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The Zacks Analyst Blog Highlights: XRT, Penske Automotive, IAI, IYT and Arch Resources
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For Immediate Release
Chicago, IL – August 13, 2021 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks and ETFs recently featured in the blog include: SPDR S&P Retail ETF (XRT - Free Report) , Penske Automotive Group Inc. (PAG - Free Report) , iShares U.S. Broker-Dealers & Securities Exchanges ETF (IAI - Free Report) , iShares U.S. Transportation ETF (IYT - Free Report) and Arch Resources Inc. (ARCH - Free Report) .
Here are highlights from Thursday’s Analyst Blog:
Bet on Top-Ranked Sectors with These ETFs and Stocks
Thanks to solid corporate earnings and a fresh large infrastructure bill, the Wall Street bulls are charging higher. The Q2 earnings season has been showing impressive momentum on the revenue side in terms of both growth and the beat percentages. In fact, the strength is broad-based with earnings on track to reach a new all-time record.
Meanwhile, the Senate has passed a $1 trillion infrastructure bill, which would be one of the most substantial federal investments in roads, bridges and rails in decades. The bill, which includes $550 billion in new spending on roads, bridges, and Internet access, will now head to the House of Representatives.
Further, the U.S. economy returned to the pre-pandemic level with GDP rising 6.5% annually in the second quarter, indicating a sustained recovery from the pandemic recession, while consumer confidence rose to a 17-month high in July. Meanwhile, the labor market recovery has boomed with more than half of the lost jobs during the pandemic recovered until July (read: U.S. Economy Returns to Pre-Pandemic Level: 4 ETF Picks).
However, the rising Delta variant of COVID-19 cases has triggered worries over the sustainability of the economic growth. The United States is now averaging more than 100,000 new COVID-19 cases every day, the highest in almost six months.
Against such a backdrop, investors should look at the ETFs and stocks from the top-performing sectors.
How to Find the Top-Performing Sectors
While identifying the top-performing sector is a daunting task, the Zacks Industry Rank makes this process simpler. The Zacks Industry Rank is determined by calculating the average Zacks Rank for each stock in the industry and then assigning a rank to it. First, we selected the best industries that have a top Zacks Rank.
A top Zacks Industry Rank means that more stocks within that group are seeing upward earnings estimate revisions. Since an industry is a group of stocks in a similar business, this is the perfect way to size it up (read: all the Top Ranked ETFs).
The Zacks Industry classification divides the business world into 16 sectors comprising 60 medium or M-level industries and 265 or X-level industries. We rank all 265 X-level industries on the basis of the earnings outlook of the constituent companies into two groups: the top half (i.e., industries with the best average Zacks Rank) and the bottom half (the industries with the worst average Zacks Rank).
The top 132 Zacks Ranked industries feature in the top 50% of all X-level industries whereas the bottom 133 Zacks Ranked industries are in the bottom 50%.
Retail
The retail sector is poised to benefit from a huge infrastructure spending package, boosting consumer spending and confidence. Most of the industries in the sector currently possess a top rank with Retail - Catalog Shopping, Automotive - Retail and Whole Sales and Automotive - Retail and Whole Sale Parts falling under the industry Rank of top 3%.
SPDR S&P Retail ETF: With AUM of $1.1 billion, this product tracks the S&P Retail Select Industry Index, holding 107 securities in its basket. Automotive retail, Internet & direct marketing retail, apparel retail, and specialty stores are the top four sectors with a double-digit allocation each. The fund charges 35 bps in annual fees and has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook (read: 5 Winning ETF Strategies for the Second Half).
Penske Automotive Group: This company is engaged in the operation of automotive and commercial truck dealerships in the United States, Canada and Western Europe. The stock saw positive earnings estimate revisions of $3.33 for this year in the past 30 days and has an expected earnings growth of 84%. Penske Automotive has a Zacks Rank #1 and Growth Score of A.
