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The Zacks Analyst Blog Highlights Invesco S&P 500 High Beta ETF, Invesco S&P SmallCap 600 Pure Value ETF, Invesco S&P MidCap 400 Pure Value ETF, First Trust Small Cap Value AlphaDEX Fund and Fidelity Blue Chip Growth
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For Immediate Release
Chicago, IL – February 9, 2024 – Zacks.com announces the list of stocks and ETFs featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. ETFs recently featured in the blog include: Invesco S&P 500 High Beta ETF (SPHB - Free Report) , Invesco S&P SmallCap 600 Pure Value ETF (RZV - Free Report) , Invesco S&P MidCap 400 Pure Value ETF (RFV - Free Report) , First Trust Small Cap Value AlphaDEX Fund (FYT - Free Report) and Fidelity Blue Chip Growth ETF (FBCG - Free Report) .
Here are highlights from Thursday’s Analyst Blog:
The S&P 500 at 5000: Bet on High-Beta ETFs
The S&P 500 is on the verge of reaching a historic milestone. It is nearing the 5,000 mark for the first time ever. A combination of factors, such as strong quarterly earnings, economic resiliency and technology sector surge, has contributed to the historic rally amid delayed prospects of rate cuts, geopolitical tension and overbought market conditions.
Companies listed on the S&P 500 have reported stronger-than-expected earnings, indicating robust financial health and operational efficiency. Total Q4 earnings of the 285 S&P 500 members that have reported results are up 4.4% from the same period last year on 3.5% higher revenues, with 81.1% beating EPS estimates and 64.6% beating revenue estimates.
The earnings and revenue growth represent a modest acceleration, with the technology sector being the major contributor. The revenue beat percentage is modestly above the last few quarters. In fact, the 4.4% earnings growth represents the best growth rate since the second quarter of 2022.
Economic Optimism
Though the recent upbeat economic data has reduced the likelihood of a near-term rate cut, it indicates a resilient economy and is seen as a net positive for stocks. Investors seem optimistic about the economy's ability to sustain growth, buoyed by favorable job reports, consumer spending, and other economic indicators. This optimism fuels investment in stocks, driving up the S&P 500.
Tech Sector
The technology sector is back in the groove, with the "Magnificent Seven" being the biggest engine of growth. These companies currently account for 30% of the S&P 500 index’s total market capitalization and have contributed 53% gains so far this year.
Combining the actual results of the six companies that have come out with estimates for the one yet-to-report company, total fourth-quarter earnings are on track to be up 48.7% from the same period last year on 14.5% higher revenues (read: Magnificent 7 ETFs Rise on Blockbuster Earnings).
While there are several options to play the bullish backdrop, high-beta ETFs seem a perfect bet at present to make huge profits.
Why High Beta?
Beta measures the price volatility of stocks or funds relative to the overall market. It has a direct relationship with market movements. A beta of more than 1 indicates that the price tends to move higher than the broader market and is extremely volatile, while a beta of less than 1 indicates the stock price or fund is less volatile than the market.
That said, high-beta stocks seek to capitalize on consistent growth with market-beating returns. This is because when markets soar, high-beta stocks experience larger gains than the broader market counterparts and, thus, outpace the rivals. However, these exhibit a higher level of volatility.
Below, we have highlighted some ETFs that could be intriguing picks for investors to play the bullish trend.
ETF Picks
We have chosen five ETFs that are not confined to a specific sector or industry but offer exposure to the broader stock market.
Invesco S&P 500 High Beta ETF
Invesco S&P 500 High Beta ETF tracks the performance of 101 stocks from the S&P 500 Index with the highest beta over the past 12 months.
Invesco S&P MidCap 400 Pure Value ETF offers exposure to the mid-cap stocks that exhibit strong value characteristics by tracking the S&P Midcap 400 Pure Value Index.
This fund tracks the Nasdaq AlphaDEX Small Cap Value Index, which employs the AlphaDEX stock selection methodology to select stocks from the NASDAQ US 700 Small Cap Value Index.
Zacks Rank: #3
Beta: 1.37 AUM: $189.1 million Expense Ratio: 0.70%
Fidelity Blue Chip Growth ETF
Fidelity Blue Chip Growth ETF is an actively managed fund that invests in blue-chip companies (well-known, well-established and well-capitalized), which generally have large or medium market capitalizations. These companies have above-average growth potential (stocks of these companies are often called "growth" stocks) (read: Here's Why Growth ETFs are Scaling New Highs).
Given the bullish backdrop, high-beta products will continue to generate outsized returns in the coming weeks and are suitable for risk-tolerant investors, given their volatile nature.
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week.
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 Invesco S&P 500 High Beta ETF, Invesco S&P SmallCap 600 Pure Value ETF, Invesco S&P MidCap 400 Pure Value ETF, First Trust Small Cap Value AlphaDEX Fund and Fidelity Blue Chip Growth
For Immediate Release
Chicago, IL – February 9, 2024 – Zacks.com announces the list of stocks and ETFs featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. ETFs recently featured in the blog include: Invesco S&P 500 High Beta ETF (SPHB - Free Report) , Invesco S&P SmallCap 600 Pure Value ETF (RZV - Free Report) , Invesco S&P MidCap 400 Pure Value ETF (RFV - Free Report) , First Trust Small Cap Value AlphaDEX Fund (FYT - Free Report) and Fidelity Blue Chip Growth ETF (FBCG - Free Report) .
