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Market at New Highs: Mega Cap ETFs & Stocks On A Roll
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The market rally is heating up this year with the S&P 500 and the Dow Jones indices breaching new milestones. After hitting 2,700 on the second trading session of the New Year, the S&P 500 closed above 2,800 for the first time while the Dow Jones closed above 26,000, easily setting the record for the fastest 1,000-point rise in its history, after topping 25,000 on Jan 4.
The euphoria surrounding the new tax legislation is fueling the rally. This is because a massive $1.5-trillion tax cut will likely create an economic surge, boosting job growth and reflation trade. It will further accelerate earnings and save companies billions of dollars, leading to increased dividend and buyback activities and paving the way for increased mergers and acquisitions (read: 7 Biggest ETF Stories of 2017 to Continue in 2018).
A bizarre jump in oil price, weak dollar, improving global growth and rounds of upbeat economic data -- especially in the areas of manufacturing, construction spending and retail -- are adding to the strength.
Further, the Q4 reporting cycle is off to a strong start, with earnings of 36 S&P 500 companies that have reported results, up 11.8% from the same period last year on 7.7% higher revenues, with 77.8% beating EPS estimates and 75% beating revenue estimates. Overall, total earnings and revenues are projected to grow 9.9% and 7%, respectively.
As the rally has been broad based, winners are spread across many corners of the space. Below we have highlighted a few ETFs and stocks that surged to all-time highs in the recent session and could be compelling choices for investors seeking to ride out the current trends in the equity markets. All these have a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), suggesting that their lead will continue in the months ahead.
SPDR Dow Jones Industrial Average ETF (DIA - Free Report)
This is the largest and most-popular ETF in the mega-cap space, with AUM of over $23.5 billion and average daily volume of 2.9 million shares. It tracks the Dow Jones Industrial Average index, charging investors 0.17% in expense ratio. The ETF hit an all-time high of $261.19, representing gains of about 34.8% in a year. It has a Zacks ETF Rank #2 (read: After a Solid Start, What Awaits Dow ETF in Q4 Earnings?).
With AUM of $1.4 billion, this ETF offers exposure to the largest U.S. stocks representing approximately the top 70% of market capitalization by tracking the CRSP US Mega Cap Index. It charges 7 bps in annual fees but trades in lower average daily volume of 34,000 shares. The product touched an all-time high of $96.45, and has returned about 27.1% over the past one-year. It has a Zacks ETF Rank #3.
This fund follows the S&P 500 Top 50 ETF Index, which measures the cap-weighted performance of 50 of the largest companies in the S&P 500 Index, reflecting the performance of U.S. mega-cap stocks. It has been able to manage assets worth $761.1 million but trades in a small volume of about 15,000 shares a day on average. Expense ratio comes in at 0.20%. The ETF reached its all-time high of $199.82, and has surged 27.9% in a year. It has a Zacks ETF Rank #3.
This ETF offers exposure to large U.S. companies that are thought to be undervalued by the market relative to comparable companies. This can easily be done by tracking the Russell Top 200 Value Index. IWX has AUM of $308.5 million and average daily volume of 15,000 shares. It charges 20 bps in annual fees and has gained 18.3% over the past year, hitting a fresh high of $54.65. The fund has a Zacks ETF Rank #3 (read: Value Investing Set to Shine on Tax Reform: 5 Cheap ETFs).
This Nebraska-based holding company provides property and casualty insurance and reinsurance, as well as life, accident, and health reinsurance; and operates railroad systems in North America. The stock has seen solid earnings estimate revision of 34 cents for this year over the past 90 days, with an expected growth rate of 28.21%. It has a market cap of $485.2 billion and hit an all-time high of $214.50, having gained over 34.1% over the past year. The stock has a Zacks Rank #2 and a solid Industry Rank in the top 25%. You can see the complete list of today’s Zacks #1 Rank stocks here.
This New Jersey-based company is engaged in the research and development, manufacture and sale of a range of products in the healthcare field. It has seen a positive earnings estimate revision of couple of cents for this year, over the past 90 days, with an expected growth rate of 7.91%. Shares of JNJ have surged about 28% in a year to hit a fresh high of $148.32. The stock has a market cap of $380.5 billion and a Zacks Rank #3. It also flaunts a solid Industry Rank in the top 38%.
This world's largest Illinois-based aerospace company is the leading manufacturer of commercial jetliners and defense, space and security systems. The stock has seen solid earnings estimate revision of 55 cents for this year over the past 90 days with an expected growth rate of 12.12%. It has risen 122.6% over the past one-year and hit an all-time high of $352.23. The stock has a market cap of $175.03 billion and a Zacks Rank #3.
This Arkansas-based company operates retail stores in various formats worldwide. Its earnings estimate revision has gone up by 21 cents for the current fiscal year with an expected growth rate of 8.84%. The stock hit an all-time high of $102.94, having gained 50.1% in a year. It has a market cap of $287.69 billion and a Zacks Rank #3. The stock also boasts a solid Industry Rank in the top 41% (read: Strong Holiday Retail Sales: 3 ETF & Stock Picks).
