4 Sector ETFs & Stocks To Bet On Ahead Of Q3 Earnings

Third-quarter earnings will officially kick-start next week with a few major banks set to report results. Like the first half, the earnings picture looks soft this time, thanks to tough comparisons, moderating economic growth and the continuing trade dispute.

The S&P 500’s earnings are expected to decline 4.7% year over year despite 4.3% higher revenues. This would follow 0.4% growth in the second quarter and a flat showing in the first quarter. Earnings growth is expected to be negative for 11 of the 16 Zacks sectors, with energy and basic materials being the biggest drags.

Given the dismal picture, investors could place their bet on sectors that are expected to post earnings growth. Business Services is expected to record strong earnings growth of 7%, followed by transportation (6%), utilities (3.4%), construction (1.6%) and financials (1.3%).

Given this, we have highlighted one ETF and one stock from some of these sectors that could make great plays as the earnings season unfolds. These ETFs and stocks have a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). For stocks, we have added the extra criteria of a VGM Score of B or better and a positive Earnings ESP. Stocks with a Zacks Rank #3 or better and a positive ESP have 70% chance of beating estimates. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

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U.S. Global Jets ETF (JETS - Free Report): This fund provides exposure to the global airline industry, including airline operators and manufacturers from all over the world, by tracking the U.S. Global Jets Index. In total, the product holds 34 securities that are heavily concentrated on the top four firms. The fund has gathered $48.5 million in its asset base while seeing a moderate trading volume of nearly 27,000 shares a day. It charges investors 60 basis points (bps) in annual fees and has a Zacks ETF Rank #3 with a High risk outlook.

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Disclosure: Zacks.com contains statements and statistics that have been obtained from sources believed to be reliable but are not guaranteed as to accuracy or completeness. References to any specific ...

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