Zacks Investment Ideas feature highlights: SPDR Technology Select Sector SPDR ETF, iShares Dow Jones Transportation Average Fund and iShares U.S. Aerospace & Defense ETF

News provided by

Nov 05, 2014, 09:30 ET

CHICAGO, Nov. 5, 2014 /PRNewswire/ -- Today, Zacks Investment Ideas feature highlights Features: SPDR Technology Select Sector SPDR ETF (AMEX:XLK-Free Report), iShares Dow Jones Transportation Average Fund (AMEX:IYT-Free Report)

iShares U.S. Aerospace & Defense ETF (AMEX: ITA- Free Report )

Top-Ranked ETFs from the Hottest Sectors

Last week, the Bank of Japan surprised the markets with an unexpected stimulus, sending the S&P 500 index to a new record high. A slew of positive economic reports and better-than-expected earnings announcements have also helped stocks regain most of the ground lost earlier in the past few weeks.

This week, investors will closely watch the outcome of mid-term elections and the labor market report. Some of the big earnings reports will also be in focus. Despite recent gains, stocks can continue their upward march in the next three months—November through January--which have historically been the strongest three months for the stocks. (Read: 3 Excellent ETFs for a Low Cost Diversified Portfolio)

Despite global headwinds, US economy continues to grow slowly but steadily and with benign inflationary expectations, interest rates are likely to stay low for an extended period. Those are the main reasons why stocks still have some upside left. But after more than five years of bull run, they are not cheap. As a result, many investors will continue to look for reasons to sell and so volatility may be here to stay. Savvy investors could use such pullbacks as opportunities to buy stocks for longer-term. (Read: Energy ETFs in focus on big oil Q3 earnings beat)

Third quarter earnings have not been remarkable but they are not bad either. At the same time, investors are clearly rewarding stocks and sectors that have been witnessing positive earnings momentum. We looked at Zacks Earnings Trends for sectors/industries that have delivered excellent revenue and earnings surprises.

After better than expected results, analysts have been raising their estimates for companies in these sectors/industries and as a result, they have climbed up in the Zacks industries ranks list. A good way to invest in these sectors/industries is to look for ETFs that have earned top Zacks ranks, based on their potential to outperform their peers.

SPDR Technology Select Sector SPDR ETF (AMEX:XLK-Free Report)

Technology sector has delivered an earnings beat ratio of 73.0% and revenue beat ratio of 59.5%, with excellent results from some of the heavyweights including Apple. (Read: Tech ETFs to benefit most on Apple's earnings beat)

XLK is the he most popular technology with over $12.5 billion in assets. This fund charges 16 bps in fees per annum from investors. It holds 713 securities in its basket currently, while Apple takes the top spot with about 16.5% of the assets.

In terms of industry allocation, the fund is well spread with technology hardware storage & peripherals, software, IT services, Internet software & services and diversified telecom services getting double-digit allocations. The fund has returned 15.4% year to date. Computer office equipment is currently ranked #2 among 62 Zacks M industries.

XLK is a Zacks Rank # 1 (Strong Buy) ETF.

iShares Dow Jones Transportation Average Fund (AMEX:IYT-Free Report)

Transportation has also delivered excellent results for the third quarter, with 80.0% of company beating on the earnings front and 70.0% on revenues.

IYT tracks the Dow Jones Transportation Average Index, providing easy exposure to the 21 U.S. airline, railroad, and trucking companies.

With top 10 holdings accounting for 66.54% of the asset base, the fund is top heavy. From a sector perspective, railroad takes the top spot with more than 27% of assets, while delivery service (23%) and trucking (18%) round out to the top three.

Launched in 2003, the fund has managed to attract about $1.6 billion in assets so far. It charges 43 bps in annual expenses and has returned 19.8% this year. Transportation is currently ranked #9 among 62 Zacks M industries

IYT is a Zacks Rank # 1 (Strong Buy) ETF.

iShares U.S. Aerospace & Defense ETF (AMEX:ITA-Free Report)

Aerospace and Defense had an excellent quarter with 100.0% of the companies delivering earnings beat and 57.1% delivering revenue beat.

With an asset base of $361 million, ITA is the largest player in this space. The product charges an annual fee of 43 basis points per year.

The fund holds 38 securities in its basket currently. United Technologies is the top holding with 8.5% allocation. Aerospace takes about 52% of the asset base while defense accounts for the rest. The product is a Zacks ETF Rank #2 (Buy) fund. It is up about 6.3% year-to-date.

Aerospace-Defense is currently ranked #13 among 62 Zacks M industries,

About Zacks

Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978. The later formation of the Zacks Rank, a proprietary stock picking system; continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Click here for your free subscription to Profit from the Pros.

Get the full Report on XLK – FREE

Get the full Report on IYT – FREE

Get the full Report on ITA – FREE

Join us on Facebook: http://www.facebook.com/ZacksInvestmentResearch

Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.

Media Contact
Zacks Investment Research
800-767-3771 ext. 9339
[email protected]
http://www.zacks.com

Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.

Logo - http://photos.prnewswire.com/prnh/20101027/ZIRLOGO

SOURCE Zacks Investment Research, Inc.