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Dow Tops 24,000: 5 Best Stocks Powering ETF

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Bourses in the United States hit yet another high to end November buoyed by rising hopes of the Senate passing a bill aimed at overhauling the U.S. tax code, this week. In particular, the Dow Jones Industrial Average is in the limelight as it topped 24,000 for the first time and logged in the first eight-month winning streak since 1995.

This represents the fifth 1,000-point milestone for the blue-chip index this year. The index hit the 20,000 mark on Jan 25, 21,000 on Mar 1, 22,000 on Aug 1 and 23,000 on Oct 17. It rallied nearly 6,000 points since Donald Trump's election win last year, notching 80 record highs since then, and suggesting strong complacency in the stock market. The benchmark has gained nearly 22.8% this year.

Investors are highly optimistic about the markets this year thanks to the dual tailwinds of strong corporate earnings and solid global economic growth with most major countries growing simultaneously for the first time in years. The U.S. economy is booming with back-to-back quarters of at least unrealistic 3% growth, 17-year high consumer confidence and the lowest level of unemployment of 4.1% since December 2000.

Given this, SPDR Dow Jones Industrial Average ETF DIA tracking the index has returned an exceptional 25.4% so far this year. This is much higher than the gain of 19.2% for the large cap ETF, SPY (read: S&P 500 Tops 2600: ETFs & Stocks That Deserve Special Thanks).

Let’s take a closer look at the fundamentals of DIA and its performance.

DIA in Focus

DIA holds 30 stocks in its basket with each security holding no more than 7.74% share. The fund is widely spread across sectors with industrials, information technology and financials being the top three. It charges 17 bps in fees per year from investors and trades in heavy volume of more than 2.4 million shares a day on average.

The fund has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook. Though most of the stocks in the fund’s portfolio have delivered impressive returns, a few were the real stars gaining more than 40% (read: Dow Rallies: More Upside for ETFs?).

Below, we have highlighted the five best-performing stocks in the ETF with their respective positions in the fund’s basket:

Best Performing Stocks of DIA

Boeing Company BA: The stock has surged nearly 73% this year and carries a Zacks Rank #3 (Hold) with a VGM Score of B. The company has seen positive earnings estimate revision of 14 cents for this year over the past three months, with an expected earnings growth rate of 30.89% compared with the industry average of 18.82%. The stock has a solid Zacks Industry Rank in the top 30% and accounts for the top position in DIA with 7.74% share.

Caterpillar Inc. (CAT - Free Report) : This stock makes up for the tenth spot in the fund’s basket with 4% allocation and has delivered solid returns of 49% this year. The stock has seen solid earnings estimate revision of $1.18 per share over the past three months for this year, reflecting year-over-year earnings growth of 87.02%, much higher than the industry’s average growth of 70.18%. Further, Caterpillar has a Zacks Rank #1 (Strong Buy) and a VGM Score of D. It boasts a robust Zacks Industry Rank in the top 5%. You can seethe complete list of today’s Zacks #1 Rank stocks here.

Apple Inc. AAPL: The stock has gained about 46.3% in the year-to-date time frame. It has seen positive earnings estimate revision of 44 cents over the past three months for this fiscal year with an expected growth rate of 21.4% compared with the industry’s average decline of 12.16%. Apple currently has a Zacks Rank #3 and a VGM Score of B. The stock has an ugly Zacks Industry Rank in the bottom 9% and occupies the seventh position in DIA with 4.9% exposure (read: Tech ETFs & Stocks Tumble: Is it a Solid Entry Point?).

Wal-Mart WMT: This stock has surged 41.1% so far this year. It has 2.8% exposure in the fund’s basket and has seen positive earnings estimate revision of four cents over the past three months for this year with an expected growth of 2.41% compared with the industry’s average decline of 2.36%. Wal-Mart has a Zacks Rank #2 (Buy) and a VGM Score of B. It belongs to solid Zacks Industry Rank in the top 45%.

Visa Inc. V: This stock accounts for 3.2% of assets in the fund’s basket. It has gained 40.8% in the year-to-date time frame and has seen positive earnings estimate revision of seven cents over the past three months for this fiscal year. Its earnings are expected to grow 16.51%, well above the industry’s average growth of 14.92%. Visa has a Zacks Rank #2 and a VGM Score of C. It belongs a robust Zacks Industry Rank in the top 42%.

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