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6 Solid Sector ETFs to Buy Now

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Now that we have entered into the reporting season of the first-quarter earnings, sectors that have been witnessing maximum earnings revisions stand out to be solid sectors. These sectors include Energy, Technology, Healthcare, Construction and Basic Materials, per Zacks Earnings Trend issued on Apr 5, 2022.

Not only this, per new data from FactSet, analysts had the most Buy ratings during February and March in more than a decade on stocks on the S&P 500 as a percentage of their total ratings. Of 10,821 ratings on companies tracked by the benchmark, 57.3% had an investment analyst recommendation of Buy as of Mar 31, slightly trailing February at 57.4%. The lions share of these Buy ratings went to Energy, Information Technology and Communication Services.

Hence, we highlight the related sector ETFs and the reasons why these are likely to be winners in the coming days.

Energy – iShares U.S. Energy ETF (IYE - Free Report)

Energy sector estimates for Q1 of 2022 have increased by +27.3% since the start of the year. Analysts are most optimistic on Energy as the sector had the highest percentage (66%) of Buy ratings on Mar 31.

Oil prices have been rising since the beginning of 2022. The upside in crude oil prices was triggered by factors like easing Omicron variant concerns, supply shortages, and geopolitical tensions in energy-rich Eastern Europe and the Middle East.

Information Technology – Technology Select Sector SPDR ETF (XLK - Free Report)

Information Technology (64%) takes the second spot in fetching the most Buy ratings. The sectors’ earnings estimate revision is also solid. The sector has held a dominant position in the ongoing health crisis. Telemedicine and Digital Health received significant importance. Data management and storage have become integral aspects of healthcare today. The semiconductor market is red-hot.

Communications – Communication Services Select Sector SPDR ETF (XLC - Free Report)

The communication Services (62%) sector takes the top spot in securing maximum Buy ratings. As we are emerging increasingly connected through internet, the communication sector has been receiving more prominence. And the continuous evolvement in sector will keep it strong over the long term. The sector is a great bet for higher dividend and buyback yield with a combined output of 5.94% (read: 5 Sectors & Its ETFs to Tap Outsized Dividend & Buyback Yield).

Healthcare – Health Care Select Sector SPDR Fund (XLV - Free Report)

The healthcare sector is a good defensive investment option. Currently, the Russia-Ukraine war crisis and the Fed’s hawkish stance on rate hikes made the investing world jittery, making the healthcare sector a safe bet. Plus, the pandemic also triggered a race to introduce vaccines, tests and treatment options, placing the healthcare sector in a sweet spot.

Construction – Invesco Dynamic Building & Construction ETF (PKB - Free Report)

The fund could be a beneficiary of the uptick in U.S. infrastructure activities. The passage of the $1.2-trillion worth of U.S. infrastructure bill is a plus for the space.

Materials – First Trust Materials AlphaDEX ETF (FXZ - Free Report)

The metal and materials industry is on a tear currently thanks to pent-up demand that is bearing fruit on economic reopening post the height of the COVID-19 pandemic as well as the passage of the $1.2-trillion U.S. infrastructure bill. Plus, several metals are staging a rally lately as these are used in clean energy production and electric vehicle manufacturing. The disruptive metals industry is also attracting attention now as it is benefiting from the Russia-Ukraine crisis. Ukraine is a major producer of uranium, titanium, iron ore, steel, and ammonia too.