5 Winning ETF Ideas For The Fourth Quarter

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The prospect of Fed tapering and inflationary fears have been acting as dampeners in the stock market in recent weeks. The Fed has indicated it will soon start rolling back on some of the monetary stimulus it provided during the pandemic crisis while inflation, which measures the increase in the cost of living over time, is running at 5.3% — the highest in nearly 13 years.

Concerns over accelerating coronavirus infections, signs of a slowdown in China, and the potential for high corporate tax rates are adding to the chaos.

However, the biggest vaccination drive, an expanded stimulus, a recovering economy, and the resumption of corporate earnings growth have been driving the rally this year. The recovering job market and reopening economies and businesses added to the strength. The combination of all the factors led to pent-up demand, resulting in a greater need for all types of products and services.

Given this, we have highlighted some investing ideas that could prove to be extremely beneficial for investors in the fourth quarter:

Make the Trending Energy Sector Your Friend

The energy sector has been the top performer this year buoyed by higher oil prices. U.S. oil price climbed to their highest since 2014 amid global supply concerns in crude, natural gas, and coal markets. Added to the oil price strength is growing fuel demand. Overall demand for fuel has rebounded to pre-pandemic levels. With new vaccination mandates to control the rising Delta variant of COVID-19, demand is poised to increase. Additionally, the energy crunch has sent natural gas prices skyrocketing, prompting power producers to switch to oil derivatives from gas to generate electricity.

While most of the ETFs are beneficiaries of this trend, First Trust ISE-Revere Natural Gas Index Fund (FCG - Free Reportand Invesco Dynamic Energy Exploration & Production ETF PXE more than doubled this year. The solid trend is likely to continue given that these have a Zacks ETF Rank #2 (Buy) or 3 (Hold).

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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 ...

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