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The Zacks Analyst Blog Highlights: Select Sector SPDR Technology, Vanguard Small-Cap Growth, iShares MSCI ACWI, EventShares U.S. Tax Reform and Vanguard Value
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For Immediate Release
Chicago, IL – Jan 29, 2018 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Select Sector SPDR Technology (XLK - Free Report) ), Vanguard Small-Cap Growth (VBK - Free Report) ), iShares MSCI ACWI (ACWI - Free Report) ), EventShares U.S. Tax Reform ) and Vanguard Value (VTV - Free Report) .
The financial world is seeing its hottest streak with the best start in many years, fueled by skyrocketing U.S. markets. The surge came despite global trade fears, political instability in Washington and geopolitical tensions. The euphoria surrounding the new U.S. tax legislation, robust corporate earnings and optimism on global growth are acting as the key catalysts.
A massive $1.5-trillion tax cut will create an economic surge, boosting job growth and reflation trade. It will further accelerate earnings, leading to increased dividend and buyback activities. Additionally, the tax repatriation will allow companies to bring offshore cash back home, paving the way for increased mergers and acquisitions. A combination of other factors like rise in oil prices, a weak dollar and rounds of upbeat global economic data also bolstered the appetite for riskier assets (read: 8 Power-Packed ETFs for 2018).
Further, rising rates in the United States as well as the end of cheap money era internationally is boosting investors’ confidence in strengthening economies, thereby leading to further growth in the stock market.
Given this, we have highlighted some investing ideas that could prove extremely beneficial for investors this year in the bullish market:
Make Trending Sectors Your Friend
Technology and financials have been at the heart of the rally this year. Technology stocks will continue to benefit from encouraging industry fundamentals and Trump's repatriation policy. Per Moody’s, the top five U.S. hoarders are from the technology sector, namely Apple, Microsoft, Cisco, Alphabet and Oracle, which hold 88% of their money overseas. On the other hand, financial stocks will enjoy the dual tailwinds of lower taxes and rising rates. Tax reform may result in a further rise in interest rates that would expand net margins and bolster banks’ profits (read: Trump's First Year in Office: 5 Must-See ETF Charts).
While the two sectors are crowded with a number of top-ranked ETFs, the most popular are State Street funds — Select Sector SPDR Technology ETF -- a Zacks ETF Rank #2 (Buy).
Bet on U.S. Small Caps
The corporate tax cut from 35% to 21% is a big boon to small caps as these pay higher taxes with a median effective tax rate of 31.9% compared with 28% for the S&P 500 companies and 23.8% for the blue chip Dow Jones stocks. Additionally, a strengthening economy will provide further boost to these pint-sized stocks that are closely tied to the U.S. economy and generate most of their revenues from the domestic market.
While there are several options in this space that would gain from the tax cut, a bunch of Zacks Rank #1 (Strong Buy) ETFs like Vanguard Small-Cap Growth ETF could be excellent picks (read: Best Small-Cap ETFs of 2017 with Huge Upside in 2018).
Go Global
Although the U.S. stock market has been skyrocketing, international investing looks tempting given cheap valuations and threats of political instability in the United States. Additionally, the monetary policy tightening outside the United States, strong growth in the Euro zone, improving Japanese economy and remarkable growth in emerging markets are adding to the strength.
As such, investors should go global to take advantage of a surge in both domestic and international markets. This can easily be done through ultra-popular funds like iShares MSCI ACWI ETF. These have a Zacks ETF Rank #3 (Hold).
Focus on Pure Trump Play
The tax reform has boosted the confidence in Trump’s ability to deliver on his other promises this year. Now, Trump will move to other campaign promises like dismantling the Dodd-Frank Act as well as boosting military and infrastructure spending. Trump has promised to spend a trillion dollar on rebuilding highways, bridges, hospital and other U.S. infrastructure during his campaign. He has also promised to revive U.S. manufacturing and rehabilitate the country’s aging infrastructure.
Given this, investors should bet on Trump trade and Republicans with the new ETFs, namely EventShares U.S. Tax Reform ETF.
Add Value to Your Portfolio
Tax reform will prompt investors to rotate out of growth and into value stocks as these have strong fundamentals — earnings, dividends, book value and cash flow — that trade below their intrinsic value and are undervalued by the market. Additionally, geopolitical tensions, Trump’s protectionist stance, and mid-term elections would raise the appeal for value investing.
Value stocks have the potential to deliver higher returns and exhibit lower volatility compared with growth and blend counterparts. In fact, these stocks outperform the growth ones across all asset classes when considered on a long-term investment horizon and are less susceptible to trending markets. Some of the popular ones in this space likeVanguard Value ETF are worth a look. It has a Zacks ETF Rank #3 (read: Value Investing Set to Shine on Tax Reform: 5 Cheap ETFs).
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 >>
Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.
Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.
Strong Stocks that Should Be in the News
Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has nearly tripled the market from 1988 through 2015. Its average gain has been a stellar +26% per year.See these high-potential stocks free >>.
