After being hurt badly by the Turkey crisis early last week, Wall Street regained momentum to close the week on optimism over trade talks between the United States and China and signs of stabilization in Turkey. Notably, the Dow Jones Industrial Average closed at its highest level since February (read: Profit From Turkish Turmoil With These Global Inverse ETFs) placing several hot stocks in focus this week.
With abating geopolitical tensions, the bullish long-term fundamentals, including surging corporate profits and bouts of upbeat data, are driving investors to riskier assets. Total earnings from 93.4% of the S&P 500 so far are up 25.5% from the same period last year on 9.9% higher revenues. Furthermore, 79.2% of the companies beat earnings-per-share estimates and 72.8% surpassed revenue estimates. Earnings and revenue growth as well as the proportion of companies beating EPS estimates are tracking above other recent periods.
The American economy has been on a solid growth path with GDP growth expanding 4.1% annually in the second quarter, representing the fastest pace of growth in nearly four years. The number is almost double the revised Q1 growth rate of 2.2%. With this, GDP grew 3.1% for the first half of the year and is poised to hit 3% annual growth for this year, buoyed by historic tax cuts, infrastructure investment, higher government spending, deregulation, rising wages and record unemployment. Per Trump, “the United States is on track to hit the highest annual growth rate in over 13 years” (read: 5 ETFs to Buy as Q2 GDP Growth Hits 4-Year High of 4.1%).
Further, an impressive labor market, increase in wages, rise in consumer confidence and higher consumer spending are boosting economic activities. A rising rate scenario also signals a strengthening economy, which will spur further growth in the stock market.
Given this, the SPDR Dow Jones Industrial Average ETF (NYSEARCA:DIA) tracking the Dow Jones Index has gained 1.3% over the past week. Let’s take a closer look at the fundamentals of DIA and its performance.
DIA in Focus
This is one of the largest and most-popular ETFs in the large-cap space with AUM of more than $21.2 billion and average daily volume of 4.6 million shares. Holding 30 blue chip stocks, the fund is widely spread across components with each holding less than a 9.2% share. Industrials (21.7%), information technology (18.5%), financials (15.4%), consumer discretionary (14.6%) and healthcare (13.4%) are the top five sectors. DIA charges 17 bps in annual fees and has a Zacks ETF Rank No. 2 (Buy) with a medium risk outlook (read: Dow Springs Back: More Upside for ETFs?).
Although most of the stocks in the fund’s portfolio have rebounded strongly, a few led the way higher over the past five days. Below, we have highlighted those five hot stocks in the ETF that are among the best-performing within their respective positions in the fund’s basket:
Hot Stocks to Watch: Walmart (WMT)
Walmart (NYSE:WMT) surged nearly 9.2% over the past week and accounts for a 2.6% share in DIA.
It carries a Zacks Rank No. 3 (Hold) and has a VGM Score of A. The company has experienced a solid earnings estimate revision of 4 cents for the year (ending January 2019) over the past week, and it has an expected earnings growth rate of 8.82%. WMT stock is part of a bottom-ranked Zacks industry (bottom 8%) (read: Wal-Mart Blockbuster Q2 Earnings Pushes Consumer ETFs Higher).
Hot Stocks to Watch: Verizon (VZ)
Verizon (NYSE:VZ) accounts for 1.4% of the assets in the fund’s basket. It has gained 4.9% and it experienced no earnings estimate activity for this year over the past week.
Its earnings are expected to grow 24.6%. Verizon has a Zacks Rank No. 3 and a VGM Score of A. It belongs to a top-ranked Zacks industry (top 24%).
Hot Stocks to Watch: Cisco (CSCO)
Cisco (NASDAQ:CSCO) gained 4.8% over the past week and has 1.2% exposure in the fund’s basket. CSCO experienced a positive earnings estimate revision of 7 cents for this fiscal year (ending July 2019) over the past week.
Cisco has an expected earnings growth of 10.35% for this fiscal year. The company has a Zacks Rank No. 3 and a VGM Score of B. However, it belongs to a bottom-ranked Zacks industry (bottom 31%) (read: ETFs to Soar on Robust Cisco Results).
Hot Stocks to Watch: Apple (AAPL)
Apple (NASDAQ:AAPL) has gained about 4.2%. It has not experienced any earnings estimate revisions in the past week for the fiscal year (ending September 2018) and it has an expected growth rate of 26.82%.
Apple currently has a Zacks Rank No. 2 (Buy) and a VGM Score of C. AAPL stock falls under a top-ranked Zacks industry (top 9%) and occupies the fourth position in DIA with 5.7% exposure. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Hot Stocks to Watch: Johnson & Johnson (JNJ)
Johnson & Johnson (NYSE:JNJ) takes 3.5% allocation in the fund’s basket and has added 3.3% in the same time frame. JNJ stock has not experienced any earnings estimate revision activity for this year over the past week and it has an estimated year-over-year earnings growth of 11.51%.
JNJ belongs to a top-ranked Zacks industry (top 40%). It has a Zacks Rank No. 3 and a VGM Score of A.
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