Published on 11 Oct 2021 on Zacks via Yahoo Finance
5 ETFs & Stocks From the Favorite Sectors of Q3 Earnings
The Q3 earnings season is set to kick off this week with the banking sector slated to report numbers. Although Q3 earnings growth is expected to decelerate significantly from the breakneck pace in the first half, the earnings picture remains strong. Total S&P 500 earnings are expected to be up 26.1% from the same period last year on 13.9% higher revenues.The earnings projection reflects the same growth expected at the start of Q3 despite the rising cost pressures amid supply-chain disruptions and labor/material shortages. This would follow the 95.0% earnings growth on 25.3% higher revenues in Q2.Of the 16 Zacks sectors, 13 are expected to earn more relative to the year-ago quarter as autos and utilities are expected to report a decline in earnings. Transportation and energy will likely see huge earnings growth from the year-ago-quarter as transportation incurred loss of $1.8 billion and energy barely reported earnings. The other 11 sectors are expected to witness positive year-over-year earnings growth. Basic materials is expected to be the biggest contributor to S&P 500 earnings with 141.4% growth. This is likely to be followed by industrial products (25.7%), technology (21.2%) and finance (20.2%).Given this, we have highlighted one ETF and one stock from the five sectors that could make great plays as the earnings season unfolds. These ETFs and stocks have a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.For stocks, we have added the extra criterion of a positive Earnings ESP. The combination of a Zacks Rank #3 or better and a positive ESP increases the odds of an earnings beat by 70%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Transportation
Travel has rebounded strongly with more Americans getting vaccinated, business and economies have reopened, consumer confidence is growing. The transport sector is expected to post strong results on the back of these positives.iShares U.S. Transportation ETF IYT: The ETF tracks the S&P Transportation Select Industry FMC Capped Index, giving investors exposure to a small basket of 48 securities. Within the transportation sector, railroads, and air freight and logistics take the top two spots with 33.3% and 26.7% share, respectively, while trucking (22.1%) and airlines (16.6%) round off the next two. The fund has $1.6 billion in AUM and trades in a good trading volume of around 201,000 shares a day. It charges 41 bps in fees per year and has a Zacks ETF Rank #2 with a High risk outlook (read: 5 ETFs to Cash In On Record High U.S. Household Net Worth).TFI International Inc. TFII: This company is in the transportation and logistics industry. It identifies strategic acquisitions and manages a network of subsidiaries. The stock has a Zacks Rank #2 and an Earnings ESP of +7.84%. The Zacks Consensus Estimate for the to-be-reported quarter has been revised upward by a penny over the past seven days and has 38.3% expected earnings growth. Additionally, the company delivered a four-quarter earnings surprise of 28.12%, on average, and is scheduled to report earnings on Oct 28.