For investors seeking momentum, The Materials Select Sector SPDR Fund (XLB - Free Report) is probably on radar. The fund just hit a 52-week high and is up 76% from its 52-week low price of $37.69/share.
But are more gains in store for this ETF? Let’s take a quick look at the fund and the near-term outlook on it to get a better idea on where it might be headed:
XLB in Focus
This product offers exposure to companies in the chemical, construction material, containers and packaging, metals and mining, and paper and forest products industries. The ETF charges 13 basis points in annual fees (see: all the Materials ETFs here).
Why the Move?
The materials sector has been an area to watch lately given the improving economy and hopes of a potential vaccine. Super-easy monetary fiscal policies have begun to improve the prospects of global economic growth. The recent U.S. dollar weakness is a strong tailwind for the sector. Though valuations are elevated, the material sector is still trading at impressive levels compared to many other sectors. Further, a rebound in expected earnings is fueling growth.
More Gains Ahead?
Currently, XLB has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook. Therefore, it is hard to get a handle on its future returns one way or the other. However, many of the segments that make up this ETF have a strong Zacks Industry Rank. So, there is definitely some promise for those who want to ride this surging ETF a little further.
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