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Q3 Earnings Effect: 5 Hottest ETF Charts

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The Q3 earnings season has reached its tail end, with 90.3% of the S&P 500 index market capitalization that has reported so far up 6.8% on 6.2% revenue growth. The beat is impressive with 73.4% surpassing EPS estimates and 67% coming ahead of top-line expectations.  

Revenue growth represents acceleration and is widespread. However, the auto and utility sector posted a revenue decline, and an earnings growth rate is lower than the historical periods. Additionally, the proportion of companies beating earnings and revenue estimates are also somewhat on the downside (read: Tap Q3 Growth with Revenue-Weighted ETFs).

Given this, several equity ETFs have impressed with their performances and have generated handsome returns over the trailing one month. While there are winners in many corners of the space, below are five ETFs that buoyed up on robust earnings results. In addition, we have given a chart for their one-month performance and compared them with the broad market fund SPY and the broad sector.

Guggenheim Solar ETF TAN

This ETF offers exposure to the global companies involved in the solar power industry. It has gained 12.3% in the past month on strong Q2 earnings. In particular, upbeat earnings from First Solar FSLR and SolarEdge Technologies SEDG led to a strong rally in the ETF. The two stocks make up for a combined 19.1% share in the basket. TAN has a Zacks ETF Rank #3 (Hold) with a High risk outlook. Overall, the solar industry came up with a 47% earnings beat in Q3 and has returned 25.3% in a month (read: 5 Top-Performing Stocks of the Top ETF of October).

First Trust Nasdaq Semiconductor ETF FTXL

This fund offers exposure to the most-liquid U.S. semiconductor securities based on volatility, value and growth. The string of better-than-expected results from the industry players such as Micron Technology MU, Intel INTC, Lam Research LRCX, Texas Instruments TXN and NVIDIA Corporation NVDA instilled optimism in the space, pushing the stocks to multi-year highs. These five stocks account for 38.5% share in the basket. Further, an astronomical surge in cryptocurrencies such as Bitcoin and Ethereum, and technological innovation have added to the strength. FTXL has gained 8.1% in one month and carries a Zacks ETF Rank #2 (Buy) (read: Best ETFs & Stocks from October's Top Performing Sector).

iShares U.S. Home Construction ETF ITB

ITB provides a pure play to home construction stocks and holds 47 stocks in its basket. Total earnings for the construction sector are up 11% on 13.8% higher revenues, with 81.8% beating EPS estimates and 63.6% beating on revenues. In fact, it has been the best performing sector in terms of price performance in response to earnings, gaining an average of 1.8%. As a result, ITB has surged 7.4% in a month and has a Zacks ETF Rank #2 with a High risk outlook (read: Best Sector ETFs & Stocks from Trump's First-Year Win).

SPDR S&P Oil & Gas Exploration & Production ETF XOP

This fund offers exposure to the oil and gas exploration and production segment of the broad energy sector, which has been the star performer this earnings season. While many energy ETFs have performed exceptionally well, XOP stole the show gaining 6.8% in a month. This is primarily thanks to the dual tailwinds of upbeat earnings report and the jump in oil prices. Overall, the Exploration and Production industry came up with a 53% earnings beat in Q3. The fund has a Zacks ETF Rank of #4 (Sell) with a High risk outlook (read: Oil Price Scales 2-Yr High: 5 Best Energy ETFs & Stocks).

iShares Dow Jones US Technology ETF IYW

This ETF offers broad exposure to technology stocks and is up 6.3% in a month. The strength is driven by blockbuster results from Alphabet GOOGL, Intel INTC, Microsoft MSFT, Facebook (FB - Free Report) and Apple AAPL. These firms account for nearly half of the portfolio. Notably, total earnings from 86.4% of the sector’s total market capitalization reported so far are up 23.3% on 10.9% higher revenues, with 81.3% of the companies beating on earnings and 87.5% exceeding top-line estimates. The sector saw solid positive earnings estimate revision following earnings and has a solid Zacks Rank in the top 31%. IYW has a Zacks ETF Rank #1 (Strong Buy) with a Medium risk outlook (read: 7 Top-Ranked Tech ETFs on Unstoppable Rally).

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