Favorite Sectors Of Q1 Earnings & Their Best ETFs, Stocks

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The Q1 earnings picture improved since the beginning of the quarter on signs of a sharp economic rebound. Total S&P 500 earnings are expected to be up 20.6% from the same period last year on 5.6% higher revenues, with a combination of easy comparisons and strong gains in a number of sectors.

In fact, the earnings projection reflects an improvement from the 12.6% growth expected at the start of Q1 and follows the 3.1% earnings growth in Q4. The positive revisions trend is broad-based, with 10 of the 16 Zacks sectors experiencing positive earnings estimate revision over the last three months. While the energy and auto sectors’ increases have been the biggest in proportional terms, the magnitude of estimate increases are highest for the technology and finance sectors.

Among the 10 sectors with positive earnings growth, autos is expected to be the biggest contributor to the S&P 500 earnings with 203.1% growth. This was followed by basic materials (65.7% earnings growth), finance (50.5%), and retail (41.4%).

Given this, we have highlighted one ETF and one stock from these five 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 criterion of a positive Earnings ESP. The combination of a Zacks Rank #3 or better and a positive ESP increases the odds of an earnings beat by 70%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.


The auto industry is benefiting from the rapid vaccinations, unprecedented stimulus and reopening of the economies that have boosted demand for everyday travel, leading to spike in auto sales. Additionally, persistent lower interest rates are encouraging new-car buying, pushing more consumers to avail loans.

First Trust NASDAQ Global Auto ETF (CARZ - Free Report): This fund offers a pure-play global exposure to 33 auto stocks by tracking the NASDAQ OMX Global Auto Index. It has moderate concentration across components as each of these make up for less than 8.8% share. CARZ has a lower level of $76.1 million in AUM and trades in a small average daily trading volume of about 23,000 shares. The product charges 70 bps in fees per year and has a Zacks ETF Rank #3 with 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 ...

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