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5 Undervalued ETF Winners With More Room For Growth
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Wall Street appears ready to rally, as the S&P 500 and the Nasdaq recorded most consecutive straight days of gains last week since November 2021. The positive shift was primarily fueled by anticipation of a less-hawkish Fed going forward, a resilient consumer base and an upbeat corporate earnings season as well as oil price slump.
The year-end rally may be extended into the next year. Morgan Stanley's strategists, including Serena Tang and Vishwanath Tirupattur, anticipate that U.S. stocks and bonds will outdo their emerging markets peers in 2024, as quoted on Bloomberg. They believe that US earnings growth will hit a trough in early 2024 and subsequently recover.
Morgan Stanley predicts that the S&P 500 Index will touch 4,500 by the end of the next year, compared to its closing value of 4,415.24 on the last trading day. Morgan Stanley's more optimistic stance for 2024 marks a substantial change from the previous bearish sentiment regarding US stocks, especially in light of concerns about the prolonged high interest rates. Previously, the bank's target for the S&P 500 at the year-end was set at 3,900.
Against this backdrop, below we highlight a few ETF winners that have a P/E less than S&P 500. P/E (ttm) ofSPDR S&P 500 ETF Trust (SPY - Free Report) stands at 22.20X. These ETF winners have a Zacks Rank #1 (Strong Buy) or #2 (Buy), indicating more growth potential.
The underlying Growth Strength Index provides exposure to a mix of domestic equities with filters for liquidity, return on equity, long-term debt, revenue and cash flow growth. No stock makes up more than 2.28% of the fund. The Zacks Rank #2 fund charges 60 bps in fees.
P/E: 15.64X
YTD Performance: 19.91%
Communication Services Select Sector SPDR ETF (XLC - Free Report)
The underlying Communication Services Select Sector Index seeks to provide an effective representation of the communication services sector of the S&P 500 Index. The Zacks Rank #2 fund is heavy on Meta and Alphabet. The fund charges 60 bps in fees.
The underlying ICE Semiconductor Index measures the performance of U.S. traded securities of companies engaged in the semiconductor business. The Zacks Rank #1 ETF charges 35 bps in fees. AMD (8.58%), Broadcom (7.86%) and Nvidia (7.78%) are the top holdings of the fund.
The underlying S&P 500 Index is designed to measure the performance of the large-capitalization segment of the U.S. equity market. The fund’s top weights are Apple (7.21%), Microsoft (6.68%) and Amazon (3.23%). The Zacks Rank #2 fund charges 2 bps in fees.
The underlying MSCI USA Sector Neutral Quality Index is based on a traditional market capitalization-weighted parent index, the MSCI USA Index which includes U.S. large and mid-capitalization stocks. The fund’s top weights are Nvidia (6.23%), Meta (4.66%) and Visa (4.55%). The Zacks Rank #2 fund charges 15 bps in fees.
P/E: 21.63X
YTD Performance: 22.03%
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5 Undervalued ETF Winners With More Room For Growth
Wall Street appears ready to rally, as the S&P 500 and the Nasdaq recorded most consecutive straight days of gains last week since November 2021. The positive shift was primarily fueled by anticipation of a less-hawkish Fed going forward, a resilient consumer base and an upbeat corporate earnings season as well as oil price slump.
The year-end rally may be extended into the next year. Morgan Stanley's strategists, including Serena Tang and Vishwanath Tirupattur, anticipate that U.S. stocks and bonds will outdo their emerging markets peers in 2024, as quoted on Bloomberg. They believe that US earnings growth will hit a trough in early 2024 and subsequently recover.
Morgan Stanley predicts that the S&P 500 Index will touch 4,500 by the end of the next year, compared to its closing value of 4,415.24 on the last trading day. Morgan Stanley's more optimistic stance for 2024 marks a substantial change from the previous bearish sentiment regarding US stocks, especially in light of concerns about the prolonged high interest rates. Previously, the bank's target for the S&P 500 at the year-end was set at 3,900.
Against this backdrop, below we highlight a few ETF winners that have a P/E less than S&P 500. P/E (ttm) ofSPDR S&P 500 ETF Trust (SPY - Free Report) stands at 22.20X. These ETF winners have a Zacks Rank #1 (Strong Buy) or #2 (Buy), indicating more growth potential.
First Trust Growth Strength ETF (FTGS - Free Report)
The underlying Growth Strength Index provides exposure to a mix of domestic equities with filters for liquidity, return on equity, long-term debt, revenue and cash flow growth. No stock makes up more than 2.28% of the fund. The Zacks Rank #2 fund charges 60 bps in fees.
P/E: 15.64X
YTD Performance: 19.91%
Communication Services Select Sector SPDR ETF (XLC - Free Report)
The underlying Communication Services Select Sector Index seeks to provide an effective representation of the communication services sector of the S&P 500 Index. The Zacks Rank #2 fund is heavy on Meta and Alphabet. The fund charges 60 bps in fees.
P/E: 17.18X
YTD Performance: 43.56%
iShares Semiconductor ETF (SOXX - Free Report)
The underlying ICE Semiconductor Index measures the performance of U.S. traded securities of companies engaged in the semiconductor business. The Zacks Rank #1 ETF charges 35 bps in fees. AMD (8.58%), Broadcom (7.86%) and Nvidia (7.78%) are the top holdings of the fund.
P/E: 21.57X
YTD Performance: 43.16%
SPDR Portfolio S&P 500 ETF (SPLG - Free Report)
The underlying S&P 500 Index is designed to measure the performance of the large-capitalization segment of the U.S. equity market. The fund’s top weights are Apple (7.21%), Microsoft (6.68%) and Amazon (3.23%). The Zacks Rank #2 fund charges 2 bps in fees.
P/E: 20.03X
YTD Performance: 16.53%
iShares MSCI USA Quality Factor ETF (QUAL - Free Report)
The underlying MSCI USA Sector Neutral Quality Index is based on a traditional market capitalization-weighted parent index, the MSCI USA Index which includes U.S. large and mid-capitalization stocks. The fund’s top weights are Nvidia (6.23%), Meta (4.66%) and Visa (4.55%). The Zacks Rank #2 fund charges 15 bps in fees.
P/E: 21.63X
YTD Performance: 22.03%