Here are highlights from Thursday’s Analyst Blog:
The S&P 500 at 5000: Bet on High-Beta ETFs
The S&P 500 is on the verge of reaching a historic milestone. It is nearing the 5,000 mark for the first time ever. A combination of factors, such as strong quarterly earnings, economic resiliency and technology sector surge, has contributed to the historic rally amid delayed prospects of rate cuts, geopolitical tension and overbought market conditions.
Notably, the S&P 500 has risen 4.5% so far this year (read: 5 Technology Stocks Powering S&P 500 ETF to Record Highs).
Strong Corporate Earnings
Companies listed on the S&P 500 have reported stronger-than-expected earnings, indicating robust financial health and operational efficiency. Total Q4 earnings of the 285 S&P 500 members that have reported results are up 4.4% from the same period last year on 3.5% higher revenues, with 81.1% beating EPS estimates and 64.6% beating revenue estimates.
The earnings and revenue growth represent a modest acceleration, with the technology sector being the major contributor. The revenue beat percentage is modestly above the last few quarters. In fact, the 4.4% earnings growth represents the best growth rate since the second quarter of 2022.
Economic Optimism
Though the recent upbeat economic data has reduced the likelihood of a near-term rate cut, it indicates a resilient economy and is seen as a net positive for stocks. Investors seem optimistic about the economy's ability to sustain growth, buoyed by favorable job reports, consumer spending, and other economic indicators. This optimism fuels investment in stocks, driving up the S&P 500.
Tech Sector
The technology sector is back in the groove, with the "Magnificent Seven" being the biggest engine of growth. These companies currently account for 30% of the S&P 500 index’s total market capitalization and have contributed 53% gains so far this year.
Combining the actual results of the six companies that have come out with estimates for the one yet-to-report company, total fourth-quarter earnings are on track to be up 48.7% from the same period last year on 14.5% higher revenues (read: Magnificent 7 ETFs Rise on Blockbuster Earnings).
While there are several options to play the bullish backdrop, high-beta ETFs seem a perfect bet at present to make huge profits.
Why High Beta?
Beta measures the price volatility of stocks or funds relative to the overall market. It has a direct relationship with market movements. A beta of more than 1 indicates that the price tends to move higher than the broader market and is extremely volatile, while a beta of less than 1 indicates the stock price or fund is less volatile than the market.
That said, high-beta stocks seek to capitalize on consistent growth with market-beating returns. This is because when markets soar, high-beta stocks experience larger gains than the broader market counterparts and, thus, outpace the rivals. However, these exhibit a higher level of volatility.
Below, we have highlighted some ETFs that could be intriguing picks for investors to play the bullish trend.
ETF Picks
We have chosen five ETFs that are not confined to a specific sector or industry but offer exposure to the broader stock market.
Invesco S&P 500 High Beta ETF
Invesco S&P 500 High Beta ETF tracks the performance of 101 stocks from the S&P 500 Index with the highest beta over the past 12 months.
Zacks Rank: N/A
Beta: 1.49
AUM: $498.5 million
Expense Ratio: 0.25%
Invesco S&P SmallCap 600 Pure Value ETF
This fund provides pure exposure to 146 small-cap stocks that exhibit strong value characteristics by tracking the S&P SmallCap 600 Pure Value Index.
Zacks Rank: #3 (Hold)
Beta: 1.47
AUM: $246.8 million
Expense Ratio: 0.35%
Invesco S&P MidCap 400 Pure Value ETF
Invesco S&P MidCap 400 Pure Value ETF offers exposure to the mid-cap stocks that exhibit strong value characteristics by tracking the S&P Midcap 400 Pure Value Index.
Zacks Rank: #3
Beta: 1.41
AUM: $323.8 million
Expense Ratio: 0.35%
First Trust Small Cap Value AlphaDEX Fund
This fund tracks the Nasdaq AlphaDEX Small Cap Value Index, which employs the AlphaDEX stock selection methodology to select stocks from the NASDAQ US 700 Small Cap Value Index.
Zacks Rank: #3
Beta: 1.37
AUM: $189.1 million
Expense Ratio: 0.70%
Fidelity Blue Chip Growth ETF
Fidelity Blue Chip Growth ETF is an actively managed fund that invests in blue-chip companies (well-known, well-established and well-capitalized), which generally have large or medium market capitalizations. These companies have above-average growth potential (stocks of these companies are often called "growth" stocks) (read: Here's Why Growth ETFs are Scaling New Highs).
Zacks Rank: NA
Beta: 1.31
AUM: $1.2 billion
Expense Ratio: 0.59%
Bottom Line
Given the bullish backdrop, high-beta products will continue to generate outsized returns in the coming weeks and are suitable for risk-tolerant investors, given their volatile nature.
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week.
Get it free >>
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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.