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The Zacks Analyst Blog Highlights: SLY, IJR, PBSM, VB and SCHA
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For Immediate Release
Chicago, IL – November 5, 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 recently featured in the blog include: SPDR S&P 600 Small Cap ETF , iShares Core S&P Small-Cap ETF (IJR - Free Report) , Invesco PureBeta MSCI USA Small Cap ETF , Vanguard Small-Cap Index Fund ETF Shares (VB - Free Report) and Schwab U.S. Small-Cap ETF (SCHA - Free Report) .
Here are highlights from Thursday’s Analyst Blog:
5 Reasons to Bet on Small-Cap ETFs
Small-cap stocks staged a great performance to start November. The cohort has lately underperformed its bigger peers like the S&P 500 and the Nasdaq. But things are taking a turn for the better for the pint-sized stocks. The small-cap index Russell 2000 has been hovering around an all-time high.
Against this backdrop, below we highlight a few reasons that point out why small-cap ETFs may rally higher in the coming days.
Holiday Season
The National Retail Federation (“NRF”) projects November/December retail sales in the range of $843.4 billion to $859 billion, up 8.5% to 10.5% from 2020 results. The NRF said its forecast — excluding automobile dealers, gas stations and restaurants and covering Nov 1 to Dec 31— beat the previous high of $777.3 billion, up 8.2%, in 2020 as well as the average gain of 4.4% over the past five years.
Deloitte forecasts considerably higher holiday sales for 2021, estimating growth of 7% to 9% to between $1.28 and $1.3 trillion during the November-to-January time span. That is more than Deloitte’s 1% to 1.5% projection for 2020 and the U.S. Census Bureau’s November 2020-to-January 2021 sales growth measure of 5.8% to $1.19 trillion (seasonally adjusted, excluding autos and fuel).
Economy to Gain Momentum in Q4
The U.S. economy lost its growth momentum in the third quarter mainly due to the resurgence of the Delta variant of COVID-19. "We're going to see growth re-accelerate in the fourth quarter and the first half of next year as the effect of the Delta variant begins to wane. It doesn't mean that we won't have future waves of COVID, but with each passing wave, the economic costs continue to diminish," said Ryan Sweet, a senior economist at Moody's Analytics in West Chester, Pennsylvania, as quoted on Reuters.
Vaccine boosters are available now. More companies are trying to come up with antiviral therapies. This should boost the U.S. economy in the coming days. Since small-cap stocks are more closely tied to the domestic economy, any improvement in the U.S. economy would be great for such stocks.
Upbeat Earnings
For the small-cap S&P 600 Index, we now have Q3 results from 25 index members or 4.2% of the index’s total membership. Total earnings for these 25 index members are up 17.5% on 3.5% higher revenues, with 80% beating EPS estimates and 68% beating revenue estimates, per the Earnings Trends issued on Oct 20, 2021. The Q3 earnings season overall for the S&P 600 is expected to be upbeat with 44.4% earnings gain (following 280% gains in Q2) on 16.1% revenue gains (over above 34.4% increase in Q2).
Inexpensive Valuation
The small-cap benchmark Russell 2000 rallied about 2.6% on Nov 1 for its best day since Aug 27. After a tough September in which the S&P 500 fell more than 4%, the benchmark jumped nearly 7% last month. In the past six months, the large-cap S&P 500 has gained about 10% while the S&P 600 has advanced merely 2.3%. No wonder, the small-cap index has the potential to rally when the domestic economy recovers fully.
Fed to Start Tapering
The Federal Reserve on Wednesday said it would start slowing its pace of asset purchases, marking the first step in scaling back its COVID-era easy money policies. This will likely follow a rate hike sooner or later. All such tightening measures will boost the strength of the greenback. Since small-cap stocks are more domestically-focused and have less foreign exposure, the cohort is less likely to be exposed to the rising greenback.
