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5 Beaten-Down Top-Ranked Stocks to Buy in S&P 500 ETF
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Escalating geopolitical tensions and inflation worries shook Wall Street last week. The three major indices capped weekly losses, with the S&P 500 shedding 1.5%, marking its worst week since October 2023. A broad decline in major bank shares after quarterly earnings failed to impress added to the chaos.
All 11 major sectors in the S&P 500 closed the week in negative territory for the first time since September 2023. SPDR S&P 500 ETF Trust (SPY), the proxy version of the S&P 500 Index, shed 1.5% last week. While many stocks in the ETF have been hit badly, a few of them have a solid Zacks Rank #1 (Strong Buy) or #2 (Buy), suggesting a good entry point. These are Globe Life Inc. (GL - Free Report) , Arista Networks Inc. (ANET - Free Report) , Fastenal Company (FAST - Free Report) , Invesco Ltd. (IVZ - Free Report) and Deckers Outdoor Corporation (DECK - Free Report) . You can see the complete list of today’s Zacks #1 Rank stocks here.
The tensions in the Middle East rose after Iran launched a barrage of missiles and drones on Israel over the weekend, heightening fears of a wider conflict in the volatile region. The conflict will lead to a spike in oil prices, which could flare up inflation, leading the Fed to go slow on rate cuts.
The bouts of upbeat economic data point to a stronger economy, dialing back expectations for rate cuts in the first half of this year. Consumer prices accelerated at a faster-than-expected pace in March, pushing inflation higher and dashing hopes that the Fed will be able to cut interest rates anytime soon. This has outlined the case for longer-than-expected higher rates (read: Inverse ETFs to Play Now on Middle East Tension & Rising Rates?).
The three major banks – JPMorgan Chase & Co (JPM - Free Report) , Citigroup (C - Free Report) , and Wells Fargo (WFC - Free Report) – disappointed investors. JPMorgan’s net interest income came in below analysts' expectations. Wells Fargo reported a 7% drop in profits, following a decline in net interest income caused by poor borrowing demand, while Citigroup experienced a loss following expenses on employee termination and deposit insurance.
Let’s take a closer look at the fundamentals of SPY.
SPY in Focus
SPDR S&P 500 ETF Trust holds 503 stocks in its basket, with each accounting for no more than 7.3% of the assets. This suggests a nice balance across each security and prevents heavy concentration. The fund is widely spread across sectors with information technology, financials, healthcare and consumer discretionary accounting for a double-digit allocation each.
SPDR S&P 500 ETF Trust has an AUM of $515.3 billion and charges 9 bps in fees per year. It trades in an average daily volume of 63 million shares and has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook (see all the Large Cap Blend ETFs here).
Below, we have highlighted the abovementioned five beaten-down top-ranked stocks in the ETF.
Stocks in Focus
Globe Life (formerly known as Torchmark Corporation) is an insurance holding company for a group of insurance companies that market primarily individual life and supplemental health insurance to lower-middle to middle-income households throughout the United States. The stock plunged 45.5% last week. Globe Life has an estimated earnings growth rate of 8.92% for this year and a Zacks Rank #2. It has a Momentum Score of A.
Arista Networks is engaged in providing cloud networking solutions for data centers and cloud computing environments. The stock lost about 9% last week. It has an estimated growth rate of 6.77% for this year. Arista Networks currently has a Zacks Rank #2 and a Momentum Score of B (read: 5 ETFs Leading the Tech Rebound: Will the Rally Continue?).
Fastenal is a national wholesale distributor of industrial and construction supplies. The company distributes its products through more than 3,200 company-owned stores, primarily located in North America. Fastenal was down about 8% last week. It has an expected earnings growth rate of 6.4% for this year. It has a Zacks Rank #2 and a Momentum Score of B.
Invesco – formerly AMVESCAP PLC – operates as an independent investment manager and offers a wide range of investment products and services. The stock shed about 8% last week. It has an estimated earnings growth rate of 14.6% for this year. IVZ has a Zacks Rank #2 and a Momentum Score of A.
Deckers Outdoor is a leading designer, producer and brand manager of innovative, niche footwear and accessories developed for outdoor sports and other lifestyle-related activities. The stock lost 7.4%. It has an estimated earnings growth rate of 10.5% for the fiscal year (ending March 2025). It has a Zacks Rank #2 at present and a Momentum Score of B.