Finance
Accelerating economic growth, a strengthening job market and growing consumer confidence will likely lead to higher demand for loans and all types of financial services. As such, it belongs to the attractive sector with Insurance - Brokerage leading the way followed by Banks - Southwest (top 15%), Insurance - Property and Casualty (top 15%), and Banks - West (top 20%).
iShares U.S. Broker-Dealers & Securities Exchanges ETF: This fund offers exposure to the U.S. investment banks, discount brokerages, and stock exchange firms by tracking the Dow Jones U.S. Select Investment Services Index. The product currently holds 25 securities and charges 41 bps in annual fees. It has $959.2 million in AUM and has a Zacks ETF Rank #2 with a High risk outlook (read: Finance ETF Hits New 52-Week High).
Transport
Travel has rebounded strongly as more Americans are getting vaccinated, business and economy have reopened, and consumer confidence is growing. A strong summer driving season is also expected to add fuel to transportation. Equipment and Leasing (top 13%) and Truck (top 13%) are leading the sector higher followed by Services and Air Freight and Cargo.
iShares U.S. Transportation ETF: The fund tracks the S&P Transportation Select Industry FMC Capped Index, giving investors exposure to a basket of 45 securities. Railroads takes the top spot with 34.6% of the portfolio while air freight & logistics, trucking and airlines round off to the next three spots with a double-digit exposure each. The fund has accumulated $1.6 billion in AUM and charges 42 bps in annual fees. It has a Zacks ETF Rank #2 with a High risk outlook (read: 4 Sector ETFs to Sizzle on Solid July Jobs Data).
Basic Materials
The materials sector, which tends to be the most sensitive to global economic growth expectations, has been performing well with economic recovery gathering pace. The increase in prices of various types of raw materials added to the strength. As such, Mining – Iron, Steel – Speciality and Steel - Producers fall within the most attractive industries with a rank in the top 1%, top 4% and top 4%, respectively.
Arch Resources: It is one of the largest coal producers in the United States, operating nine mines across the major coal basins of the country. The stock witnessed positive earnings estimate revision of $3.20 for this year in a month and has projected an earnings growth rate of 137.6%. The stock has a Zacks Rank #1 and Growth Score of B.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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The Zacks Analyst Blog Highlights: XRT, Penske Automotive, IAI, IYT and Arch Resources
For Immediate Release
Chicago, IL – August 13, 2021 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks and ETFs recently featured in the blog include: SPDR S&P Retail ETF (XRT - Free Report) , Penske Automotive Group Inc. (PAG - Free Report) , iShares U.S. Broker-Dealers & Securities Exchanges ETF (IAI - Free Report) , iShares U.S. Transportation ETF (IYT - Free Report) and Arch Resources Inc. (ARCH - Free Report) .
Here are highlights from Thursday’s Analyst Blog:
Bet on Top-Ranked Sectors with These ETFs and Stocks
Thanks to solid corporate earnings and a fresh large infrastructure bill, the Wall Street bulls are charging higher. The Q2 earnings season has been showing impressive momentum on the revenue side in terms of both growth and the beat percentages. In fact, the strength is broad-based with earnings on track to reach a new all-time record.
Meanwhile, the Senate has passed a $1 trillion infrastructure bill, which would be one of the most substantial federal investments in roads, bridges and rails in decades. The bill, which includes $550 billion in new spending on roads, bridges, and Internet access, will now head to the House of Representatives.
Further, the U.S. economy returned to the pre-pandemic level with GDP rising 6.5% annually in the second quarter, indicating a sustained recovery from the pandemic recession, while consumer confidence rose to a 17-month high in July. Meanwhile, the labor market recovery has boomed with more than half of the lost jobs during the pandemic recovered until July (read: U.S. Economy Returns to Pre-Pandemic Level: 4 ETF Picks).
However, the rising Delta variant of COVID-19 cases has triggered worries over the sustainability of the economic growth. The United States is now averaging more than 100,000 new COVID-19 cases every day, the highest in almost six months.
Against such a backdrop, investors should look at the ETFs and stocks from the top-performing sectors.
