As coronavirus fears deepened, the bull market has turned into a bear market in less than a month. This is especially true as the S&P 500 has been witnessing wild swings lately and is on track for its worst month since October 2008. The benchmark has tumbled 14.4% so far this month, and 21.7% so far this year. Notably, it is down 25.5% from its peak reached on Feb 19 (read: Has Wall Street's March Madness Peaked? ETFs to Tap).
In an effort to fight the economic fallout from the coronavirus pandemic, the White House and Federal Reserve unveiled massive stimulus measures. Trump administration has proposed an emergency stimulus package of $1 trillion, which includes direct payments to Americans, loans and help for small businesses. The move came after the Fed announced a surprise rate cut to near zero last weekend and will buy at least $500 billion in Treasury securities and at least $200 billion in mortgage-backed securities in the coming months to help ease a growing liquidity problem in financial markets.
The slew of stimulus measures failed to revive investors’ confidence in the economy and the stock market. According to S&P Global and a number of analysts, the coronavirus outbreak has plunged the world economy into a recession. Notably, Morgan Stanley predicts the global economy to slip into a recession triggered by the fast-spreading coronavirus (COVID-19) with growth dipping to 0.9% year-on-year in 2020, which will be deeper than 2001 (read: Short Small-Cap ETFs as U.S. May Face Technical Recession).
Amid the sluggish backdrop, the proxy version of the S&P 500 Index, SPDR S&P 500 ETF Trust (SPY) has tumbled 21.5% so far this year. Let’s take a closer look at the fundamentals of SPY:
Inside the SPY
The ETF holds 505 stocks in its basket with each security holding not more than 5.3%. This suggests a nice balance across each security and prevents heavy concentration. The fund is widely spread across sectors with information technology, healthcare, financials and communication services being the top four, with double-digit allocation each. It has AUM of $264.5 billion and charges 9 bps in fees per year from investors. The product trades in heavy volume of around 87.4 million shares a day on average, ensuring higher liquidity with a tight bid/ask spread, leading to lower trading costs for investors (see: all the large Cap Blend ETFs here).
SPY has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook. Though most stocks in the fund’s portfolio are in red from the year-to-date look, there are a few that are standing tall in the ongoing market turmoil. Below, we have highlighted five of them that are in green so far this year and has a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold):
Best-Performing Stocks of SPY
Regeneron Pharmaceuticals Inc. (REGN - Free Report) : The biopharmaceutical company is focused on the discovery, development and commercialization of treatments targeting serious medical conditions. It has gained 17.4% so far this year and has an estimated earnings growth rate of 18.3%. The stock has a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Clorox Company (CLX - Free Report) : It is engaged in the production, marketing and sale of consumer products in the United Sates and international markets. The stock climbed 13.8% in the same time frame and saw positive earnings estimate revision of 4 cents in a month for fiscal year (ending June 2020). The Clorox has a Zacks Rank #3.
Rollins Inc. (ROL - Free Report) : This Zacks #3 Ranked company provides pest and termite control services to residential and commercial customers. It has added 7.8% so far this year and has an estimated earnings growth rate of 8.2% for this year (read: Beat Virus With 2 Sector ETFs & Stocks That Survived 2008 Crisis).
The Kroger Co. (KR - Free Report) : This company operates in the thin-margin grocery industry, rising 7.3% in year to date. Having a Zacks Rank #3, it has an estimated earnings growth rate of 6.8% for the fiscal year ending January 2021.
SBA Communications Corporation (SBAC - Free Report) : This Zacks Rank #3 is a leading independent owner and operator of wireless communications infrastructure in the North, Central and South America. It has an estimated earnings growth rate of 10.8% for this year and is up 6.5% so far this year.
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