The broad stock market is sizzling this holiday season thanks to solid corporate earnings and improving economic fundamentals. Total earnings for the S&P 500 index are expected to be up from 0.7% growth seen in 2016 to 7.6% for 2017 and 11.6% for 2018.
Meanwhile, the economy expanded at the fastest clip in three years in best back-to-back quarters with at least 3% GDP growth and unemployment at the lowest level of 4.1% since December 2000. Americans are highly optimistic about the economy with consumer confidence climbing to the highest level in 17 years. Additionally, the combination of other factors like a jump in oil price and higher interest rates are fueling growth.
The Trump effect is adding to the holiday spirit with a tax cut on its way to Congress and the final signature of the bill highly anticipated. This is especially true, as a massive $1.4-trillion tax cut will create an economic surge, boosting job growth and reflation trade. It will further accelerate earnings, leading to increased dividend and buyback activities. Notably, the tax legislation could double the growth pace of earnings in 2018.
Moreover, Santa rally is coming up and would provide further boost to stocks. A Santa rally refers to the increase in stock prices in the final week of the calendar year (i.e. between Christmas and New Year’s Day) that extends into the first two days of the New Year.
Against such a backdrop, while most of the stocks and ETFs have been surging over the past one month, there are some hidden gems or Secret Santa as we call them that could surprise investors with big returns this Christmas based on the current trends. We have highlighted some of these in detail.
Here, we have chosen five ETFs that have AUM of less than $200 million, average daily volume of under 50,000 shares and are lagging the gain of 3.2% for the broad market fund (SPY) over the past month. However, these have a Zacks ETF Rank # 1 (Strong Buy) or 2 (Buy), suggesting their outperformance in the final weeks of 2017.
First Trust Nasdaq Semiconductor ETF (FTXL)
The First Trust Nasdaq Semiconductor ETF (NASDAQ:FTXL) offers exposure to the most-liquid U.S. semiconductor securities based on volatility, value and growth by tracking the Nasdaq US Smart Semiconductor Index. It holds 30 stocks in its basket, with each holding less than 9.4% share.
FTXL has accumulated $28.1 million in AUM and trades in average volume of around 8,000 shares. Expense ratio comes in at 0.60%. FTXL is down 3.7% over the past one month and has a Zacks ETF Rank #1.
Loncar Cancer Immunotherapy ETF (CNCR)
The Loncar Cancer Immunotherapy ETF (NASDAQ:CNCR) tracks the Loncar Cancer Immunotherapy Index and provides exposure to the basket of 31 companies that develop therapies to treat cancer by harnessing the body’s own immune system.
Each firm accounts for less than 4.7% share. With AUM of $38.4 million, the ETF charges 79 bps in annual fees and trades in average daily volume of around 20,000 shares. It has added just 0.7% in a month and has a Zacks ETF Rank #2.
PowerShares Dynamic Market Portfolio (PWC)
The PowerShares Dynamic Market Portfolio (NYSEARCA:PWC) follows the Dynamic Market Intellidex Index, which measures the performance of companies with superior risk-return profiles. Holding 100 stocks in its basket, it is well spread across components with none accounting for more than 3.5% of assets.
It has amassed $150.4 million in its asset base and charges 60 bps in annual fees. Average daily volume is paltry at 2,000 shares. The fund has gained 2% in the same time frame and carries a Zacks ETF Rank #2.
PowerShares S&P SmallCap Materials Fund (PSCM)
The PowerShares S&P SmallCap Materials Fund (NASDAQ:PSCM) targets the small-cap segment of the material sector by tracking the S&P SmallCap 600 Capped Materials Index. It holds 36 securities in its basket with each holds less than 7.3% share.
The ETF has accumulated $52.6 million in its asset base and has an expense ratio of 0.29%. Volume is low with 4,000 shares exchanged a day on average. It has gained 2.5% in the same time period and has a Zacks ETF Rank #2.
PowerShares Russell Top 200 Pure Growth Portfolio (PXLG)
The PowerShares Russell Top 200 Pure Growth Portfolio (NYSEARCA:PXLG) offers exposure to the growth corner of the broad market by tracking the Russell Top 200 Pure Growth Index. It holds 68 securities in its basket and charges 39 bps in annual fees.
The fund has amassed $190.3 million in its asset base but trades in a volume of 12,000 shares a day on average. PXLG has gained 2.6% and sports a Zacks ETF Rank #1.
Here, we have used the Zacks stock screener to find five picks that are in the red from a one-month look but carry a Zacks Rank #1 or 2, VGM Style Score of ‘B’ or better, and a Zacks Industry Rank in the top 30%, and have witnessed positive earnings estimate revision.
Advanced Energy Industries, Inc. (AEIS)
This Colorado-based company is a global leader in the development and support of technologies critical to high-technology, high-growth manufacturing processes used in the production of semiconductors, flat panel displays, data storage products, solar cells, architectural glass, and other advanced product applications.
Advanced Energy Industries, Inc. (NASDAQ:AEIS) has seen positive earnings estimate revision of 3 cents for this year over the past 30 days, with an average earnings growth of 50.08%. It has a market cap of $2.79 billion and boasts a top Industry Rank in the top 1%. The stock has shed about 14.1% in the last one-month period. ATVI has a Zacks Rank #2 and a VGM Style Score of B.
Entegris Inc (ENTG)
This Massachusetts-based company is a leading provider of materials management solutions to the microelectronics industry including, the semiconductor manufacturing and disk manufacturing markets.
Entegris Inc (NASDAQ:ENTG) has seen positive earnings estimate revision of a couple of cents for this year over the past 30 days with an average growth rate of 48.09%. It has a market cap of $4.17 billion and shed 0.6% over the past one month. Entegris has a Zacks Rank #1 and a VGM Style Score of A, and falls in a strong industry having a Rank in the top 9%.
Jones Lang LaSalle Inc (JLL)
This Illinois-based full-service real estate firm provides management services, corporate and financial services and investment management services to corporations and other real estate owners, users and investors worldwide.
With a market cap of $6.81 billion, Jones Lang LaSalle Inc (NYSE:JLL) has seen solid earnings estimate revision of 8 cents over the past 30 days for this year and an expected earnings growth rate of 3.38%. Jones Lang LaSalle is down about 3% in the same time frame and has a solid Industry Rank in the top 13%. It has a Zacks Rank #1 and a VGM Style Score of A. You can see the complete list of today’s Zacks #1 Rank stocks here.
Kronos Worldwide, Inc. (KRO)
With a market cap of $2.92 billion, this is a Texas-based global producer and marketer of value-added titanium dioxide pigments. Its shares have dropped 7.3% over the past one-month period.
Kronos Worldwide, Inc. (NYSE:KRO) has seen solid earnings estimate revision of a couple of cents for this year over the past 30 days with an expected earnings growth of 425.81%. The stock boasts a solid Industry Rank in the top 24%, and has a Zacks Rank #1 and a VGM Style Score of A.
Wal-Mart Stores Inc. (WMT)
This Arkansas-based company operates retail stores in various formats worldwide. The stock saw positive earnings estimate revision by a penny for this fiscal year over the past 30 days, with an average earnings growth of 2.50%.
Wal-Mart Stores Inc. (NYSE:WMT) has a market cap of $286 billion and shed about 2.5% over the past one month. WMT has a Zacks Rank #2 with a VGM Style Score of B and falls in the industry having a Zacks Rank in the top 26%.
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>