How to Find the Top-Performing Sectors
While identifying the top-performing sector is a daunting task, the Zacks Industry Rank makes this process simpler. The Zacks Industry Rank is determined by calculating the average Zacks Rank for each stock in the industry and then assigning a rank to it. First, we selected the best industries that have a top Zacks Rank.
A top Zacks Industry Rank means that more stocks within that group are seeing upward earnings estimate revisions. Since an industry is a group of stocks in a similar business, this is the perfect way to size it up (read: all the Top Ranked ETFs).
The Zacks Industry classification divides the business world into 16 sectors comprising 60 medium or M-level industries and 265 or X-level industries. We rank all 265 X-level industries on the basis of the earnings outlook of the constituent companies into two groups: the top half (i.e., industries with the best average Zacks Rank) and the bottom half (the industries with the worst average Zacks Rank).
The top 132 Zacks Ranked industries feature in the top 50% of all X-level industries whereas the bottom 133 Zacks Ranked industries are in the bottom 50%.
Retail
The retail sector is poised to benefit from a huge infrastructure spending package, boosting consumer spending and confidence. Most of the industries in the sector currently possess a top rank with Retail - Catalog Shopping, Automotive - Retail and Whole Sales and Automotive - Retail and Whole Sale Parts falling under the industry Rank of top 3%.
SPDR S&P Retail ETF: With AUM of $1.1 billion, this product tracks the S&P Retail Select Industry Index, holding 107 securities in its basket. Automotive retail, Internet & direct marketing retail, apparel retail, and specialty stores are the top four sectors with a double-digit allocation each. The fund charges 35 bps in annual fees and has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook (read: 5 Winning ETF Strategies for the Second Half).
Penske Automotive Group: This company is engaged in the operation of automotive and commercial truck dealerships in the United States, Canada and Western Europe. The stock saw positive earnings estimate revisions of $3.33 for this year in the past 30 days and has an expected earnings growth of 84%. Penske Automotive has a Zacks Rank #1 and Growth Score of A.
Finance
Accelerating economic growth, a strengthening job market and growing consumer confidence will likely lead to higher demand for loans and all types of financial services. As such, it belongs to the attractive sector with Insurance - Brokerage leading the way followed by Banks - Southwest (top 15%), Insurance - Property and Casualty (top 15%), and Banks - West (top 20%).
iShares U.S. Broker-Dealers & Securities Exchanges ETF: This fund offers exposure to the U.S. investment banks, discount brokerages, and stock exchange firms by tracking the Dow Jones U.S. Select Investment Services Index. The product currently holds 25 securities and charges 41 bps in annual fees. It has $959.2 million in AUM and has a Zacks ETF Rank #2 with a High risk outlook (read: Finance ETF Hits New 52-Week High).
Transport
Travel has rebounded strongly as more Americans are getting vaccinated, business and economy have reopened, and consumer confidence is growing. A strong summer driving season is also expected to add fuel to transportation. Equipment and Leasing (top 13%) and Truck (top 13%) are leading the sector higher followed by Services and Air Freight and Cargo.
iShares U.S. Transportation ETF: The fund tracks the S&P Transportation Select Industry FMC Capped Index, giving investors exposure to a basket of 45 securities. Railroads takes the top spot with 34.6% of the portfolio while air freight & logistics, trucking and airlines round off to the next three spots with a double-digit exposure each. The fund has accumulated $1.6 billion in AUM and charges 42 bps in annual fees. It has a Zacks ETF Rank #2 with a High risk outlook (read: 4 Sector ETFs to Sizzle on Solid July Jobs Data).
Basic Materials
The materials sector, which tends to be the most sensitive to global economic growth expectations, has been performing well with economic recovery gathering pace. The increase in prices of various types of raw materials added to the strength. As such, Mining – Iron, Steel – Speciality and Steel - Producers fall within the most attractive industries with a rank in the top 1%, top 4% and top 4%, respectively.
Arch Resources: It is one of the largest coal producers in the United States, operating nine mines across the major coal basins of the country. The stock witnessed positive earnings estimate revision of $3.20 for this year in a month and has projected an earnings growth rate of 137.6%. The stock has a Zacks Rank #1 and Growth Score of B.
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.