Like the first three quarters of 2019, the earnings picture looks weak for Q4 thanks to tough comparisons and moderating economic growth.

The S&P 500’s earnings are expected to decline 3.7% year over year despite 3.4% higher revenues. This would follow 1.7% deceleration in the third quarter, 0.6% growth in the second quarter and a flat showing in the first quarter. Earnings growth is expected to be negative for 10 of the 16 Zacks sectors, autos and energy being the biggest drags with expected earnings decline of 56.5% and 42.1%, respectively.

Given this dismal picture, investors could place their bet on sectors that are expected to post earnings growth. Utilities is expected to record strong earnings growth of 17.9%, followed by business services (9.6%), finance (7.5%), construction (5.5%) and medical (3.5%).

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.

Utilities

Utilities Select Sector SPDR (XLU - Free Report): With AUM of $10.7 billion, this fund provides exposure to a small basket of 28 securities by tracking the Utilities Select Sector Index. Electric utilities take the top spot in terms of sectors at 61.6%, closely followed by multi utilities (31.8%). The product charges 13 bps in annual fees and sees heavy volume of around 16.5 million shares on average. It has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook.

Algonquin Power & Utilities Corp. (AQN - Free Report): This renewable energy and regulated utility company is engaged in the ownership of power generation facilities, and water and energy utilities primarily in North America. It has a Zacks Rank #3 and an Earnings ESP of +4.35%. The stock saw no earnings estimate revision for the to-be-reported quarter over the past three months and has an expected earnings growth of 21.4%. However, its trailing four-quarter negative earnings surprise is 3.41%, on average. The company is slated to release earnings results on Feb 27.

Financials

Financial Select Sector SPDR Fund (XLF - Free Report): This fund follows the Financial Select Sector Index and holds 66 stocks in its basket. Banks dominate the fund’s portfolio with 43% while capital markets, insurance and diversified financial services round off the next three spots. The fund has accumulated nearly $25.3 billion in AUM and charges investors 13 bps in annual fees. It trades in volumes of 47.1 million shares on average per day and has a Zacks ETF Rank #2 with a Medium risk outlook.

E*TRADE Financial Corporation (ETFC - Free Report): This company provides online brokerage and related products and services primarily to individual retail investors, under the brand name of “E*TRADE Financial” worldwide. The stock has a Zacks Rank #2 and an Earnings ESP of +1.22%. It saw negative earnings estimate revision of 9 cents over the past 90 days for the to-be-reported quarter and has an estimated year-over-year decline rate of 22.6%. The company’s trailing four-quarter earnings surprise is 6.68%, on average. It is slated to release earnings on Jan 23.

Construction

SPDR S&P Homebuilders ETF (XHB - Free Report): The most popular choice in the homebuilding space, XHB, follows the S&P Homebuilders Select Industry Index. The fund holds about 35 securities in its basket with equal-weighted exposure of around 5%. It has AUM of $750 million and trades in volume of almost 1.8 million shares. The fund charges 35 bps in annual fees and carries a Zacks ETF Rank #3 with a High risk outlook.

Patrick Industries Inc. (PATK - Free Report): It is a major manufacturer of component products and distributor of building products and materials for the Recreational Vehicle, Manufactured Housing and Marine industries. The stock has a Zacks Rank #2 and an Earnings ESP of +12.83%. The Zacks Consensus Estimate for the to-be-reported quarter has been revised downward by 23 cents over the past 90 days and represents a substantial 21.9% earnings decline. Additionally, the company delivered a positive four-quarter earnings surprise of 7.91%, on average, and is scheduled to report earnings on Feb 13.

Medical

Vanguard Health Care ETF (VHT - Free Report): This ETF tracks the MSCI US Investable Market Health Care 25/50 Index and holds 403 stocks in its basket. Pharma takes the largest share at 27.7%, while health care equipment and biotech round off the top three spots. VHT is also one of the popular and liquid ETFs with AUM of $10.1 billion and average daily volume of about 187,000 shares. It charges 10 bps in annual fees and has a Zacks ETF Rank #2 with a Medium risk outlook.

Amgen Inc. (AMGN - Free Report): It is one of the leading biotechnology companies in the world, with extensive manufacturing, distribution and sales facilities. The stock has a Zacks Rank #2 and an Earnings ESP of +0.29%. The Zacks Consensus Estimate for the to-be-reported quarter has been revised upward by 12 cents over the past three months and its earnings are estimated to grow 1.5%. The company’s trailing four-quarter positive earnings surprise is 2.86%, on average. The company is slated to release earnings results on Feb 4.