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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The Zacks Analyst Blog Highlights: Select Sector SPDR Technology, Vanguard Small-Cap Growth, iShares MSCI ACWI, EventShares U.S. Tax Reform and Vanguard Value
For Immediate Release
Chicago, IL – Jan 29, 2018 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Select Sector SPDR Technology (XLK - Free Report) ), Vanguard Small-Cap Growth (VBK - Free Report) ), iShares MSCI ACWI (ACWI - Free Report) ), EventShares U.S. Tax Reform ) and Vanguard Value (VTV - Free Report) .
Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.
Here are highlights from Friday’s Analyst Blog:
Amazing ETF Strategies for Skyrocketing Markets
The financial world is seeing its hottest streak with the best start in many years, fueled by skyrocketing U.S. markets. The surge came despite global trade fears, political instability in Washington and geopolitical tensions. The euphoria surrounding the new U.S. tax legislation, robust corporate earnings and optimism on global growth are acting as the key catalysts.
A massive $1.5-trillion tax cut will create an economic surge, boosting job growth and reflation trade. It will further accelerate earnings, leading to increased dividend and buyback activities. Additionally, the tax repatriation will allow companies to bring offshore cash back home, paving the way for increased mergers and acquisitions. A combination of other factors like rise in oil prices, a weak dollar and rounds of upbeat global economic data also bolstered the appetite for riskier assets (read: 8 Power-Packed ETFs for 2018).
Further, rising rates in the United States as well as the end of cheap money era internationally is boosting investors’ confidence in strengthening economies, thereby leading to further growth in the stock market.
Given this, we have highlighted some investing ideas that could prove extremely beneficial for investors this year in the bullish market:
Make Trending Sectors Your Friend
Technology and financials have been at the heart of the rally this year. Technology stocks will continue to benefit from encouraging industry fundamentals and Trump's repatriation policy. Per Moody’s, the top five U.S. hoarders are from the technology sector, namely Apple, Microsoft, Cisco, Alphabet and Oracle, which hold 88% of their money overseas. On the other hand, financial stocks will enjoy the dual tailwinds of lower taxes and rising rates. Tax reform may result in a further rise in interest rates that would expand net margins and bolster banks’ profits (read: Trump's First Year in Office: 5 Must-See ETF Charts).
While the two sectors are crowded with a number of top-ranked ETFs, the most popular are State Street funds — Select Sector SPDR Technology ETF -- a Zacks ETF Rank #2 (Buy).
Bet on U.S. Small Caps
The corporate tax cut from 35% to 21% is a big boon to small caps as these pay higher taxes with a median effective tax rate of 31.9% compared with 28% for the S&P 500 companies and 23.8% for the blue chip Dow Jones stocks. Additionally, a strengthening economy will provide further boost to these pint-sized stocks that are closely tied to the U.S. economy and generate most of their revenues from the domestic market.
While there are several options in this space that would gain from the tax cut, a bunch of Zacks Rank #1 (Strong Buy) ETFs like Vanguard Small-Cap Growth ETF could be excellent picks (read: Best Small-Cap ETFs of 2017 with Huge Upside in 2018).
Go Global
Although the U.S. stock market has been skyrocketing, international investing looks tempting given cheap valuations and threats of political instability in the United States. Additionally, the monetary policy tightening outside the United States, strong growth in the Euro zone, improving Japanese economy and remarkable growth in emerging markets are adding to the strength.
As such, investors should go global to take advantage of a surge in both domestic and international markets. This can easily be done through ultra-popular funds like iShares MSCI ACWI ETF. These have a Zacks ETF Rank #3 (Hold).
Focus on Pure Trump Play
The tax reform has boosted the confidence in Trump’s ability to deliver on his other promises this year. Now, Trump will move to other campaign promises like dismantling the Dodd-Frank Act as well as boosting military and infrastructure spending. Trump has promised to spend a trillion dollar on rebuilding highways, bridges, hospital and other U.S. infrastructure during his campaign. He has also promised to revive U.S. manufacturing and rehabilitate the country’s aging infrastructure.
Given this, investors should bet on Trump trade and Republicans with the new ETFs, namely EventShares U.S. Tax Reform ETF.
Add Value to Your Portfolio
Tax reform will prompt investors to rotate out of growth and into value stocks as these have strong fundamentals — earnings, dividends, book value and cash flow — that trade below their intrinsic value and are undervalued by the market. Additionally, geopolitical tensions, Trump’s protectionist stance, and mid-term elections would raise the appeal for value investing.
Value stocks have the potential to deliver higher returns and exhibit lower volatility compared with growth and blend counterparts. In fact, these stocks outperform the growth ones across all asset classes when considered on a long-term investment horizon and are less susceptible to trending markets. Some of the popular ones in this space likeVanguard Value ETF are worth a look. It has a Zacks ETF Rank #3 (read: Value Investing Set to Shine on Tax Reform: 5 Cheap ETFs).
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 >>
Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1 Stock of the Day pick for free.
About Zacks Equity Research
Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.
Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.
Strong Stocks that Should Be in the News
Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has nearly tripled the market from 1988 through 2015. Its average gain has been a stellar +26% per year.See these high-potential stocks free >>.
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.