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The stock market has been on a stellar run this year thanks to strong corporate earnings, still lower interest rates, and improving health of economies around the world. Even the ongoing turmoil in Washington, geopolitical tensions, North Korean nuclear missile tests and stretched valuations failed to block the road.
In fact, Dow Jones crossed the another milestone of 22,000 for the first time in yesterday’s trading session after hitting the 20,000 and 21,000 marks earlier this year and the S&P 500 is less than 1% shy of its major threshold of 2,500. The bullish trend is likely to continue at least in the near term.
This is especially true, as the economy has been on a solid growth path buoyed by an impressive labor market, increase in wages, and increasing consumer spending. U.S. GDP growth expanded 2.6% annually in the second quarter, which is double the first-quarter growth of 1.2% and represents the fastest growth since the third quarter of last year when the economy grew 2.8%. Notably, this 96-month growth confirms the eight-year expansion since mid-2009 – the third-longest economic winning streak in American history behind March 1991 to March 2001 (120 months) and February 1961 to December 1969 (106 months).
Additionally, consumers now appear to be more optimistic as we enter into the second half of the year. The Consumer Confidence Index, as indicated by the Conference Board, surged to a 16-year high of 121.1 in July from the revised 117.3 in June and is much above the expected 116.5. Further, a weaker dollar helped blue chip companies, most of whose revenues came from international markets, to surge higher (read: 4 ETFs to Ride on 16-Year High Consumer Confidence).
Amid bullish sentiments, momentum investing would be a winning strategy for those seeking higher returns in a short spell. This is because the strategy looks to fetch profits from buying hot stocks that have shown an uptrend over the past few weeks or months.
As such, we have presented five ETFs and stocks that could lead to outperformance in the current market environment. Further, these could even beat the broader market returns in the coming months.
This fund provides exposure to large and mid-cap stocks that exhibit relatively higher price momentum by tracking the MSCI USA Momentum Index. It charges 15 bps in fees per year and is the popular choice with AUM of $3.4 billion.
This product tracks the Dorsey Wright Focus Five Index, which provides targeted exposure to five First Trust sector and industry based ETFs that Dorsey, Wright & Associates (DWA) believes have the greatest potential to outperform the other ETFs in the universe. The approach results in a little higher fee of 89 bps per year and has AUM of $2.4 billion.
Goldman Sachs ActiveBeta U.S. Large Cap Equity ETF (GSLC - Free Report)
This fund seeks to offer exposure to 451 stocks with four well-established attributes of performance: good value, strong momentum, high quality and low volatility. It tracks the Goldman Sachs ActiveBeta U.S. Large Cap Equity Index, charging investors 9 bps in annual fees. The fund has amassed $2.3 billion in its asset base and has a Zacks ETF Rank of 2 or ‘Buy’ rating (read: 5 ETF Investing Mistakes You Must Avoid).
With AUM of $478.1 million, this product targets the large cap securities with a combination of core factors (high value, high quality, and low size characteristics), with a focus factor comprising high momentum characteristics. It follows the Russell 1000 Momentum Focused Factor Index and charges an annual fee of 20 bps. The fund has a Zacks ETF Rank of 3 or ‘Hold’ rating.
This is an actively managed ETF providing exposure to high quality U.S. companies across all industries and sectors that have prospects for long-term returns due to their ability to grow earnings and increase dividends over time. It holds 59 securities in its basket and charges a high expense ratio of 1.05%. CCOR has garnered enough investors’ interest since its debut in late May and has accumulated $105.8 million in its asset base (read: 6 New Hot ETFs of First-Half 2017).
Stock Picks
Imperva Inc.
This California-based company is engaged in the development of protection software and services for business applications and databases. It has seen solid earnings estimate revision from a loss of $1.40 to a loss of 81 cents for this year over the past seven days with an expected earnings growth of 62.84%. The stock has a Zacks Rank #1 (Strong Buy) and Momentum Style Score of A. You can see the complete list of today’s Zacks #1 Rank stocks here
This California-based company designs, manufactures, markets and services semiconductor processing equipment used in the fabrication of integrated circuits. It saw impressive earnings estimate revision of $1.44 over the past seven days for this fiscal year with an expected earnings growth of 25.51%. The stock has a Zacks Rank #1 and Momentum Style Score of A.
This California-based company provides products and technologies to treat late-stage cardiovascular disease. It saw solid earnings estimates revision of 26 cents for this year over the past seven days with an expected earnings growth of 30.72%. The stock has a Zacks Rank #1 and Momentum Style Score of A (read: Can Biotech ETFs Continue to Surge Higher?).
This Texas-based company is a global producer and marketer of value-added titanium dioxide pigments. It has seen solid earnings estimate revision of 13 cents for this year over the past seven days expects whopping earnings growth of 396.77%. The stock has a Zacks Rank #1 and Momentum Style Score of A.
This California-based company is focused on the development, commercialization and financial management of bio-pharmaceuticals. It saw solid earnings estimate revision of 9 cents for this year over the past seven days with massive expected earnings growth of 143.23%. The stock has a Zacks Rank #1 and Momentum Style Score of A.
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Bet on Momentum with These ETFs & Stocks
The stock market has been on a stellar run this year thanks to strong corporate earnings, still lower interest rates, and improving health of economies around the world. Even the ongoing turmoil in Washington, geopolitical tensions, North Korean nuclear missile tests and stretched valuations failed to block the road.
