The Q4 earnings season is underway with a few major banks set to report this week. Earnings for the S&P 500 index are expected to grow 8.8% from the same period last year on 6.9% higher revenues. This is higher than the Q3 earnings growth of 6.7% on 5.9% revenue growth.

Additionally, the revision trend has been favorable with earnings estimates holding up better relative to other comparable periods. The earnings estimates for Q4 have moved up 2 percentage points from 8.6% at the start of the period. Further, the dollar amount of total earnings is on track to reach a new all-time quarterly record.

Of the 16 Zacks sectors, 13 are likely to be contributors to earnings growth, with energy leading the way. Like the last two reporting cycles, the energy sector has the strongest growth projection of 174.9% for Q4, primarily reflecting easier comparisons. This is followed by double-digit earnings growth of 27.3% for basic materials, 22.1% for industrial products, 18.8% for construction, 14% for technology and 12.2% for autos.

Given this, we have highlighted one ETF and one stock from some of these sectors that could make great plays as the Q4 earnings season unfolds. Each of these ETFs and stocks have a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). For stocks, we have added the extra flavor of a positive Earnings ESP. This is because stocks with this combination have a 70% chance of beating estimates when their earnings are released, and a VGM Style Score of B or better.

Energy

Energy Select Sector SPDR (XLE - Free Report): This is the largest and most popular ETF in the energy space with AUM of $19.5 billion and average daily volume of around 12.3 million shares per day. Expense ratio comes in at 0.14%. The fund follows the Energy Select Sector Index and holds 32 securities in its basket. In terms of industrial exposure, oil, gas & consumable fuels accounts for nearly 85.7% of the portfolio while energy equipment & services takes the remainder. The product has a Zacks ETF Rank #3.

Bill Barrett Corporation (BBG - Free Report): This independent energy company is engaged in acquiring, exploring, and developing oil and natural gas resources in the United States. The Zacks Consensus Estimate for the yet-to-be reported quarter has been revised upward from a loss of 19 cents to a loss of three cents over the past 90 days and has an expected growth rate of 83.33%. It has a Zacks Rank #2 and an Earnings ESP of +10.71%. The stock delivered a positive earnings surprise of 19.41% over the last four quarters. It belongs to a strong Zacks Industry Rank in the top 21% and is scheduled to report earnings results on Mar 1.

Basic Materials

PowerShares DWA Basic Materials Momentum Portfolio (PYZ - Free Report): This ETF tracks the Dorsey Wright Basic Materials Technical Leaders Index, giving investors exposure to 31 stocks that are showing relative strength (momentum). Chemicals dominates the fund’s returns at 60.1% while metals & mining accounts for one-fourth of the portfolio. The fund has amassed $110.1 million in its asset base while charges 60 bps in fees and expenses. Volume is paltry as it exchanges nearly 4,000 shares in hand a day. The fund has a Zacks ETF Rank #2.

Huntsman Corporation (HUN - Free Report): This is among the world's largest global manufacturers of differentiated and commodity chemical products for a variety of industrial and consumer applications. It has a Zacks Rank #1 and an Earnings ESP of +1.04%. The stock saw solid earnings estimate revision of 27 cents over the past three months for the to-be-reported quarter with an expected earnings growth rate of 113.33%. It also delivered average earnings surprise of 8.48% for the last four quarters. The company has a solid Zacks Industry Rank in the top 18% and is slated to release earnings results on Feb 21. You can see the complete list of today’s Zacks #1 Rank stocks here.

Industrials

First Trust Industrials/Producer Durables AlphaDEX Fund (FXR - Free Report): This fund follows the StrataQuant Industrials Index, which uses the AlphaDEX methodology to select stocks from the Russell 1000 Index and ranks them on both growth and value factors. The approach results in a basket of 94 securities, with each holding less than 2% share. Machinery, airlines and aerospace & defense are the top three industries with double-digit exposure each. The fund has accumulated nearly $1.7 billion in AUM and sees a good trading volume of about 124,000 shares a day. It charges 63 bps in fees per year and has a Zacks ETF Rank #2.

Caterpillar Inc. (CAT - Free Report): This company manufactures and sells construction and mining equipment, diesel and natural gas engines, industrial gas turbines, and diesel-electric locomotives for heavy and general construction, rental, quarry, aggregate, mining, waste, material handling, oil and gas, power generation, marine, rail, and industrial markets. It has a Zacks Rank #2 and an Earnings ESP of +4.82%. The stock saw solid earnings estimate revision of 50 cents for the yet-to-be-reported quarter in the past three months with an expected growth rate of 108.43% and delivered positive earnings surprise of 1.67% for the last four quarters. The company is slated to release earnings results on Jan 25, and belongs a solid Zacks Industry Rank in the top 24%.

Construction

iShares U.S. Home Construction ETF (ITB - Free Report): This fund provides a pure play to home construction stocks by tracking the Dow Jones U.S. Select Home Construction Index. It holds a basket of 48 stocks with a heavy concentration on the top three firms that account for a combined 32.1% share. The product has amassed $2.7 billion in its asset base and trades in robust volume of around 2.4 million shares a day on average. It charges 44 bps in annual fees and has a Zacks ETF Rank #2.

Louisiana-Pacific Corporation (LPX - Free Report): This company manufactures building materials and engineered wood products in the United States, Canada, Chile, and Brazil. It has a Zacks Rank #2 and an Earnings ESP of +6.90%. The stock saw solid earnings estimate revision of 23 cents over the past 90 days for the fourth quarter, representing whopping growth of 152.17%, and delivered a positive earnings surprise of 3.98% over the past four quarters. The company is slated to release its earnings results on Feb 14 and belongs to a strong Zacks Industry Rank in the top 10%.