Published on 10 Jan 2022 on Zacks via Yahoo Finance
5 Sector ETFs to Bet on Ahead of Q4 Earnings
The Q4 earnings season is set to kick off this week with the banking sector slated to report numbers. Although Q4 earnings growth is expected to decelerate significantly from the last two quarters due to rising cost pressures and supply chain disruptions, the earnings picture remains strong.Total S&P 500 earnings are expected to be up 19.8% from the same period last year on 11.6% higher revenues. This would follow the 41.5% rise in earnings in Q3 and 95.1% growth in Q2 (read: Take a Look at Top-Performing ETF Sectors of 2021).Of the 16 Zacks sectors, 11 are expected to earn more relative to the year-ago quarter. Energy, transportation & aerospace will likely see huge earnings growth from the year-ago-quarter as aerospace incurred loss while energy and transportation barely reported positive earnings.The other eight 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 80.3% growth. This is likely to be followed by consumer discretionary (46.5%), construction (22.2%) and medical (16.9%).Given this, we have highlighted one ETF 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).
Aerospace
The aerospace and defense sector is benefiting from the recovering commercial aviation market. Additionally, defense spending is a key part of the country’s budget and is likely to remain unperturbed by the economic situation. As such, iShares U.S. Aerospace & Defense ETF ITA seems a compelling choice.iShares U.S. Aerospace & Defense ETF provides exposure to U.S. companies that manufacture commercial and military aircraft, and other defense equipment by tracking the Dow Jones U.S. Select Aerospace & Defense Index.iShares U.S. Aerospace & Defense ETF holds 34 stocks in its basket with AUM of $2.6 billion and an expense ratio of 0.42%. The product trades in an average daily volume of around 197,000 shares. iShares U.S. Aerospace & Defense ETF has a Zacks ETF Rank #3 with a Medium risk outlook.