Image: Bigstock

The S&P 500 Index has been hitting a series of record highs, braving a myriad of hurdles like rising cases of the Delta variant of COVID-19, inflation concerns, and a slowdown in China’s economy. Notably, the benchmark logged in its 49th record closes of the year and has doubled from its pandemic closing low on Mar 23, 2020. This marks the fastest bull-market doubling since World War II, according to CNBC.

The latest rally is being powered by strong corporate profit growth and new infrastructure package. This is especially true as the Q2 earnings picture has been one of all-round strength, with aggregate total quarterly earnings on track to reach a new all-time record and impressive momentum on the revenue side. Meanwhile, the Senate last week had passed a $1 trillion infrastructure bill, which would be one of the most substantial federal investment in roads, bridges and rails in decades. The bill, which includes $550 billion in new spending on roads, bridges, and Internet access, will now head to the House of Representatives.

Additionally, the U.S. economy returned to the pre-pandemic level with GDP rising 6.5% annually in the second quarter, indicating a sustained recovery from the pandemic recession. Rapid vaccinations, business reopenings and trillions of dollars in government stimulus spending are spurring consumer spending and resulting in robust growth.

Driven by these factors, Wall Street analysts have become more bullish on stocks in almost two decades with about 56% of all recommendations on S&P 500 firms listed as buys, the highest since 2002.

Against such a backdrop, the proxy version, SPDR S&P 500 ETF Trust (SPY - Free Report) , which tracks the S&P 500 Index, has climbed 20.3% so far this year. Let’s take a closer look at the fundamentals of SPY and its best stocks:

Inside the SPY

The ETF holds 505 stocks in its basket with each accounting for no more than 6.2% of the assets. This suggests a nice balance across each security and prevents heavy concentration. The fund is widely spread across sectors with information technology, healthcare, consumer discretionary, financials, and communication services accounting for a double-digit allocation each. It has AUM of $388.8 billion and charges 9 bps in fees per year. The product trades in heavy volume of around 54.3 million shares a day on average, ensuring higher liquidity with a tight bid/ask spread, leading to lower trading costs for investors.

SPY has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook. Though most stocks in the fund’s portfolio have been in deeper green so far this year, we have highlighted five stocks that led the rally and have a Zacks Rank #1 (Strong Buy), 2 or 3 (Hold):

Best-Performing Stocks of SPY

Moderna Inc. (MRNA - Free Report): It is a clinical-stage pharmaceutical company, primarily focused on discovering and developing messenger RNA-based therapies. The stock has skyrocketed about 258% this year and has an expected earnings growth rate of more than 1000%. It currently has a Zacks Rank #2 and a VGM Score of A.

Nucor Corporation (NUE - Free Report): This company is a leading producer of structural steel, steel bars, steel joists, steel deck, and cold-finished bars in the United States. It has jumped 133.6% so far this year and has an estimated earnings growth rate of 489.2% for this year. Nucor Corporation has a Zacks Rank #1 and VGM Score of B.

Fortinet Inc. (FTNT - Free Report): This company is a provider of network security appliances and Unified Threat Management network security solutions to enterprises, service providers, and government entities worldwide. It has soared 103.6% so far this year and has an estimated earnings growth rate of 15.5% for this year. The stock has a Zacks Rank #3 and a Growth Score of A.

Gartner Inc. (IT - Free Report): It is the world's leading research and advisory company. The stock has climbed 92.7% so far this year and has an estimated earnings growth rate of 60.1% for this year. It has a Zacks Rank #1 and a Growth Score of A.

Generac Holdings Inc. (GNRC - Free Report): It is a leading manufacturer of power generation equipment, energy storage systems and other power products including portable, residential, commercial, and industrial generators. The stock has surged 80.4% and has estimated earnings growth of 56.1% for this year. It has a Zacks Rank #3 and a Growth Score of A.