After three consecutive weekly losses, Wall Street has rebounded to start this week on rising hopes of monetary stimulus globally as well as renewed trade optimism. This is especially true as major central banks across the globe are taking steps to prop up the slowing economic growth that has eased global recession concerns and in turn given a boost to investor confidence once again.
Chinese central bank unveiled a key interest rate reform to lower borrowing costs for companies while the German government is ready to potentially free up 50 billion euros ($82 billion) of extra spending. The European Central Bank is expected to cut rates in September and resume a bond-buying program while the Federal Reserve might signal further rate cuts this year. In the rate cut stampede, Mexico was the latest to cut interest rates last week.
In the latest trade development, Washington extended a 90-day temporary license allowing China’s Huawei Technologies to continue doing business with U.S. firms (read: Sino-US Trade Tension Softens: ETFs in Focus).
Given the rebounding fundamentals, investors should take advantage of the beaten down prices. For them, we have highlighted five solid picks from both the ETF and the stock worlds that were in red over the past month but have a solid upside potential. All these have a Zacks Rank #1 (Strong Buy) or 2 (Buy).
SPDR S&P Internet ETF (XWEB - Free Report) – Down 11.1%
This product targets the Internet corner of the broad tech space and follows the S&P Internet Select Industry Index. It charges 35 bps in annual fees and trades in a volume of 6,000 shares. With AUM of $27.6 million, the fund holds 44 stocks in its basket and carries a Zacks ETF Rank #2.
iShares U.S. Telecommunications ETF (IYZ - Free Report) – Down 8.4%
This fund follows the Dow Jones U.S. Select Telecommunications Index and offers exposure to 42 American companies that provide telephone and Internet products, services and technologies. It has AUM of $432.9 million and trades in average daily volumes of 489,000 shares. It charges 42 bps in annual fees and has a Zacks ETF Rank #2 with a Medium risk outlook (read: Telecom ETFs in Focus on Mixed Q2 Earnings Results).
First Trust Materials AlphaDEX Fund (FXZ - Free Report) — Down 8.2%
This product targets the broad materials sector and follows the StrataQuant Materials Index. It holds 50 stocks in its basket with commodity chemicals taking the largest share at 20.1% of the portfolio while non-paper containers & packaging, steel, and construction supplies & fixtures round off the next spots. The fund has accumulated $123.6 million in its asset base and trades in volumes of 47,000 shares a day on average. It charges 64 bps in annual fees and has a Zacks ETF Rank #2 with a Medium risk outlook.
First Trust Consumer Discretionary AlphaDEX Fund (FXD - Free Report) — Down 7.9%
This fund tracks the StrataQuant Consumer Discretionary Index, which employs the AlphaDEX stock selection methodology to select stocks from the Russell 1000 Index. This approach results in a basket of 121 stocks that are well spread out across industries with other specialty retailers, hotels & entertainment services, automobiles & auto parts, media & publishing, and diversified retail and accounting for a double-digit exposure each. FXD has AUM of $336.4 million and charges a higher 64 bps in annual fees. It trades in average daily volume of 70,000 shares and has a Zacks ETF Rank # 2 with a Medium risk outlook.
Invesco S&P 500 Enhanced Value ETF (SPVU - Free Report) — Down 7.5%
This fund follows the S&P 500 Enhanced Value Index, which measures the performance of stocks in the S&P 500 Index that have the highest value score. It holds 99 stocks in its basket with financials as the top sector making up for 39.1% followed by 12.1% for consumer discretionary. The ETF has accumulated $57.6 million in AUM while trades in light average daily volume of 11,000 shares. It charges 13 bps in annual fees and has a Zacks ETF Rank #2 with a Medium risk outlook (read: A Spread of Top-Ranked Value ETFs for the Current Market).
Clear Channel Outdoor Holdings Inc. (CCO - Free Report) — Down 47.2%
This is a global leader in outdoor advertising displays in countries across continents. It saw positive earnings estimate revision of 10 cents for this year over the past month and has an expected growth rate of 13.79%. With a market cap of $1 billion, the stock has a Zacks Rank #2 and a top VGM Score of A.
Office Depot Inc. (ODP - Free Report) — Down 27.6%
With a market cap of $786.8 million, it provides business services and supplies, products and technology solutions. The stock saw positive earnings estimate revision of a couple of cents for this year over the past 30 days with an expected growth rate of 5.71%. It has a Zacks Rank of 2 and an impressive VGM Score of A.
Meritor Inc. (MTOR - Free Report) — Down 22.9%
It designs, develops, manufactures, markets, distributes, sells, services and supports integrated systems, modules and components to original equipment manufacturers (OEMs) and the aftermarket for the commercial vehicle, transportation and industrial sectors. The stock witnessed positive earnings estimate revision of 17 cents for the fiscal (ending Sep 2019) over the past month with an expected growth rate of 22.77%. With a market cap of $1.5 billion, the stock has a Zacks Rank #2 and a solid VGM Score of A (read: Fed Cuts Rate: Sector ETFs & Stocks Set to Soar).
China Southern Airlines Company Limited (ZNH - Free Report) — Down 15.9%
With a market cap of $7.1 billion, it provides airlines transportation services in the People's Republic of China and internationally. The stock saw solid earnings estimate of 73 cents for this year over the past month with an expected growth rate of 145.5%. China Southern Airlines has a Zacks Rank # 1 and a solid VGM Score of B. You can see the complete list of today’s Zacks #1 Rank stocks here.
Ameriprise Financial Inc. (AMP - Free Report) — Down 15.8%
It provides various financial products and services to individual and institutional clients in the United States and internationally. The stock saw positive earnings estimate revision of 16 cents for this year over the past 30 days, with the projected growth rate being 7.5%. With a market cap of $16.5 billion, this is a Zacks #2 Ranked stock with a VGM Score of A.
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