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With the easing of Omicron fears, Wall Street jumped to start a new week after a broad market sell-off in the past couple of weeks. Growth concerns and Fed’s speedy taper talks have made many ETFs attractive at the current levels.
As such, the beaten down prices have charged up investors to snap up ETFs on the cheap. Investors could definitely look to these products for outsized gains over the longer term. Some of these are Invesco S&P MidCap Value with Momentum ETF (XMVM - Free Report) , Vanguard Financials ETF (VFH - Free Report) , SPDR S&P Retail ETF (XRT - Free Report) , SPDR S&P Biotech ETF (XBI - Free Report) and Invesco S&P 500 Enhanced Value ETF (SPVU - Free Report) .
Market Trends
The tech-heavy Nasdaq Composite Index rose 0.9% while the S&P 500 and Dow Jones gained 1.2% and 1.9%, respectively. The Russell 2000 Index outperformed, climbing 2.1%.
Bets that the new COVID-19 variant Omicron may cause milder illness than previously feared, renewed confidence in consumer and travel demand. Dr. Anthony Fauci, the White House's chief medical adviser, said that early indications of Omicron suggest that it may be less dangerous than the Delta variant.
Additionally, the wider reach of vaccinations and COVID-19 boosters should help to reduce infections caused by the new variant of COVID-19. Consumer confidence is stronger than expected, hiring has picked up and wages are rising. While inflation is rising at the fastest pace in 30 years, retail sales remain robust. Further, the U.S. service sector activity gauge hit a record high in November as businesses expedited hiring (read: 4 ETF Areas to Play Upbeat Manufacturing Data).
How to Find Bargain ETFs?
Using our database, first we have selected ETFs with a Zacks Rank #1 (Strong Buy) or 2 (Buy). This is because these ranks suggest strengthening fundamentals and superior weighting methodologies that could allow them to move higher than their cousins in a booming market. Then, we narrowed down the list to funds having a lower P/E ratio than 27.10 for the broad market fund (SPY - Free Report) . Further, these ETFs have a lower expense ratio of below 0.50% and are among the popular options with AUM of at least $1 billion.
We have detailed the above-mentioned ETFs that are currently undervalued and could generate solid returns in a rising stock market.
Invesco S&P MidCap Value with Momentum ETF (XMVM - Free Report) – P/E Ratio: 10.77
Invesco S&P MidCap Value with Momentum ETF follows the S&P MidCap 400 High Momentum Value Index, which is composed of 80 securities in the S&P MidCap 400 Index having both the highest value scores and momentum scores. It holds 81 stocks in its basket with key holdings in financials, consumer discretionary and industrials.
Invesco S&P MidCap Value with Momentum ETF has accumulated $195.1 million in its asset base while trades in volume of 25,000 shares per day on average. The fund charges 39 bps in annual fees and has a Zacks ETF Rank #2 (read: Here's Why Mid-Cap ETFs Are the Right Bets Now).
With AUM of $11.5 billion, Vanguard Financials ETF targets the broad financial sector. It provides exposure to a basket of 394 stocks by tracking the MSCI US Investable Market Financials 25/50 Index. Diversified banks account for 24.1% of the portfolio, followed by regional banks (14.5%), asset management & custody banks (10.3%) and investment banking & brokerage (8.9%).
Vanguard Financials ETF charges 10 bps in annual fees and trades in an average daily volume of 586,000 shares. It has a Zacks ETF Rank #1
SPDR S&P Retail ETF tracks the S&P Retail Select Industry Index, which provides exposure across large, mid-and small-cap retail stocks. It holds well-diversified 107 stocks in its basket with none making up for more than 1.6% share. Additionally, SPDR S&P Retail ETF is well spread across various industries with a double-digit allocation each in apparel retail, Internet & direct marketing retail, automotive retail and specialty stores.
SPDR S&P Retail ETF is the largest and most popular in the retail space with AUM of $824 million and an average trading volume of 3.3 million shares. It charges 35 bps in annual fees. SPDR S&P Retail ETF has a Zacks ETF Rank #1.
SPDR S&P Biotech ETF offers equal-weight exposure across 186 biotechnology stocks. It follows the S&P Biotechnology Select Industry Index, charging investors 35 bps in annual fees (read: 5 Top-Ranked ETFs to Invest in December).
SPDR S&P Biotech ETF has AUM of $6.6 billion and trades in an average daily volume of 5.8 million shares. XBI has a Zacks ETF Rank #2.
Invesco S&P 500 Enhanced Value ETF follows the S&P 500 Enhanced Value Index, which measures the performance of stocks in the S&P 500 Index that have the highest "value score." The product holds holding 99 stocks in its basket with key holdings in financials, healthcare and consumer discretionary.
Invesco S&P 500 Enhanced Value ETF has accumulated $128.8 million in AUM while trades in a light average daily volume of 15,000 shares. The product charges 13 bps in annual fees and has a Zacks ETF Rank #1.
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5 Top-Ranked ETFs to Buy At Bargain Prices
With the easing of Omicron fears, Wall Street jumped to start a new week after a broad market sell-off in the past couple of weeks. Growth concerns and Fed’s speedy taper talks have made many ETFs attractive at the current levels.