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5 Beaten-Down Top-Ranked Stocks to Buy in S&P 500 ETF
Escalating geopolitical tensions and inflation worries shook Wall Street last week. The three major indices capped weekly losses, with the S&P 500 shedding 1.5%, marking its worst week since October 2023. A broad decline in major bank shares after quarterly earnings failed to impress added to the chaos.
All 11 major sectors in the S&P 500 closed the week in negative territory for the first time since September 2023. SPDR S&P 500 ETF Trust (SPY), the proxy version of the S&P 500 Index, shed 1.5% last week. While many stocks in the ETF have been hit badly, a few of them have a solid Zacks Rank #1 (Strong Buy) or #2 (Buy), suggesting a good entry point. These are Globe Life Inc. (GL - Free Report) , Arista Networks Inc. (ANET - Free Report) , Fastenal Company (FAST - Free Report) , Invesco Ltd. (IVZ - Free Report) and Deckers Outdoor Corporation (DECK - Free Report) . You can see the complete list of today’s Zacks #1 Rank stocks here.
The tensions in the Middle East rose after Iran launched a barrage of missiles and drones on Israel over the weekend, heightening fears of a wider conflict in the volatile region. The conflict will lead to a spike in oil prices, which could flare up inflation, leading the Fed to go slow on rate cuts.
The bouts of upbeat economic data point to a stronger economy, dialing back expectations for rate cuts in the first half of this year. Consumer prices accelerated at a faster-than-expected pace in March, pushing inflation higher and dashing hopes that the Fed will be able to cut interest rates anytime soon. This has outlined the case for longer-than-expected higher rates (read: Inverse ETFs to Play Now on Middle East Tension & Rising Rates?).
The three major banks – JPMorgan Chase & Co (JPM - Free Report) , Citigroup (C - Free Report) , and Wells Fargo (WFC - Free Report) – disappointed investors. JPMorgan’s net interest income came in below analysts' expectations. Wells Fargo reported a 7% drop in profits, following a decline in net interest income caused by poor borrowing demand, while Citigroup experienced a loss following expenses on employee termination and deposit insurance.
Let’s take a closer look at the fundamentals of SPY.
SPY in Focus
SPDR S&P 500 ETF Trust holds 503 stocks in its basket, with each accounting for no more than 7.3% of the assets. This suggests a nice balance across each security and prevents heavy concentration. The fund is widely spread across sectors with information technology, financials, healthcare and consumer discretionary accounting for a double-digit allocation each.
SPDR S&P 500 ETF Trust has an AUM of $515.3 billion and charges 9 bps in fees per year. It trades in an average daily volume of 63 million shares and has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook (see all the Large Cap Blend ETFs here).
Below, we have highlighted the abovementioned five beaten-down top-ranked stocks in the ETF.
Stocks in Focus
Globe Life (formerly known as Torchmark Corporation) is an insurance holding company for a group of insurance companies that market primarily individual life and supplemental health insurance to lower-middle to middle-income households throughout the United States. The stock plunged 45.5% last week. Globe Life has an estimated earnings growth rate of 8.92% for this year and a Zacks Rank #2. It has a Momentum Score of A.
Arista Networks is engaged in providing cloud networking solutions for data centers and cloud computing environments. The stock lost about 9% last week. It has an estimated growth rate of 6.77% for this year. Arista Networks currently has a Zacks Rank #2 and a Momentum Score of B (read: 5 ETFs Leading the Tech Rebound: Will the Rally Continue?).
Fastenal is a national wholesale distributor of industrial and construction supplies. The company distributes its products through more than 3,200 company-owned stores, primarily located in North America. Fastenal was down about 8% last week. It has an expected earnings growth rate of 6.4% for this year. It has a Zacks Rank #2 and a Momentum Score of B.
Invesco – formerly AMVESCAP PLC – operates as an independent investment manager and offers a wide range of investment products and services. The stock shed about 8% last week. It has an estimated earnings growth rate of 14.6% for this year. IVZ has a Zacks Rank #2 and a Momentum Score of A.
Deckers Outdoor is a leading designer, producer and brand manager of innovative, niche footwear and accessories developed for outdoor sports and other lifestyle-related activities. The stock lost 7.4%. It has an estimated earnings growth rate of 10.5% for the fiscal year (ending March 2025). It has a Zacks Rank #2 at present and a Momentum Score of B.