In fact, Dow Jones crossed the another milestone of 22,000 for the first time in yesterday’s trading session after hitting the 20,000 and 21,000 marks earlier this year and the S&P 500 is less than 1% shy of its major threshold of 2,500. The bullish trend is likely to continue at least in the near term.
This is especially true, as the economy has been on a solid growth path buoyed by an impressive labor market, increase in wages, and increasing consumer spending. U.S. GDP growth expanded 2.6% annually in the second quarter, which is double the first-quarter growth of 1.2% and represents the fastest growth since the third quarter of last year when the economy grew 2.8%. Notably, this 96-month growth confirms the eight-year expansion since mid-2009 – the third-longest economic winning streak in American history behind March 1991 to March 2001 (120 months) and February 1961 to December 1969 (106 months).
Additionally, consumers now appear to be more optimistic as we enter into the second half of the year. The Consumer Confidence Index, as indicated by the Conference Board, surged to a 16-year high of 121.1 in July from the revised 117.3 in June and is much above the expected 116.5. Further, a weaker dollar helped blue chip companies, most of whose revenues came from international markets, to surge higher (read: 4 ETFs to Ride on 16-Year High Consumer Confidence).
Amid bullish sentiments, momentum investing would be a winning strategy for those seeking higher returns in a short spell. This is because the strategy looks to fetch profits from buying hot stocks that have shown an uptrend over the past few weeks or months.
As such, we have presented five ETFs and stocks that could lead to outperformance in the current market environment. Further, these could even beat the broader market returns in the coming months.
ETF Picks
iShares Edge MSCI USA Momentum Factor ETF (MTUM - Free Report)
This fund provides exposure to large and mid-cap stocks that exhibit relatively higher price momentum by tracking the MSCI USA Momentum Index. It charges 15 bps in fees per year and is the popular choice with AUM of $3.4 billion.
First Trust Dorsey Wright Focus 5 ETF (FV - Free Report)
This product tracks the Dorsey Wright Focus Five Index, which provides targeted exposure to five First Trust sector and industry based ETFs that Dorsey, Wright & Associates (DWA) believes have the greatest potential to outperform the other ETFs in the universe. The approach results in a little higher fee of 89 bps per year and has AUM of $2.4 billion.
Goldman Sachs ActiveBeta U.S. Large Cap Equity ETF (GSLC - Free Report)
This fund seeks to offer exposure to 451 stocks with four well-established attributes of performance: good value, strong momentum, high quality and low volatility. It tracks the Goldman Sachs ActiveBeta U.S. Large Cap Equity Index, charging investors 9 bps in annual fees. The fund has amassed $2.3 billion in its asset base and has a Zacks ETF Rank of 2 or ‘Buy’ rating (read: 5 ETF Investing Mistakes You Must Avoid).
SPDR Russell 1000 Momentum Focus ETF (ONEO - Free Report)
With AUM of $478.1 million, this product targets the large cap securities with a combination of core factors (high value, high quality, and low size characteristics), with a focus factor comprising high momentum characteristics. It follows the Russell 1000 Momentum Focused Factor Index and charges an annual fee of 20 bps. The fund has a Zacks ETF Rank of 3 or ‘Hold’ rating.
Cambria Core Equity ETF (CCOR - Free Report)
This is an actively managed ETF providing exposure to high quality U.S. companies across all industries and sectors that have prospects for long-term returns due to their ability to grow earnings and increase dividends over time. It holds 59 securities in its basket and charges a high expense ratio of 1.05%. CCOR has garnered enough investors’ interest since its debut in late May and has accumulated $105.8 million in its asset base (read: 6 New Hot ETFs of First-Half 2017).
Stock Picks
Imperva Inc.
This California-based company is engaged in the development of protection software and services for business applications and databases. It has seen solid earnings estimate revision from a loss of $1.40 to a loss of 81 cents for this year over the past seven days with an expected earnings growth of 62.84%. The stock has a Zacks Rank #1 (Strong Buy) and Momentum Style Score of A. You can see the complete list of today’s Zacks #1 Rank stocks here
Lam Research Corporation (LRCX - Free Report)
This California-based company designs, manufactures, markets and services semiconductor processing equipment used in the fabrication of integrated circuits. It saw impressive earnings estimate revision of $1.44 over the past seven days for this fiscal year with an expected earnings growth of 25.51%. The stock has a Zacks Rank #1 and Momentum Style Score of A.
Edwards Lifesciences Corporation (EW - Free Report)
This California-based company provides products and technologies to treat late-stage cardiovascular disease. It saw solid earnings estimates revision of 26 cents for this year over the past seven days with an expected earnings growth of 30.72%. The stock has a Zacks Rank #1 and Momentum Style Score of A (read: Can Biotech ETFs Continue to Surge Higher?).
Kronos Worldwide Inc. (KRO - Free Report)
This Texas-based company is a global producer and marketer of value-added titanium dioxide pigments. It has seen solid earnings estimate revision of 13 cents for this year over the past seven days expects whopping earnings growth of 396.77%. The stock has a Zacks Rank #1 and Momentum Style Score of A.
Innoviva Inc. (INVA - Free Report)
This California-based company is focused on the development, commercialization and financial management of bio-pharmaceuticals. It saw solid earnings estimate revision of 9 cents for this year over the past seven days with massive expected earnings growth of 143.23%. The stock has a Zacks Rank #1 and Momentum Style Score of A.
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 >>