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The month of October will be highlighted by a deluge of earnings and investors’ quest for clarity on the Fed’s likely policy tightening as well as passage of tax reforms. As per the Earnings Trends issued on Sep 27, 2017, earnings growth of the S&P 500 in Q3 is expected to be 3.2% on 5% higher revenues. Third-quarter revenue growth is projected to be way higher than 2.2% in Q3 of 2016 while earnings growth might come in slightly lower than what we saw (4%) in the year-ago cycle.
The economic front looks upbeat as evident by the 13-year high manufacturing activity recorded in September and a jump in new auto sales. The broader market has also seen a decent start in October, though many fear disturbingly low levels of volatility and chances of a crash if Trump fails to push through the tax reform.
Against this backdrop, it is important to pin point ETFs that could safeguard investors from any sudden market swing as well as play the current momentum.
This can be a great momentum play. Biotech ETFs especially those with a focus on cancer therapy are on fire lately on a slew of mergers and acquisitions, FDA’s approval of CAR-T cell therapy and improving research and developments.
Shares of Endocyte Inc. soared more than 150% on Oct 2, after it acquired an exclusive worldwide license to develop and commercialize ABX GmbH’s phase III-ready prostate cancer candidate 177Lu-PSMA-617. There was Gilead’s (GILD - Free Report) buyout announcement of the clinical-stage biopharmaceutical company Kite Pharma . The FDA has in fact given its nod to 34 drugs so far in 2017 including three in September. This is already way higher than 22 approvals seen last year.
First Trust Mid Cap Growth AlphaDEX Fund (FNY - Free Report)
With both the United States and global economy on the rise, it is time to play mid-cap growth ETFs like FNY. This is because the greenback may gain strength in the coming days on an improving U.S. economy. This will go against large-cap stocks with greater foreign exposure. But through md-cap growth ETFs, investors can mitigate the adverse impact of a rising dollar while tap the surge in the global economy alongside.
iShares Dow Jones Transportation Average Index Fund IYT
As per the source, Dow Jones Transportation index enjoys a seasonal tailwind in October. Plus, the transportation sector is expected to witness revenue growth of 4.6% in the ongoing reporting cycle, after 10.1% growth in Q2. The transportation sector is best positioned to take advantage of falling crude. This is especially true as energy costs form a major portion of the overall costs of this sector (read: 5 Sector ETFs for Revenue Growth Play).
If this was not enough, airline stocks surged on Oct 3 following Cowen & Co. analyst Helane Becker’s reiteration of an outperform rating on Delta Airlines (DAL). The analyst sees Delta’s outlook ‘positive,’ as per an article published on MarketWatch. The surge benefited the transportation ETF. Also, the fund should offer some bargains now as these stocks were battered in previous months on back-to-back hurricanes (read: Top and Flop Sector ETFs of Q3).
iShares Edge MSCI Multifactor Global ETF
A look at global ETFs is also warranted given the upbeat prospects. This way, investors can mitigate certain risks. And the fund looks to track the global developed and emerging market large- and mid-cap stocks chosen on the basis of value, quality, momentum and low-size scores (read: Global Dividend Payments Upbeat in Q2: ETFs to Benefit).
This ETF seeks to track the performance of the rules-based and fundamentals-driven Barron’s 400 Index. The benchmark looks to select high performing U.S. stocks based on four fundamental factors — growth, valuation, profitability and cash flow. The fund will suit investors seeking quality exposure (read: Are We Nearing a Bear Market? ETFs to Lean On).
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5 ETF Picks for October
The month of October will be highlighted by a deluge of earnings and investors’ quest for clarity on the Fed’s likely policy tightening as well as passage of tax reforms. As per the Earnings Trends issued on Sep 27, 2017, earnings growth of the S&P 500 in Q3 is expected to be 3.2% on 5% higher revenues. Third-quarter revenue growth is projected to be way higher than 2.2% in Q3 of 2016 while earnings growth might come in slightly lower than what we saw (4%) in the year-ago cycle.
The economic front looks upbeat as evident by the 13-year high manufacturing activity recorded in September and a jump in new auto sales. The broader market has also seen a decent start in October, though many fear disturbingly low levels of volatility and chances of a crash if Trump fails to push through the tax reform.
Against this backdrop, it is important to pin point ETFs that could safeguard investors from any sudden market swing as well as play the current momentum.
Loncar Cancer Immunotherapy ETF (CNCR - Free Report)
This can be a great momentum play. Biotech ETFs especially those with a focus on cancer therapy are on fire lately on a slew of mergers and acquisitions, FDA’s approval of CAR-T cell therapy and improving research and developments.
Shares of Endocyte Inc. soared more than 150% on Oct 2, after it acquired an exclusive worldwide license to develop and commercialize ABX GmbH’s phase III-ready prostate cancer candidate 177Lu-PSMA-617. There was Gilead’s (GILD - Free Report) buyout announcement of the clinical-stage biopharmaceutical company Kite Pharma . The FDA has in fact given its nod to 34 drugs so far in 2017 including three in September. This is already way higher than 22 approvals seen last year.
First Trust Mid Cap Growth AlphaDEX Fund (FNY - Free Report)
With both the United States and global economy on the rise, it is time to play mid-cap growth ETFs like FNY. This is because the greenback may gain strength in the coming days on an improving U.S. economy. This will go against large-cap stocks with greater foreign exposure. But through md-cap growth ETFs, investors can mitigate the adverse impact of a rising dollar while tap the surge in the global economy alongside.
iShares Dow Jones Transportation Average Index Fund IYT
As per the source, Dow Jones Transportation index enjoys a seasonal tailwind in October. Plus, the transportation sector is expected to witness revenue growth of 4.6% in the ongoing reporting cycle, after 10.1% growth in Q2. The transportation sector is best positioned to take advantage of falling crude. This is especially true as energy costs form a major portion of the overall costs of this sector (read: 5 Sector ETFs for Revenue Growth Play).
If this was not enough, airline stocks surged on Oct 3 following Cowen & Co. analyst Helane Becker’s reiteration of an outperform rating on Delta Airlines (DAL). The analyst sees Delta’s outlook ‘positive,’ as per an article published on MarketWatch. The surge benefited the transportation ETF. Also, the fund should offer some bargains now as these stocks were battered in previous months on back-to-back hurricanes (read: Top and Flop Sector ETFs of Q3).
iShares Edge MSCI Multifactor Global ETF
A look at global ETFs is also warranted given the upbeat prospects. This way, investors can mitigate certain risks. And the fund looks to track the global developed and emerging market large- and mid-cap stocks chosen on the basis of value, quality, momentum and low-size scores (read: Global Dividend Payments Upbeat in Q2: ETFs to Benefit).
Barron's 400 ETF (BFOR - Free Report)
This ETF seeks to track the performance of the rules-based and fundamentals-driven Barron’s 400 Index. The benchmark looks to select high performing U.S. stocks based on four fundamental factors — growth, valuation, profitability and cash flow. The fund will suit investors seeking quality exposure (read: Are We Nearing a Bear Market? ETFs to Lean On).
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 >>