The following is an excerpt from Zacks Chief Strategist John Blank’s full Jul Market Strategy report To access the full PDF, click here . I. Introduction The S&P500 forward 12-Month P/E multiple is at a high 18.9. This market cap-weighted large-cap index valuation gets held up — these summer days — by seven monster Info Tech stocks. Want to know the 10-year valuation average? This is 17.4. Other S&P500 sectors are being hugely overlooked and under-bought. One of the most overlooked S&P500 sectors: Materials. II. Global Markets Are you looking for a Materials Sector ETF? Here is the list of ticker symbols, ETF names, the issuer/sponsor, the industry the ETF tracks, total assets ($M), the benchmark index for the ETF, and the expense ratio %. Image Source: Zacks Investment Research Image Source: Zacks Investment Research
Next, I show you the top holding in the 12 largest Materials ETFs.
These are worthy cherry picking. Image Source: etf.com
Finally, one of the biggest internal share price differences among the Materials ETFs is the percentage of Process Industries that the ETF holds.
This can be 70% to 75% Process Industry for the majors like Vanguard and iShares. Or 45%, 28%, or 9%, or even zero, in the case in Materials ETFs centered in Gold or Copper mining. Image Source: etf.com
This month’s global markets investing lesson is an old one:
Know what you own. III. Zacks July Sector/Industry/Company Telescope The consumer remains the core earnings driver, according to reporting S&P500 companies. Consumer Discretionary and Consumer Staples stay Very Attractive. Industrials stay as a Very Attractive sector too. Lots of hot industries are showing here. Utilities fell to Market Weight. Utilities-Telephone looks the best The Health Care sector stayed Market Weight. Materials fell to Market Weight, and the Energy sector remains at Market Weight. Financials remain Very Unattractive. There is loads of concern about this sector. Recession worry, office REITs, investment funds, insurance, investment banking. (1) Consumer Discretionary stayed Very Attractive. Apparel and Leisure are tops. Zacks #1 Rank (STRONG BUY): Urban Outfitters ( URBN Quick Quote URBN - Free Report) (2) Consumer Staples stayed Very Attractive. Food/Drug Retail, Soaps & Cosmetics, and Beverages are best. Zacks #1 Rank (STRONG BUY): Kimberly Clark ( KMB Quick Quote KMB - Free Report) (3) Industrials stayed Very Attractive. Industrial Products-Services, Construction-Building Services, Pollution Control, and Machinery-Electrical are tops. Lots to pick from here… Zacks #1 Rank (STRONG BUY): Siemens ( SIEGY Quick Quote SIEGY - Free Report) (4) Info Tech stayed Attractive. Semis remain notable at Very Attractive! (5) Health Care stayed Market Weight. Medical Products led again. (6) Energy stays at Market Weight. Energy-Alternates and Oil & Gas Integrated look best. (7) Materials fall to Market Weight from Very Attractive. Building Products was the best. (8) Utilities fell to Market Weight from Very Attractive. Utilities-Telephone looks the best. (9) Communications Services fell to Unattractive from Market Weight. Telco Services is the best here. (10) Financials stayed Very Unattractive. IV. Conclusion
After the latest momentum runs taken by mega-cap info tech names — maybe now is the time to buy beaten-down stocks — in overlooked S&P500 sectors?
Materials would be one of those overlooked S&P500 sectors! Be contrarian. Enjoy the JULY 2023 Zacks Market Strategy report. Warm Regards, John Blank, PhD Zacks Chief Equity Strategist and Economist