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Market at New Highs: Mega Cap ETFs & Stocks On A Roll
The market rally is heating up this year with the S&P 500 and the Dow Jones indices breaching new milestones. After hitting 2,700 on the second trading session of the New Year, the S&P 500 closed above 2,800 for the first time while the Dow Jones closed above 26,000, easily setting the record for the fastest 1,000-point rise in its history, after topping 25,000 on Jan 4.
The euphoria surrounding the new tax legislation is fueling the rally. This is because a massive $1.5-trillion tax cut will likely create an economic surge, boosting job growth and reflation trade. It will further accelerate earnings and save companies billions of dollars, leading to increased dividend and buyback activities and paving the way for increased mergers and acquisitions (read: 7 Biggest ETF Stories of 2017 to Continue in 2018).
A bizarre jump in oil price, weak dollar, improving global growth and rounds of upbeat economic data -- especially in the areas of manufacturing, construction spending and retail -- are adding to the strength.
Further, the Q4 reporting cycle is off to a strong start, with earnings of 36 S&P 500 companies that have reported results, up 11.8% from the same period last year on 7.7% higher revenues, with 77.8% beating EPS estimates and 75% beating revenue estimates. Overall, total earnings and revenues are projected to grow 9.9% and 7%, respectively.
As the rally has been broad based, winners are spread across many corners of the space. Below we have highlighted a few ETFs and stocks that surged to all-time highs in the recent session and could be compelling choices for investors seeking to ride out the current trends in the equity markets. All these have a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), suggesting that their lead will continue in the months ahead.
SPDR Dow Jones Industrial Average ETF (DIA - Free Report)
This is the largest and most-popular ETF in the mega-cap space, with AUM of over $23.5 billion and average daily volume of 2.9 million shares. It tracks the Dow Jones Industrial Average index, charging investors 0.17% in expense ratio. The ETF hit an all-time high of $261.19, representing gains of about 34.8% in a year. It has a Zacks ETF Rank #2 (read: After a Solid Start, What Awaits Dow ETF in Q4 Earnings?).
Vanguard Mega Cap ETF (MGC - Free Report)
With AUM of $1.4 billion, this ETF offers exposure to the largest U.S. stocks representing approximately the top 70% of market capitalization by tracking the CRSP US Mega Cap Index. It charges 7 bps in annual fees but trades in lower average daily volume of 34,000 shares. The product touched an all-time high of $96.45, and has returned about 27.1% over the past one-year. It has a Zacks ETF Rank #3.
Guggenheim S&P 500 Top 50 ETF (XLG - Free Report)
This fund follows the S&P 500 Top 50 ETF Index, which measures the cap-weighted performance of 50 of the largest companies in the S&P 500 Index, reflecting the performance of U.S. mega-cap stocks. It has been able to manage assets worth $761.1 million but trades in a small volume of about 15,000 shares a day on average. Expense ratio comes in at 0.20%. The ETF reached its all-time high of $199.82, and has surged 27.9% in a year. It has a Zacks ETF Rank #3.
iShares Russell Top 200 Value ETF IWX
This ETF offers exposure to large U.S. companies that are thought to be undervalued by the market relative to comparable companies. This can easily be done by tracking the Russell Top 200 Value Index. IWX has AUM of $308.5 million and average daily volume of 15,000 shares. It charges 20 bps in annual fees and has gained 18.3% over the past year, hitting a fresh high of $54.65. The fund has a Zacks ETF Rank #3 (read: Value Investing Set to Shine on Tax Reform: 5 Cheap ETFs).
Berkshire Hathaway Inc. (BRK.B - Free Report)
This Nebraska-based holding company provides property and casualty insurance and reinsurance, as well as life, accident, and health reinsurance; and operates railroad systems in North America. The stock has seen solid earnings estimate revision of 34 cents for this year over the past 90 days, with an expected growth rate of 28.21%. It has a market cap of $485.2 billion and hit an all-time high of $214.50, having gained over 34.1% over the past year. The stock has a Zacks Rank #2 and a solid Industry Rank in the top 25%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Johnson & Johnson (JNJ - Free Report)
This New Jersey-based company is engaged in the research and development, manufacture and sale of a range of products in the healthcare field. It has seen a positive earnings estimate revision of couple of cents for this year, over the past 90 days, with an expected growth rate of 7.91%. Shares of JNJ have surged about 28% in a year to hit a fresh high of $148.32. The stock has a market cap of $380.5 billion and a Zacks Rank #3. It also flaunts a solid Industry Rank in the top 38%.
The Boeing Company (BA - Free Report)
This world's largest Illinois-based aerospace company is the leading manufacturer of commercial jetliners and defense, space and security systems. The stock has seen solid earnings estimate revision of 55 cents for this year over the past 90 days with an expected growth rate of 12.12%. It has risen 122.6% over the past one-year and hit an all-time high of $352.23. The stock has a market cap of $175.03 billion and a Zacks Rank #3.
Wal-Mart Stores Inc. (WMT - Free Report)
This Arkansas-based company operates retail stores in various formats worldwide. Its earnings estimate revision has gone up by 21 cents for the current fiscal year with an expected growth rate of 8.84%. The stock hit an all-time high of $102.94, having gained 50.1% in a year. It has a market cap of $287.69 billion and a Zacks Rank #3. The stock also boasts a solid Industry Rank in the top 41% (read: Strong Holiday Retail Sales: 3 ETF & Stock Picks).
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 >>