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S&P 500 Tops 2,700: ETFs & Stocks Outperforming to Start 2018

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The U.S. stock market witnessed a strong start to 2018 given that last year’s bullishness remained intact. The S&P 500 index topped 2,700 for the first time led by technology stocks.

Investors are bargain hunting tech stocks after the recent sell-off given the high potential of growth in the sector. In particular, chipmakers are driving most of the rally in the New Year with the Philadelphia Semiconductor index surging 1.7% in its strongest two-day performance since June 2016.

Fed minutes and upbeat manufacturing data also added to the strength. Although Fed officials remained wary over future inflation, they expressed growing confidence in the strength of the labor market and the economy. They expect a $1.5 trillion tax cut to provide a boost to the economy and inflation, thereby paving the way for faster rate hikes (read: Bet on Trump Trade & Republicans with These New ETFs).

The latest data confirms the robust economic growth. U.S. factory activity, as indicated by the Institute for Supply Management (ISM) index, increased more than expected in December with the second-highest reading in six years buoyed by a surge in new orders growth. Construction spending hit record highs in November with broad-based gains in both private and public outlays.

Given this, we have highlighted five U.S. equity ETFs and five stocks of the S&P 500 index that are outperforming to start the New Year.

Best ETFs

ELEMENTS DJ High Yield Select 10 ETN


This is an ETN option and provides investors pure play to the 10 highest dividend-yielding securities in Dow Jones Industrial Average in equal proportions. It tracks the Dow Jones High Yield Select 10 Total Return Index and charges 75 bps in annual fees. The note has amassed only $37.3 million in its asset base while trades in a light volume of around 8,000 shares on an average daily basis. DOD gained 9.1% to start the New Year.

ARK Innovation ETF (ARKK - Free Report)

This is an actively managed fund focusing on companies that are expected to benefit from the development of new products or services, technological improvement and advancements in genomic revolution, Web x.0 and industrial innovation. It holds 53 stocks in its basket with none having more than 6.2% share. The ETF has amassed $398 million in its asset base and trades in a good average daily volume of around 156,000 shares. The expense ratio comes in at 0.75%. The ETF is up 4.5% in the first to initial days of trading (read: Top & Flop Zones of 2017 and Their ETFs).

iShares PHLX Semiconductor ETF (SOXX - Free Report)

This ETF targets the semiconductor corner of the broad tech space and follows the PHLX SOX Semiconductor Sector Index. It is home to 30 securities with each holding less than 8.6% of assets. The fund charges investors 48 bps in annual fees and trades in a solid average volume of around 520,000 shares a day. It has AUM of $1.5 billion and surged 4.5% in the first two days of trading this year. It has a Zacks ETF Rank #1 (Strong Buy) with a High risk outlook.

PowerShares Dynamic Semiconductors Fund (PSI - Free Report)

This product also targets chip stocks tracking the Dynamic Semiconductor Intellidex Index and offers exposure to 30 firms. It has AUM of $388.9 million and trades in moderate average volume of around 86,000 shares a day. The product charges 63 bps in fees a year from investors and has gained 4.3% in the same time frame. It has a Zacks ETF Rank #1 with a High risk outlook (read: Top-Ranked ETFs & Stocks That Crushed the Market in 2017).

Principal Sustainable Momentum Index ETF

This ETF that debuted in mid October has accumulated $3.9 million in its asset base so far. It follows the Nasdaq U.S. Sustainable Momentum Index, which uses a quantitative model designed to identify equity securities, including growth and value stocks, within the Nasdaq US Large Mid Cap Index that exhibit sustainable price momentum, based on historical stock prices over multiple periods. The fund holds 120 stocks in its basket with each accounting for no more than 4.05% of assets. About one-third of the portfolio is allotted to financials services, followed by information technology (23%) and industrials (20.1%). The product charges 29 bps in annual fees and trades in a paltry volume of 10,000 shares. It has added 3.8% in the same time frame.

Best Stocks

Advanced Micro Devices Inc. (AMD - Free Report)


Based in Sunnyvale, CA, Advanced Micro Devices operates as a semiconductor company worldwide offering x86 microprocessors as an accelerated processing unit (APU), chipsets, discrete graphics processing units (GPUs), and professional graphics; and server and embedded processors, and semi-custom System-on-Chip (SoC) products and technology for game consoles. The company’s earnings are expected to grow a whopping 160.77% in 2018. The stock, having a Zacks Rank #3 (Hold) and a Growth Score of B, climbed 12.4% in the initial two days of trading. It flaunts a solid Industry Rank in the top 38%.

NVIDIA Corporation (NVDA - Free Report)

Based in Santa Clara, CA, Nvidia is the worldwide leader in graphics processors and media communications devices. The stock has an expected earnings growth of 11.41% for the fiscal year (ending January 2019). It has Zacks Rank #1 and a Growth Score of A. It belongs to the best Zacks Industry Rank in the top 4% and has surged 9.8%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Ulta Beauty Inc. (ULTA - Free Report)

Based in Bolingbrook, IL, Ulta Beauty is a beauty retailer primarily in the United States and a premier beauty destination for cosmetics, fragrance, skin, hair care products and salon services. Its earnings are expected to grow 17.45% for the fiscal year (ending January 2019). The stock carries a Zacks Rank #3 and a Growth Score of B and falls in in the Industry having a Rank in the top 11%. Shares of ULTA are up 9.6% in the same time frame.

Micron Technology Inc (MU - Free Report)

Based in Boise, Idaho, Micron Technology is one of the leading worldwide providers of semiconductor memory solutions. The stock gained about 9.4% to start the year and has an expected earnings growth rate of 5.98% for the fiscal year (ending August 2019). Micron Technology currently has a Zacks Rank #1 and a top Growth Score of A. It also boasts a solid Zacks Industry Rank in the top 1%.

Under Armour Inc. (UAA - Free Report)

Based in Baltimore, Maryland, Under Armour develops, markets and distributes branded performance apparel, footwear, and accessories for men, women, and youth primarily in North America, Europe, the Middle East, Africa, the Asia-Pacific, and Latin America. It has an expected earnings growth of 11.53% for 2018 and a Zacks Industry Rank in the top 13%. The stock carries a Zacks Rank #3 and has a Momentum Score of B. It added 8.9% in the initial two days of the trading in 2018 (read: Holiday Sales At 6-Year High: Best Consumer ETFs & Stocks).

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