The Zacks Analyst Blog Highlights: Market Vectors Pharmaceutical ETF, Guggenheim S&P 500 Equal Weight Utilities ETF, First Trust ISE-Revere Natural Gas Index Fund and Canadian Solar

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May 16, 2014, 09:30 ET

CHICAGO, May 16, 2014 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include the Market Vectors Pharmaceutical ETF (AMEX:PPH-Free Report), Guggenheim S&P 500 Equal Weight Utilities ETF (AMEX:RYU-Free Report), First Trust ISE-Revere Natural Gas Index Fund (AMEX:FCG-Free Report), andCanadian Solar Inc. (Nasdaq:CSIQ-Free Report).

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

Here are highlights from Thursday's Analyst Blog:

3 Non-Leveraged ETFs Beating SPY

Despite a weak start to the year, the U.S. market showed strong resilience to the ongoing volatility and once again hit multi-year highs. The S&P 500 broke the 1,900 mark for the first time while Dow Jones jumped close to 16,700 early this week (read: 3 ETFs Hitting All-time Highs in Rocky Market).

Most of the gains were driven by a rebound in the momentum stocks, which have seen a wild ride over the past couple of months on high valuation concerns, as well as improving economic conditions after a bad weather took a toll on economic growth early in the year. Further, a low interest rate environment, increased merger & acquisition (M&A) activities and hopes of a strong new government in India added to the optimism.

These positive factors strongly offset the negative impact from the growing geopolitical tensions in Russia and signs of slowdown in China. Moreover, with Q1 earnings in its final stretch, expectations for Q2 are not as bad as before. Total earnings for Q2 are expected to be up 3.7%, as per the Earnings Trends. Though this is down from 5.5% a month ago, it is more than double the growth seen in the same period a year ago. The favorable earnings estimate revision is also fueling bullishness into the stock market.

Though there have been winners in every corner of the space, several ETFs have easily crushed the broad market fund (AMEX:SPY-Free Report) by wide margins, in the year-to-date period. Below, we have highlighted three ETFs that have been the star performers so far this year and led the market higher (see: all the Categories ETF here).

Market Vectors Pharmaceutical ETF (AMEX:PPH-Free Report)

Pharmaceutical stocks have shown an impressive turnaround from the patent cliffs that have affected their performance over the last several years and became the darlings of the financial stock market this year. These are riding higher on the wave of M&A talks, promising new drugs and their approvals, increased pipeline visibility, aging population and expansion into emerging markets.

The top performer in this corner of the broad healthcare space is the large cap centric fund –PPH. This product is less popular and less liquid with AUM of $300.8 million and average daily volume of less than 79,000 shares. It tracks the Market Vectors US Listed Pharmaceutical 25 Index and charges 35 bps in fees and expenses.

In total, the fund holds 26 stocks in its basket that is guilty of concentration on the top 10 holdings at 60.55%. Though PPH currently has a Zacks ETF Rank of 4 or 'Sell' rating with Medium risk outlook, it has added more than 13% in the year-to-date time frame (read: Pharma M&A Frenzy Pushing These ETFs Higher).

Guggenheim S&P 500 Equal Weight Utilities ETF (AMEX:RYU-Free Report)

Utilities have performed exceptionally well in the current market turmoil thanks to investors shift from riskier assets to defensive ones and their drive for higher income. The utility stocks pay outsized yields to investors and often act as a safe haven in the market turmoil. The sector is also benefiting from an ever-expanding population, which would fuel demand for essential utility supplies like water, gas and electricity. In addition, lower interest rates in spite of the Fed tapering of stimulus are fueling growth in the sector.

Though most of the utility ETFs are surging, RYU is leading the sector with returns of over 13% this year. This ETF provides exposure to 35 utilities stocks with equal weight methodology by tracking the S&P 500 Equal Weight Index Utilities (read: 3 Utility ETFs Surviving the Market Turmoil).

Multi utilities and electric utilities make up for the top two sectors at 38.06% and 37.24%, respectively, while diversified telecom services also receive double-digit allocation. The fund has amassed $91.8 million in its asset base while trades in paltry volume of just 10,000 shares a day. Expense ratio came in at 0.40%. The ETF has a Zacks ETF Rank of 5 or 'Strong Sell' rating with Medium risk outlook.

First Trust ISE-Revere Natural Gas Index Fund (AMEX:FCG-Free Report)

Rise in natural gas prices came from the coldest winter in decades that sent heating demand (and thus natural gas usage) soaring. Additionally, increased concerns that the energy companies might not be able to rebuild depleted natural gas inventory to levels high enough to meet demand next winter are fueling a rally in the prices.

As a result, FCG, which offers exposure to the U.S. stocks that derive a substantial portion of their revenues from the exploration and production of natural gas, has been surging. The product has gained 12.4% so far this year and tracks the ISE-REVERE Natural Gas Index (read: Is It Finally Time to Buy the Natural Gas Equity ETF?).

Holding 30 stocks in its basket, the fund is slightly tilted toward the top two firms – Goodrich Petroleum and Comstock Resources – that make up for a combined 10% of assets. Other securities hold less than 4% share. The fund is rich with AUM of $539 million and average daily volume of nearly 490,000 shares per day. It charges 60 bps in fees per year from investors and has a Zacks ETF Rank of 3 or 'Hold' rating with High risk outlook.

Canadian Solar Providing Panels to IKEA

One of the world's leading solar companies,Canadian Solar Inc. (Nasdaq:CSIQ-Free Report) announced that it has struck a solar panel deal with IKEA Australia for a 3.6 megawatt (MW) power project.

The IKEA project is the company's largest commercial PV program so far globally. Per the contract, the company will supply its CS6P-250P solar photovoltaic panels (PV) to IKEA Australia. This project will cover seven IKEA sites in Victoria, New South Wales, and Queensland. The green energy from this project will be sufficient to eradicate 4,000 tons of carbon dioxide per annum. Canadian Solar got the required permits and will provide engineering, procurement and construction (EPC) and operation and maintenance services for the project.

Canadian Solar is a leading global manufacturer of high-efficiency solar PV modules and provides the industry's maximum power production per panel. The CS6P-250P PV panel generates 3% more electricity compared to solar panels from other companies. In addition, Canadian Solar is committed to provide enhanced customer services by reducing the complexities and costs of solar system installation.

The demand for renewable energy is on the rise across the world mainly due to greater consciousness among the masses regarding its benefits. As a result, utility providers are shifting to clean energy from traditional sources for power generation. Solar companies like Canadian Solar are making the most of this favorable trend with an increasingly diversified customer base. This solar company is continuously expanding its customer base geographically, across the North American and European markets, as well as the emerging markets of South Korea, Japan and China.

Recently, the company received a contract to supply 43 MW of PV modules for Japan's second-largest solar project. Module delivery is scheduled to start from this month and complete in Feb 2015.

The company is scheduled to release its first quarter earnings on May 16 and the Zacks Consensus Estimate is currently pegged at 8 cents.

Currently, the company holds a Zacks Rank #3 (Hold).

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

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