As such, the beaten down prices have charged up investors to snap up ETFs on the cheap. Investors could definitely look to these products for outsized gains over the longer term. Some of these are Invesco S&P MidCap Value with Momentum ETF (XMVM - Free Report) , Vanguard Financials ETF (VFH - Free Report) , SPDR S&P Retail ETF (XRT - Free Report) , SPDR S&P Biotech ETF (XBI - Free Report) and Invesco S&P 500 Enhanced Value ETF (SPVU - Free Report) .
Market Trends
The tech-heavy Nasdaq Composite Index rose 0.9% while the S&P 500 and Dow Jones gained 1.2% and 1.9%, respectively. The Russell 2000 Index outperformed, climbing 2.1%.
Bets that the new COVID-19 variant Omicron may cause milder illness than previously feared, renewed confidence in consumer and travel demand. Dr. Anthony Fauci, the White House's chief medical adviser, said that early indications of Omicron suggest that it may be less dangerous than the Delta variant.
Additionally, the wider reach of vaccinations and COVID-19 boosters should help to reduce infections caused by the new variant of COVID-19. Consumer confidence is stronger than expected, hiring has picked up and wages are rising. While inflation is rising at the fastest pace in 30 years, retail sales remain robust. Further, the U.S. service sector activity gauge hit a record high in November as businesses expedited hiring (read: 4 ETF Areas to Play Upbeat Manufacturing Data).
How to Find Bargain ETFs?
Using our database, first we have selected ETFs with a Zacks Rank #1 (Strong Buy) or 2 (Buy). This is because these ranks suggest strengthening fundamentals and superior weighting methodologies that could allow them to move higher than their cousins in a booming market. Then, we narrowed down the list to funds having a lower P/E ratio than 27.10 for the broad market fund (SPY - Free Report) . Further, these ETFs have a lower expense ratio of below 0.50% and are among the popular options with AUM of at least $1 billion.
We have detailed the above-mentioned ETFs that are currently undervalued and could generate solid returns in a rising stock market.
Invesco S&P MidCap Value with Momentum ETF (XMVM - Free Report) – P/E Ratio: 10.77
Invesco S&P MidCap Value with Momentum ETF follows the S&P MidCap 400 High Momentum Value Index, which is composed of 80 securities in the S&P MidCap 400 Index having both the highest value scores and momentum scores. It holds 81 stocks in its basket with key holdings in financials, consumer discretionary and industrials.
Invesco S&P MidCap Value with Momentum ETF has accumulated $195.1 million in its asset base while trades in volume of 25,000 shares per day on average. The fund charges 39 bps in annual fees and has a Zacks ETF Rank #2 (read: Here's Why Mid-Cap ETFs Are the Right Bets Now).
Vanguard Financials ETF (VFH - Free Report) – P/E Ratio: 11.20
With AUM of $11.5 billion, Vanguard Financials ETF targets the broad financial sector. It provides exposure to a basket of 394 stocks by tracking the MSCI US Investable Market Financials 25/50 Index. Diversified banks account for 24.1% of the portfolio, followed by regional banks (14.5%), asset management & custody banks (10.3%) and investment banking & brokerage (8.9%).
Vanguard Financials ETF charges 10 bps in annual fees and trades in an average daily volume of 586,000 shares. It has a Zacks ETF Rank #1
SPDR S&P Retail ETF (XRT - Free Report) – P/E Ratio: 11.87
SPDR S&P Retail ETF tracks the S&P Retail Select Industry Index, which provides exposure across large, mid-and small-cap retail stocks. It holds well-diversified 107 stocks in its basket with none making up for more than 1.6% share. Additionally, SPDR S&P Retail ETF is well spread across various industries with a double-digit allocation each in apparel retail, Internet & direct marketing retail, automotive retail and specialty stores.
SPDR S&P Retail ETF is the largest and most popular in the retail space with AUM of $824 million and an average trading volume of 3.3 million shares. It charges 35 bps in annual fees. SPDR S&P Retail ETF has a Zacks ETF Rank #1.
SPDR S&P Biotech ETF (XBI - Free Report) – P/E Ratio: 12.07
SPDR S&P Biotech ETF offers equal-weight exposure across 186 biotechnology stocks. It follows the S&P Biotechnology Select Industry Index, charging investors 35 bps in annual fees (read: 5 Top-Ranked ETFs to Invest in December).
SPDR S&P Biotech ETF has AUM of $6.6 billion and trades in an average daily volume of 5.8 million shares. XBI has a Zacks ETF Rank #2.
Invesco S&P 500 Enhanced Value ETF (SPVU - Free Report) – P/E Ratio: 12.07
Invesco S&P 500 Enhanced Value ETF follows the S&P 500 Enhanced Value Index, which measures the performance of stocks in the S&P 500 Index that have the highest "value score." The product holds holding 99 stocks in its basket with key holdings in financials, healthcare and consumer discretionary.
Invesco S&P 500 Enhanced Value ETF has accumulated $128.8 million in AUM while trades in a light average daily volume of 15,000 shares. The product charges 13 bps in annual fees and has a Zacks ETF Rank #1.