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5 Secret Santa ETFs & Stocks for Your Portfolio

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Thanks to the Trump effect and improving fundamentals, the broad stock market is enjoying a torrid run this holiday season and is likely to continue to do so with Santa Claus on the way.

This is especially true as President-elect Trump has triggered risk-on trade and set the stage for higher interest rates that drove most of the rally. Trump has promised to accelerate economic growth, spend big time on infrastructure, reduce regulations, cut taxes and create more jobs in the country (read: Trump Effect Elevated These Sector ETFs to Rank #1).

The U.S. economy is clearly on a solid footing buoyed by a solid labor market, rising wages, slowly increasing inflation, and increasing consumer spending. Americans have an optimistic view about the economy with confidence hitting the highest level in nine years heading into the key holiday shopping season. Additionally, the combination of other factors like return of the earnings growth era, the jump in oil price, hopes of a December rate hike, and of course the holiday fervor added to the strength, suggesting that Santa rally might be real this year.

Apart from these, if we go by history, December has been good month for stocks as seasonality plays an important role. As per Bespoke, the S&P 500 has been positive 70% of the time with average returns of 1.3% for the month.

Against such a backdrop, while most of the stocks and ETFs are surging over the past one-month, there are some hidden gems or Secret Santa as we call them that are still lagging but could surprise investors with big returns this Christmas based on the current trends. We have highlighted some of these in detail below:

Secret Santa ETFs

Here, we have chosen five ETFs that have underperformed over the past one-month period but have a Zacks ETF Rank of 1 (Strong Buy), 2 (Buy) or 3 (Hold).

First Trust Dow Jones Internet Index FDN

This fund targets the Internet segment of the broad technology space with AUM of $3.6 billion and average daily volume of around 513,000 shares. It follows the Dow Jones Internet Composite Index and holds 41 stocks in its basket with a higher concentration on the top two firms at over 9%. Others firms account for less than 5.5% share. Expense ratio comes in at 0.54%. The product lost 0.9% over the past one-month and has a Zacks ETF Rank of 3 (read: Hot Stock & ETF Deals for Cyber Monday).

iShares U.S. Medical Devices ETF IHI

The fund provides exposure to U.S. companies that manufacture and distribute medical devices by tracking the Dow Jones U.S. Select Medical Equipment Index. In total, the fund holds 47 securities in its basket with double-digit allocation to the top firm while other firms do not hold more than 7.73% of assets. It has managed assets worth $920.4 million while charging 44 bps in fees per year. Volume is good as it exchanges about 152,000 shares in hand per day. The fund was down 1.3% over the past month and has a Zacks ETF Rank of 2.

ETFS Physical Silver Shares SIVR

This ETF tracks the performance of the price of silver less the Trust expenses and is backed by physical silver under the custody of HSBC Bank USA in London. This fund has AUM of $321.9 million and trades in good volume of around 120,000 shares per day on average. It charges 30 bps in fees per year and shed 10.2% in the past one month. SIVR has a Zacks ETF Rank of 3.

The Teucrium Corn Fund CORN

This fund doesn’t just cycle into the next month as expiration approaches like other commodity ETFs. Instead it utilizes a much more in-depth approach that reduces the effects of backwardation and contango. The product uses three futures contracts for corns, all of which are traded on the CBOT Futures Exchange. The three contracts include the second-to-expire contract weighted 35%, the third-to-expire contract weighted 30%, and 35% weighted contract expiring in the December following the expiration month of the third-to-expire contract. The fund has amassed $79.2 million in its asset base and trades in a good volume of about 128,000 shares a day. The product is a high cost choice charging 2.89% in annual fees. The ETF lost 2.4% over the past one month and has a Zacks ETF Rank of 1 (read: 5 Agricultural ETFs Upgraded to Buys).

SPDR S&P Pharmaceuticals ETF XPH

This fund provides exposure to the pharma companies by tracking the S&P Pharmaceuticals Select Industry Index. With AUM of over $485.2 million, it trades in solid volume of more than 173,000 shares a day and charges 35 bps in fees a year. In total, the product holds 37 securities with none accounting for more than 5.8% share. The product was down 2.1% in the past one month and has a Zacks ETF Rank of 3.

Secret Santa Stocks

Here, we have used our Zacks stock screener to find five picks that are in the red from a one-month look, have a Zacks Rank #1 or 2, VGM Style Score of ‘B’ or better, and a positive earnings estimate revision.

Towerstream Corporation TWER

Based in Middletown, Rhode Island, Towerstream is a leading fixed wireless service provider in the U.S., delivering high-speed Internet access to businesses. The Zacks Consensus Estimate for the current fiscal year has moved up from a loss of $5.77 to a loss of $4.88 over the past 30 days. This represents a substantial growth of 12.86%, above the industry average of 11.63%. With a market cap of $2.65 million, the stock lost about 81% over the past one month and has a Zacks Rank #2 with a VGM Style Score of ‘B’.

Activision Blizzard Inc. ATVI

Based in Santa Monica, California, Activision Blizzard is the world’s largest online and console game publisher with leading market positions across all categories of the rapidly growing interactive entertainment software industry. The stock saw solid earnings estimate revision of 4 cents for this year over the past 30 days, with an average earnings growth of 55.28% versus the industry average of 14.08%. It has a market cap of $27.2 billion and shed about 14% in the same time frame. ATVI has a Zacks Rank #2 with a VGM Style Score of ‘B’ (read: 4 Reasons to Buy Retail ETFs This Holiday Season).

Sanderson Farms Inc. SAFM

Based in Laurel, Mississippi, Sanderson Farms is a fully integrated poultry processing company engaged in the production, processing, marketing and distribution of fresh and frozen chicken products. With a market cap of $1.82 billion, the stock saw earnings estimates moving up 10 cents for the current fiscal year over the past one month with an average growth rate of 6.20%. Sanderson Farms is down about 12% in the same time frame and has a Zacks Rank #1 with a VGM Style Score of ‘A’. You can see the complete list of today’s Zacks #1 Rank stocks here

NewStar Financial Inc. NEWS

Based in Boston, Massachusetts, NewStar Financial is a specialized commercial finance company focused on meeting the complex financing needs of companies and private investors in the middle markets. The stock saw positive earnings estimate revision of 8 cents for this year over the past 30 days with an average growth rate of 27.50%. It has a market cap of $375.3 million and is down 10% over the past one month. NewStar Financial has a Zacks Rank #2 with a VGM Style Score of ‘A’. NewStar Financial has a Zacks Rank #2 with a VGM Style Score of ‘B’.

Facebook Inc. (FB - Free Report)

Based in Menlo Park, California, Facebook operates as a mobile application and website that enables people to connect, share, discover, and communicate with each other on mobile devices and personal computers worldwide. Its shares dropped 7% over the past one-month period. Having a market cap of $341.3 billion, the company saw solid earnings estimate revision of 16 cents for this year over the past 30 days. Additionally, its expected earnings growth of 121.74% is much higher than the industry average of 22.31%.

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