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Now that we are about to draw the curtain on the third quarter of 2017, let’s take a look which sectors are trending in the market and may create a boom going into the fourth quarter. This is especially true given the quarter has been quite eventful with two big hurricanes, lots of merger and acquisitions and geopolitical concerns. Let’s delve a little deeper.
Defense
While North Korea’s habit of launching missiles is not being viewed as a good sign by the world, it is gainful for U.S. defense ETFs. The login is simple. Any chance of a war calls for more weapons and aerospace, which will boost the sector. Moreover, the sector is undergoing inorganic expansion which should go in favor of funds like Zacks Rank #1 (Strong Buy) ETF SPDR S&P Aerospace & Defense ETF (XAR - Free Report) (read: 3 Top Ranked Aerospace and Defense ETFs For Your Portfolio).
Housing
The condition of houses in areas ravaged by back-to-back deadly hurricanes is anybody’s guess. While Hurricane Harvey flooded Texas, Irma demolished Florida, though less than expected. So, the need for reconstruction and remodeling of houses will surely boost housing and construction ETFs.
Hurricane Harvey dented thousands of new vehicles that were in dealership lots, according to a new analysis from Edmunds. These new cars and trucks perhaps “have to be scrapped” as per the CEO of AutoNation.
The car-shopping website estimates that Harvey affected 366,000 new vehicles across Texas. Since several of these are high-profit trucks and SUVs, the trouble is deep for automakers. So, repurchase of cars will gain traction over the medium term on higher replacement demand for the damaged vehicles.
AutoNation’s CEO also emphasized that “there will be a substantial snapback either in the fourth quarter or the first quarter of next year because that's the American way.” First Trust NASDAQ Global Auto Index Fund (CARZ - Free Report) , a Zacks Rank #2 fund, can thus gain ahead (read: Harvey: Pain or Gain Ahead for Auto Stocks and ETFs?)
The health care sector is pretty steady right now with price-gouging issues retreating in the Trump administration. Along with this, mergers and acquisitions, FDA approvals of several key drugs and therapies are also leading the space. Biotech stocks were hurt the most among the S&P 500 members last year. This has probably made the space cheap and helped it to be back with a bang. Overall, Zacks Rank #2 Vanguard Health Care ETF (VHT - Free Report) should be on investors’ radar (read: Should You Keep Your Portfolio Healthy with Biotech ETFs?)
Semiconductor
By now, everyone is familiar with the stupendous rise of bitcoin. Though several analysts expressed concerns about overvaluation, one thing is for sure that the concept of cryptocurrencies is here to stay. Like bitcoin, ether or etherum is also popular this year.
Now, mining of cryptocurrencies needs the usage of semiconductors. A hardware known as an ASIC (Application-Specific Integrated Circuit) has been designed exclusively for mining bitcoin. This is where semiconductor companies can gain traction.
Plus, the Semiconductor Industry Association (“SIA”) recently announced that global sales of semiconductors were $33.6 billion in July 2017, marking a year-over-year gain of 24% and a sequential rise of 3.1%. All the key geographies registered both year-over-year and month-over-month increases in July. As a result, Zacks Rank #1 (Strong Buy) ETF iShares PHLX SOX Semiconductor Sector Index Fund (SOXX - Free Report) definitely deserves a look (read: Here's Why Semiconductor ETFs Could Continue Their Rally).
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6 Sector ETFs Must Buys Now
Now that we are about to draw the curtain on the third quarter of 2017, let’s take a look which sectors are trending in the market and may create a boom going into the fourth quarter. This is especially true given the quarter has been quite eventful with two big hurricanes, lots of merger and acquisitions and geopolitical concerns. Let’s delve a little deeper.
Defense
While North Korea’s habit of launching missiles is not being viewed as a good sign by the world, it is gainful for U.S. defense ETFs. The login is simple. Any chance of a war calls for more weapons and aerospace, which will boost the sector. Moreover, the sector is undergoing inorganic expansion which should go in favor of funds like Zacks Rank #1 (Strong Buy) ETF SPDR S&P Aerospace & Defense ETF (XAR - Free Report) (read: 3 Top Ranked Aerospace and Defense ETFs For Your Portfolio).
Housing
The condition of houses in areas ravaged by back-to-back deadly hurricanes is anybody’s guess. While Hurricane Harvey flooded Texas, Irma demolished Florida, though less than expected. So, the need for reconstruction and remodeling of houses will surely boost housing and construction ETFs.
This makes Zacks Rank #2 (Buy) PowerShares Dynamic Building & Construction Portfolio (PKB - Free Report) andSPDR S&P Homebuilders ETF (XHB - Free Report) top picks (read: Home Retailer ETFs Set to Gain After Harvey).
Auto
Hurricane Harvey dented thousands of new vehicles that were in dealership lots, according to a new analysis from Edmunds. These new cars and trucks perhaps “have to be scrapped” as per the CEO of AutoNation.
The car-shopping website estimates that Harvey affected 366,000 new vehicles across Texas. Since several of these are high-profit trucks and SUVs, the trouble is deep for automakers. So, repurchase of cars will gain traction over the medium term on higher replacement demand for the damaged vehicles.
AutoNation’s CEO also emphasized that “there will be a substantial snapback either in the fourth quarter or the first quarter of next year because that's the American way.” First Trust NASDAQ Global Auto Index Fund (CARZ - Free Report) , a Zacks Rank #2 fund, can thus gain ahead (read: Harvey: Pain or Gain Ahead for Auto Stocks and ETFs?)
Industrials
Manufacturing activity came in the strongest in six years in August, as per a survey. This clearly tells why industrial ETFs like First Trust Industrials/Producer Durables AlphaDEX Fund (FXR - Free Report) , a Zacks Rank #2 fund, is our pick (read: Here's an ETF to "Make America Great Again").
Health Care
The health care sector is pretty steady right now with price-gouging issues retreating in the Trump administration. Along with this, mergers and acquisitions, FDA approvals of several key drugs and therapies are also leading the space. Biotech stocks were hurt the most among the S&P 500 members last year. This has probably made the space cheap and helped it to be back with a bang. Overall, Zacks Rank #2 Vanguard Health Care ETF (VHT - Free Report) should be on investors’ radar (read: Should You Keep Your Portfolio Healthy with Biotech ETFs?)
Semiconductor
By now, everyone is familiar with the stupendous rise of bitcoin. Though several analysts expressed concerns about overvaluation, one thing is for sure that the concept of cryptocurrencies is here to stay. Like bitcoin, ether or etherum is also popular this year.
Now, mining of cryptocurrencies needs the usage of semiconductors. A hardware known as an ASIC (Application-Specific Integrated Circuit) has been designed exclusively for mining bitcoin. This is where semiconductor companies can gain traction.
Plus, the Semiconductor Industry Association (“SIA”) recently announced that global sales of semiconductors were $33.6 billion in July 2017, marking a year-over-year gain of 24% and a sequential rise of 3.1%. All the key geographies registered both year-over-year and month-over-month increases in July. As a result, Zacks Rank #1 (Strong Buy) ETF iShares PHLX SOX Semiconductor Sector Index Fund (SOXX - Free Report) definitely deserves a look (read: Here's Why Semiconductor ETFs Could Continue Their Rally).
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>