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Bet on Growth Investing Now: Top-Ranked ETFs & Stocks
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With the world’s two largest superpowers striking the long-awaited phase-one trade deal, the Wall Street, which is hitting record highs lately, is poised to surge even higher. Notably, the S&P 500 has gained nearly 26% so far in 2019 and is on track for its best annual performance in six years (read: Trade Deal Cut in Principle? Sector ETFs to Soar).
The uptrend will also be powered by the Fed’s accommodative interest-rate policy, holiday fervor and a resilient domestic economy. The U.S. economy is on a strong growth path with the unemployment rate hovering around the lowest level since 1969 and third-quarter GDP growth revised upwardly from 1.9% to 2.1%. The housing market is also clearly showing signs of a strong recovery as lower mortgage rates and slower home price growth are acting as catalysts. Easing of Brexit tensions have also added to the strength.
Given the bullishness, nothing seems a better strategy than growth. This is especially true, as growth stocks refer to high-quality stocks that are likely to witness revenue and earnings increase at a faster rate than the industry average. These stocks harness their momentum in earnings to create a positive bias in the market, resulting in rocketing share prices. As such, growth stocks are a momentum play and tend to outperform in a trending market (a market characterized by a prolonged uptrend).
However, it is worth noting that these funds offer exposure to stocks with growth characteristics that have comparatively higher P/B, P/S and P/E ratios and exhibit a higher degree of volatility when compared to value stocks.
Given this, we have highlighted five growth ETFs and stocks that have a top Zacks Rank #1 (Strong Buy), suggesting their outperformance. For stocks, we have added double-digit estimated earnings growth for the current fiscal year and a Growth Score of A as parameters.
This ETF follows the Russell 1000 Growth Index and holds 529 stocks in its basket. It has AUM of $48.6 billion and charges 19 bps in annual fees (read: A Look Back At S&P 500 Sector ETFs in 2019).
This fund offers exposure to S&P 500 companies that display the strongest growth characteristics and holds 298 stocks in its basket. It charges 4 bps in annual fees and has amassed $5.3 billion in its asset base (read: Bulls to Drive S&P 500 Higher in 2020: ETFs to Tap).
This company provides online auction and a wide range of remarketing services to process and sell salvage and clean title vehicles. With a market cap of $20.6 billion, it has an estimated earnings growth of 23.1% for the fiscal year (ending Jul 2020).
It is a provider of network security appliances and Unified Threat Management network security solutions to enterprises, service providers and government entities worldwide. The stock has a market cap of $18.1 billion and estimated earnings growth rate of 31% for this year.
Kirkland Lake Gold Ltd.
With AUM of $9 billion, this company is engaged in the acquisition, exploration, development, and operation of gold properties. It has an estimated earnings growth rate of 100% for this year (read: Gold to Shine in 2020: ETFs to Consider).
This is one of the largest craft brewers in the United States. Boston Beer produces beer, malt beverages, and cider products at company-owned breweries and under contract. With AUM of $4.4 billion, the company has an estimated earnings growth rate of 23.4% for this year.
This company is an installer and distributor of insulation products, catering to the construction industry primarily in the United States. It has a market cap of $3.6 billion and has an estimated earnings growth rate of 30.1% for this year.
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Bet on Growth Investing Now: Top-Ranked ETFs & Stocks
With the world’s two largest superpowers striking the long-awaited phase-one trade deal, the Wall Street, which is hitting record highs lately, is poised to surge even higher. Notably, the S&P 500 has gained nearly 26% so far in 2019 and is on track for its best annual performance in six years (read: Trade Deal Cut in Principle? Sector ETFs to Soar).
The uptrend will also be powered by the Fed’s accommodative interest-rate policy, holiday fervor and a resilient domestic economy. The U.S. economy is on a strong growth path with the unemployment rate hovering around the lowest level since 1969 and third-quarter GDP growth revised upwardly from 1.9% to 2.1%. The housing market is also clearly showing signs of a strong recovery as lower mortgage rates and slower home price growth are acting as catalysts. Easing of Brexit tensions have also added to the strength.
Given the bullishness, nothing seems a better strategy than growth. This is especially true, as growth stocks refer to high-quality stocks that are likely to witness revenue and earnings increase at a faster rate than the industry average. These stocks harness their momentum in earnings to create a positive bias in the market, resulting in rocketing share prices. As such, growth stocks are a momentum play and tend to outperform in a trending market (a market characterized by a prolonged uptrend).
However, it is worth noting that these funds offer exposure to stocks with growth characteristics that have comparatively higher P/B, P/S and P/E ratios and exhibit a higher degree of volatility when compared to value stocks.
Given this, we have highlighted five growth ETFs and stocks that have a top Zacks Rank #1 (Strong Buy), suggesting their outperformance. For stocks, we have added double-digit estimated earnings growth for the current fiscal year and a Growth Score of A as parameters.
iShares Russell 1000 Growth ETF (IWF - Free Report)
This ETF follows the Russell 1000 Growth Index and holds 529 stocks in its basket. It has AUM of $48.6 billion and charges 19 bps in annual fees (read: A Look Back At S&P 500 Sector ETFs in 2019).
Vanguard Growth ETF (VUG - Free Report)
With AUM of $45.9 billion, this fund follows the CRSP US Large Cap Growth Index, holding 280 stocks in its basket. It charges 4 bps in annual fees.
Vanguard Mega Cap Growth ETF (MGK - Free Report)
This ETF tracks the CRSP US Mega Cap Growth Index, holding 115 stocks in its basket. It charges 7 bps in annual fees and has AUM of $5 billion.
Vanguard Russell 1000 Growth ETF (VONG - Free Report)
This ETF tracks the Russell 1000 Growth Index, charging investors 12 bps in annual fees. It holds a basket of 531 stocks with AUM of $3.3 billion.
SPDR Portfolio S&P 500 Growth ETF (SPYG - Free Report)
This fund offers exposure to S&P 500 companies that display the strongest growth characteristics and holds 298 stocks in its basket. It charges 4 bps in annual fees and has amassed $5.3 billion in its asset base (read: Bulls to Drive S&P 500 Higher in 2020: ETFs to Tap).
Copart Inc. (CPRT - Free Report)
This company provides online auction and a wide range of remarketing services to process and sell salvage and clean title vehicles. With a market cap of $20.6 billion, it has an estimated earnings growth of 23.1% for the fiscal year (ending Jul 2020).
Fortinet Inc. (FTNT - Free Report)
It is a provider of network security appliances and Unified Threat Management network security solutions to enterprises, service providers and government entities worldwide. The stock has a market cap of $18.1 billion and estimated earnings growth rate of 31% for this year.
Kirkland Lake Gold Ltd.
With AUM of $9 billion, this company is engaged in the acquisition, exploration, development, and operation of gold properties. It has an estimated earnings growth rate of 100% for this year (read: Gold to Shine in 2020: ETFs to Consider).
The Boston Beer Company Inc. (SAM - Free Report)
This is one of the largest craft brewers in the United States. Boston Beer produces beer, malt beverages, and cider products at company-owned breweries and under contract. With AUM of $4.4 billion, the company has an estimated earnings growth rate of 23.4% for this year.
TopBuild Corp. (BLD - Free Report)
This company is an installer and distributor of insulation products, catering to the construction industry primarily in the United States. It has a market cap of $3.6 billion and has an estimated earnings growth rate of 30.1% for this year.
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 >>