We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
The fast spreading coronavirus outbreak has created panic across the globe and has led to bloodbath in the stock market. This is especially true as fears of the pandemic wiped out more than $5 trillion from the global stock market last week, representing the steepest slump in more than a decade.
The brutal plunge has led the central banks around the world to take measures to counter economic weakness. The Bank of Japan would provide “ample” liquidity to the country’s financial markets through short-term loans and asset purchases and the Bank of England said it would take necessary steps to fight the economic fallout of coronavirus. The People's Bank of China (PBOC) has instructed banks to help firms struggling with repayments by extending loans and not penalizing them if they are late with payments (read: Is it the Right Time to Invest in Beaten-Down Japan ETFs?).
The Federal Reserve signaled its willingness to cut interest rates to support the economy last week. Per the latest CME FedWatch Tool, there is a 100% chance that the Fed will slash rates in March while the fed funds futures market predicts more than 70% chance of a rate cut. Goldman Sachs expects the Fed to reduce interest rate by 75 basis points (bps) between March and June. Bank of America sees a 50 bps cut at the Fed’s March meeting.
Meanwhile, Australia’s government is also considering targeted stimulus for sectors of the economy most severely impacted by the coronavirus outbreak.
Given the strong widespread expectations of easing of global monetary policy, investors should take advantage of the beaten down prices. We have highlighted five ETFs from different sectors that have been selling at a bargain price. Investors could definitely look at these products for outperformance in the coming weeks when the market resumes its uptrend.
How to Find Bargain ETFs?
Using our database, first we selected the ETFs with a Zacks Rank #1 (Strong Buy), or 2 (Buy). This is because these ranks suggest strengthening fundamentals and superior weighting methodologies that could allow them to lead higher than their cousins in an uptrend market. Then we narrowed down the list to funds having a lower P/E ratio than 19.75 for the broad market fund (SPY - Free Report) .
Here are the five ETFs that are currently undervalued and could generate solid returns when the market rebounds.
This fund follows the Financial Select Sector Index and provides exposure to companies in the diversified financial services, insurance, banks, capital markets, mortgage real estate investment trusts, consumer finance, and thrifts and mortgage finance industries (read: Follow Warren Buffett With These ETF Strategies).
This ETF offers exposure to U.S. companies that manufacture residential homes by tracking the Dow Jones U.S. Select Home Construction Index (read: Yields at Record Lows: 4 Sector ETFs to Buy).
This fund provides exposure to the technology hardware segment of the broad technology market. It follows the S&P Technology Hardware Select Industry Index.
Image: Shutterstock
5 Top-Ranked Sector ETFs to Buy at Bargain Price
The fast spreading coronavirus outbreak has created panic across the globe and has led to bloodbath in the stock market. This is especially true as fears of the pandemic wiped out more than $5 trillion from the global stock market last week, representing the steepest slump in more than a decade.
The brutal plunge has led the central banks around the world to take measures to counter economic weakness. The Bank of Japan would provide “ample” liquidity to the country’s financial markets through short-term loans and asset purchases and the Bank of England said it would take necessary steps to fight the economic fallout of coronavirus. The People's Bank of China (PBOC) has instructed banks to help firms struggling with repayments by extending loans and not penalizing them if they are late with payments (read: Is it the Right Time to Invest in Beaten-Down Japan ETFs?).
The Federal Reserve signaled its willingness to cut interest rates to support the economy last week. Per the latest CME FedWatch Tool, there is a 100% chance that the Fed will slash rates in March while the fed funds futures market predicts more than 70% chance of a rate cut. Goldman Sachs expects the Fed to reduce interest rate by 75 basis points (bps) between March and June. Bank of America sees a 50 bps cut at the Fed’s March meeting.
Meanwhile, Australia’s government is also considering targeted stimulus for sectors of the economy most severely impacted by the coronavirus outbreak.
Given the strong widespread expectations of easing of global monetary policy, investors should take advantage of the beaten down prices. We have highlighted five ETFs from different sectors that have been selling at a bargain price. Investors could definitely look at these products for outperformance in the coming weeks when the market resumes its uptrend.
How to Find Bargain ETFs?
Using our database, first we selected the ETFs with a Zacks Rank #1 (Strong Buy), or 2 (Buy). This is because these ranks suggest strengthening fundamentals and superior weighting methodologies that could allow them to lead higher than their cousins in an uptrend market. Then we narrowed down the list to funds having a lower P/E ratio than 19.75 for the broad market fund (SPY - Free Report) .
Here are the five ETFs that are currently undervalued and could generate solid returns when the market rebounds.
Financial Select Sector SPDR Fund (XLF - Free Report)
This fund follows the Financial Select Sector Index and provides exposure to companies in the diversified financial services, insurance, banks, capital markets, mortgage real estate investment trusts, consumer finance, and thrifts and mortgage finance industries (read: Follow Warren Buffett With These ETF Strategies).
Zacks ETF Rank: #2
P/E Ratio: 11.84
Expense Ratio: 0.13%
Dividend Yield: 2.16%
SPDR S&P Retail ETF (XRT - Free Report)
This fund targets the retail segment of the broad market by tracking the S&P Retail Select Industry Index.
Zacks ETF Rank: #2
P/E Ratio: 12.35
Expense Ratio: 0.35%
Dividend Yield: 1.79%
iShares U.S. Home Construction ETF (ITB - Free Report)
This ETF offers exposure to U.S. companies that manufacture residential homes by tracking the Dow Jones U.S. Select Home Construction Index (read: Yields at Record Lows: 4 Sector ETFs to Buy).
Zacks ETF Rank: #2
P/E Ratio: 14.27
Expense Ratio: 0.42%
Dividend Yield: 0.51%
Health Care Select Sector SPDR Fund (XLV - Free Report)
This product targets the broad healthcare sector and follows the Health Care Select Sector Index (read: Looking to Buy the Dip? Play These Top-Ranked ETFs).
Zacks ETF Rank: #2
P/E Ratio: 14.90
Expense Ratio: 0.13%
Dividend Yield: 2.38%
SPDR S&P Technology Hardware ETF
This fund provides exposure to the technology hardware segment of the broad technology market. It follows the S&P Technology Hardware Select Industry Index.
Zacks ETF Rank: #2
P/E Ratio: 15.51
Expense Ratio: 0.35%
Dividend Yield: 0.78%
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 >>