ETFs in Focus
SPDR S&P 600 Small Cap ETF– Zacks Rank #2
iShares Core S&P Small-Cap ETF– Zacks Rank #2
Invesco PureBeta MSCI USA Small Cap ETF– Zacks Rank #2
Vanguard Small-Cap Index Fund ETF Shares– Zacks Rank #2
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: SLY, IJR, PBSM, VB and SCHA
For Immediate Release
Chicago, IL – November 5, 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 recently featured in the blog include: SPDR S&P 600 Small Cap ETF , iShares Core S&P Small-Cap ETF (IJR - Free Report) , Invesco PureBeta MSCI USA Small Cap ETF , Vanguard Small-Cap Index Fund ETF Shares (VB - Free Report) and Schwab U.S. Small-Cap ETF (SCHA - Free Report) .
Here are highlights from Thursday’s Analyst Blog:
5 Reasons to Bet on Small-Cap ETFs
Small-cap stocks staged a great performance to start November. The cohort has lately underperformed its bigger peers like the S&P 500 and the Nasdaq. But things are taking a turn for the better for the pint-sized stocks. The small-cap index Russell 2000 has been hovering around an all-time high.
Against this backdrop, below we highlight a few reasons that point out why small-cap ETFs may rally higher in the coming days.
Holiday Season
The National Retail Federation (“NRF”) projects November/December retail sales in the range of $843.4 billion to $859 billion, up 8.5% to 10.5% from 2020 results. The NRF said its forecast — excluding automobile dealers, gas stations and restaurants and covering Nov 1 to Dec 31— beat the previous high of $777.3 billion, up 8.2%, in 2020 as well as the average gain of 4.4% over the past five years.
Deloitte forecasts considerably higher holiday sales for 2021, estimating growth of 7% to 9% to between $1.28 and $1.3 trillion during the November-to-January time span. That is more than Deloitte’s 1% to 1.5% projection for 2020 and the U.S. Census Bureau’s November 2020-to-January 2021 sales growth measure of 5.8% to $1.19 trillion (seasonally adjusted, excluding autos and fuel).
Economy to Gain Momentum in Q4
The U.S. economy lost its growth momentum in the third quarter mainly due to the resurgence of the Delta variant of COVID-19. "We're going to see growth re-accelerate in the fourth quarter and the first half of next year as the effect of the Delta variant begins to wane. It doesn't mean that we won't have future waves of COVID, but with each passing wave, the economic costs continue to diminish," said Ryan Sweet, a senior economist at Moody's Analytics in West Chester, Pennsylvania, as quoted on Reuters.
Vaccine boosters are available now. More companies are trying to come up with antiviral therapies. This should boost the U.S. economy in the coming days. Since small-cap stocks are more closely tied to the domestic economy, any improvement in the U.S. economy would be great for such stocks.
Upbeat Earnings
For the small-cap S&P 600 Index, we now have Q3 results from 25 index members or 4.2% of the index’s total membership. Total earnings for these 25 index members are up 17.5% on 3.5% higher revenues, with 80% beating EPS estimates and 68% beating revenue estimates, per the Earnings Trends issued on Oct 20, 2021. The Q3 earnings season overall for the S&P 600 is expected to be upbeat with 44.4% earnings gain (following 280% gains in Q2) on 16.1% revenue gains (over above 34.4% increase in Q2).
Inexpensive Valuation
The small-cap benchmark Russell 2000 rallied about 2.6% on Nov 1 for its best day since Aug 27. After a tough September in which the S&P 500 fell more than 4%, the benchmark jumped nearly 7% last month. In the past six months, the large-cap S&P 500 has gained about 10% while the S&P 600 has advanced merely 2.3%. No wonder, the small-cap index has the potential to rally when the domestic economy recovers fully.
Fed to Start Tapering
The Federal Reserve on Wednesday said it would start slowing its pace of asset purchases, marking the first step in scaling back its COVID-era easy money policies. This will likely follow a rate hike sooner or later. All such tightening measures will boost the strength of the greenback. Since small-cap stocks are more domestically-focused and have less foreign exposure, the cohort is less likely to be exposed to the rising greenback.
ETFs in Focus
SPDR S&P 600 Small Cap ETF– Zacks Rank #2
iShares Core S&P Small-Cap ETF– Zacks Rank #2
Invesco PureBeta MSCI USA Small Cap ETF– Zacks Rank #2
Vanguard Small-Cap Index Fund ETF Shares– Zacks Rank #2
Schwab U.S. Small-Cap ETF – Zacks Rank #2
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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.