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ETF News And Commentary

Thanksgiving week is here and history shows that this holiday-shortened week is a bullish feast for stock investors –– even those with low volumes. According to research firm Bespoke, the average return of the S&P 500 has been 0.81% during Thanksgiving week over the past 20 years and the week is positive 60% of the time.

Kensho, a tool designed to quantify historical market events, depicts that the S&P 500 posted an average return of 1% during the week of Thanksgiving. As per Schaeffer's Investment Research, the S&P 500 index has been positive 68% of the time with average returns of 0.64% over the past 50 years. In particular, U.S. stocks have generated average gains of 0.32% over the three days until Wednesday before Turkey Day, closing positive 82% of the time.

Thanksgiving Never Better than This Year

Thanksgiving could not come better than this, indicating huge optimism for stocks. Notably, the major benchmarks are currently within the striking distance from their record highs. This is because the U.S. stock market has been steadily rising this month after the unexpected election of Donald Trump (read: Trump Drives Dow to Record High: ETFs in Focus).

Trump’s proposal of expansive government spending, lesser financial regulation and increased prospects of tax cuts would boost economic growth as well as increase inflation and interest rates. In particular, the Fed in its latest testimony hinted at a sooner-than-expected rates hike (might be in December) given the U.S. economy has been on a solid footing with an improving housing market, rising consumer prices and a more robust labor market. These should be enough for the economy to withstand an increase in interest rates. All these have set the stage for the rally in stocks for the coming weeks.

Food, Beverage & Transportation: Hot Spots

While many corners of the stock world will see a rally, food and beverage, and transportation stocks will likely take charge. According to the latest data from the American Farm Bureau Federation, the average cost of serving 10 people for Thanksgiving is expected to drop 24 cents from last year to $49.87 thanks to declining farm prices including the most happening food ––turkey.

According to travel service provider AAA, thanksgiving holiday travel is expected to hit the levels not seen in nine years buoyed by lower gas prices. As many as 48.7 million Americans will travel through roads and skies this Thanksgiving holiday period (Nov 23-Nov 27). Out of these, 43.5 million Americans will take long car trips (up 1.9% from last year), 3.7 million will fly (up 1.6%) and the rest will travel by bus and train (up less than 1%).  

Notably, a report from the U.S. airlines group, Airlines for America (A4A), shows that about 27.3 million passengers would fly over the 12-day Thanksgiving holiday travel period (Nov 18-Nov 29), up 2.5% from last year (read: If Oil Continues to Soar, These 7 ETFs May Fall).

As a result, investors seeking to cash in on the Thanksgiving week for big gains could consider the following ETFs & stocks. Thanksgiving celebration is mainly about eating and dining with families:

ETFs

While a few of these are Sell-rated ETFs, investors should note that these could get a boost this week on Thanksgiving excitement.

Direxion Daily S&P 500 Bull 3x Shares (SPXL - Free Report)

This fund makes an excellent pick for investors seeking to make large profits from the soaring stock market in a very short span. The fund creates a triple leveraged long position in the S&P 500 Index while charging 95 bps in fees a year. It has $507.7 million in AUM and trades in heavy volume of 1.2 million shares on average.

PowerShares Dynamic Food & Beverage Portfolio (PBJ - Free Report)

This product offers exposure to 30 stocks that are engaged in the manufacture, sale or distribution of food and beverage products, agricultural products and products related to the development of new food technologies by tracking the Dynamic Food & Beverage Intellidex Index. With AUM of $143.7 million, the fund charges 58 bps in annual fees from investors and sees a moderate average daily volume of 66,000 shares. It has a Zacks ETF Rank of 3 or ‘Hold’ rating with a Medium risk outlook.

The Restaurant ETF (BITE - Free Report)

This ETF follows the BITE Index and offers exposure to 41 renowned companies in the restaurant industry that operates a broad variety of restaurant formats ranging from quick serve and fast casual to casual dining and fine dining. It has an expense ratio of 0.75% and accumulated nearly $3 million in its asset base. The fund trades in small volume of under 2,000 shares and has a Zacks ETF Rank of 5 or ‘Strong Sell’ rating with a High risk outlook.

Spirited Funds/ETFMG Whiskey and Spirits ETF (WSKY - Free Report)

This fund offers exposure to 23 distilleries, breweries, vintners and related luxury goods companies involved in the alcohol business by tracking the Spirited Funds/ETFMG Whiskey & Spirits Index. It trades in a small volume of about 6,000 shares and has attracted $2.4 million in its asset base so far. Expense ratio comes in at 0.75% (read: Tap the Growing Whiskey & Spirit Market with This New ETF).

U.S. Global Jets ETF (JETS - Free Report)

This fund provides exposure to the global airline industry, including airline operators and manufacturers from all over the world, by tracking the U.S. Global Jets Index. The product holds 33 securities in its basket and has gathered $48.8 million in its asset base. It sees a light trading volume of nearly 36,000 shares a day and charges investors 60 bps in annual fees. JETS has a Zacks ETF Rank of 4 or ‘Sell’ rating with a High risk outlook.

iShares Dow Jones Transportation Average Fund (IYT - Free Report)

The ETF follows the Dow Jones Transportation Average Index and offers exposure to the broad transportation sector. The fund holds a small basket of 20 stocks with air freight & logistics, railroads, and airlines taking the top three spots. The fund has accumulated $1 billion in its asset base while sees a good trading volume of around 318,000 shares a day. It charges 44 bps in annual fees and has a Zacks ETF Rank of 3 with a High risk outlook.

Stocks

While there are several stocks that could spike on Thanksgiving, we have outlined those that have seen their rank rising to #1 (Strong Buy) or #2 (Buy) in the past week due to the event.

SkyWest Inc. (SKYW - Free Report)

This Utah-based company operates a regional airline in the United States. The stock, with a market cap of $1.87 billion, was upgraded to a Zacks Rank #1 and has a VGM Style Score of A.

Sanderson Farms Inc. (SAFM - Free Report)

This Mississippi-based company is a fully integrated poultry processing company engaged in the production, processing, marketing and distribution of fresh and frozen chicken products. The stock has a Zacks Rank #1 with a VGM Style Score of A and has a market cap of $1.85 billion.

USD Partners LP (USDP - Free Report)

This Texas-based company acquires, develops and operates energy-related rail terminals and other midstream infrastructure assets and businesses in the United States and Canada. With a market cap of $190 million, USDP has a Zacks Rank #1 and a VGM Style Score of A.

Hormel Foods Corporation (HRL - Free Report)

This Minnesota-based company is a multinational manufacturer and marketer of high-quality, brand-name food and meat products worldwide. It has a Zacks Rank #2 and a VGM Style Score of B. Market cap of HRL is $19.02 billion.

The Cheesecake Factory Incorporated (CAKE - Free Report)

This California-based company operates full-service and casual dining restaurants primarily in the United States. With a market cap of $2.74 billion, the stock has a Zacks Rank #2 and a VGM Style Score of A (read: How Does Q3 Earnings Taste to Restaurant ETF?).

McCormick & Company Inc. (MKC - Free Report)

This Maryland-based company is a global leader in creating flavor. It manufactures, markets, and distributes spices, herbs, seasoning mixes, condiments, recipes and other flavorful products to the entire food industry. The stock rose to a Zacks Rank #2. It has a market cap of $11.52 billion and a VGM Style Score of D.

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