Buy Cheap, High-Quality, Winning Stocks Via These ETFs

U.S stocks remain stuck in a range this year as investors continue to fret over the uncertainty regarding Fed’s rate hike, weak economic data points and wobbly corporate earnings. Despite these headwinds, stocks are likely to reward investors with positive returns for the seventh year in a row but returns this year may be lackluster.

As the easy money in stocks has already been made, investors will need to be more selective about their investments and look for companies with strong fundamentals and reasonable valuations. There are some ETFs that invest in such stocks and it’s no surprise they have been outperforming the market this year. (Read: Beat the Market with Momentum ETFs)

Is the Bull Market Vulnerable in its Seventh Year?

Recent economic data has surprised to the downside but most of the weakness can be attributed to the brutal weather and west coast port problems. Domestic economy is likely to rebound in the coming months with much needed help from cheaper oil prices.

Investors should also remember that the exact timing of the rate hike is rather irrelevant since it is almost certain that the Fed will raise rates only when the economy is strong enough to withstand higher rates. And history shows that stocks do well during the initial phase of rising rates, if the economy continues to improve. (Read: 5 ETFs for Your IRA Contribution)

Earnings slowdown –caused largely by the collapse in oil prices, surge in the US dollar and overseas weakness--is also making most investors nervous. Considering these factors have been known for a long time and are most likely already priced in, the backdrop doesn’t appear so hazy.

After more than six years of bull run, US stocks are not cheap; at the same time they are not terribly expensive either.  Further, they are still more attractive compared to most other asset classes. A recovering economy and accommodative monetary policy remain supportive of stocks.  (Read: 3 Ultra Cheap Value ETFs for Long Term Outperformance)

Invest in "Best" Stocks for Outperformance

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