risk outlook (read: Stocks & ETFs to Pick From Goldman Sachs' Favored List in 2019).

Finance

Financial Select Sector SPDR Fund:This fund follows the Financial Select Sector Index and holds 68 stocks in its basket with higher concentration on the top two firms. Banks dominate the fund’s portfolio with 43.3% while capital markets, insurance and diversified financial services round off the next three spots. The fund has accumulated nearly $23.8 billion in AUM and charges investors 13 bps in annual fees. It has a Zacks ETF Rank #1 with a Medium risk outlook (read: 10 Most-Heavily Traded ETFs of 2018).

You can see the complete list of today’s Zacks #1 Rank stocks here.

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.


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