Yahoo Finance 5 Beaten-Down Top-Ranked Stocks to Buy in S&P 500 ETF
Escalating geopolitical tensions and inflation worries shook Wall Street last week. The three major indices capped weekly losses, with the S&P 500 shedding 1.5%, marking its worst week since October 2023. A broad decline in major bank shares after quarterly earnings failed to impress added to the chaos.
All 11 major sectors in the S&P 500 closed the week in negative territory for the first time since September 2023. SPDR S&P 500 ETF Trust (SPY), the proxy version of the S&P 500 Index, shed 1.5% last week. While many stocks in the ETF have been hit badly, a few of them have a solid Zacks Rank #1 (Strong Buy) or #2 (Buy), suggesting a good entry point. These are Globe Life Inc. GL, Arista Networks Inc. ANET, Fastenal Company FAST, Invesco Ltd. IVZ and Deckers Outdoor Corporation DECK. You can see the complete list of today’s Zacks #1 Rank stocks here.
The tensions in the Middle East rose after Iran launched a barrage of missiles and drones on Israel over the weekend, heightening fears of a wider conflict in the volatile region. The conflict will lead to a spike in oil prices, which could flare up inflation, leading the Fed to go slow on rate cuts.
The bouts of upbeat economic data point to a stronger economy, dialing back expectations for rate cuts in the first half of this year. Consumer prices accelerated at a faster-than-expected pace in March, pushing inflation higher and dashing hopes that the Fed will be able to cut interest rates anytime soon. This has outlined the case for longer-than-expected higher rates (read: Inverse ETFs to Play Now on Middle East Tension & Rising Rates?).
The three major banks – JPMorgan Chase & Co JPM, Citigroup C, and Wells Fargo WFC – disappointed investors. JPMorgan’s net interest income came in below analysts' expectations. Wells Fargo reported a 7% drop in profits, following a decline in net interest income caused by poor borrowing demand, while Citigroup experienced a loss following expenses on employee termination and deposit insurance.
Let’s take a closer look at the fundamentals of SPY.
SPY in Focus
SPDR S&P 500 ETF Trust holds 503 stocks in its basket, with each accounting for no more than 7.3% of the assets. This suggests a nice balance across each security and prevents heavy concentration. The fund is widely spread across sectors with information technology, financials, healthcare and consumer discretionary accounting for a double-digit allocation each.
SPDR S&P 500 ETF Trust has an AUM of $515.3 billion and charges 9 bps in fees per year. It trades in an average daily volume of 63 million shares and has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook (see all the Large Cap Blend ETFs here).
Below, we have highlighted the abovementioned five beaten-down top-ranked stocks in the ETF.
Stocks in Focus
Globe Life (formerly known as Torchmark Corporation) is an insurance holding company for a group of insurance companies that market primarily individual life and supplemental health insurance to lower-middle to middle-income households throughout the United States. The stock plunged 45.5% last week. Globe Life has an estimated earnings growth rate of 8.92% for this year and a Zacks Rank #2. It has a Momentum Score of A.
Arista Networks is engaged in providing cloud networking solutions for data centers and cloud computing environments. The stock lost about 9% last week. It has an estimated growth rate of 6.77% for this year. Arista Networks currently has a Zacks Rank #2 and a Momentum Score of B (read: 5 ETFs Leading the Tech Rebound: Will the Rally Continue?).
Fastenal is a national wholesale distributor of industrial and construction supplies. The company distributes its products through more than 3,200 company-owned stores, primarily located in North America. Fastenal was down about 8% last week. It has an expected earnings growth rate of 6.4% for this year. It has a Zacks Rank #2 and a Momentum Score of B.
Invesco – formerly AMVESCAP PLC – operates as an independent investment manager and offers a wide range of investment products and services. The stock shed about 8% last week. It has an estimated earnings growth rate of 14.6% for this year. IVZ has a Zacks Rank #2 and a Momentum Score of A.
Deckers Outdoor is a leading designer, producer and brand manager of innovative, niche footwear and accessories developed for outdoor sports and other lifestyle-related activities. The stock lost 7.4%. It has an estimated earnings growth rate of 10.5% for the fiscal year (ending March 2025). It has a Zacks Rank #2 at present and a Momentum Score of B.
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Wells Fargo & Company (WFC) : Free Stock Analysis Report
JPMorgan Chase & Co. (JPM) : Free Stock Analysis Report
Citigroup Inc. (C) : Free Stock Analysis Report
Fastenal Company (FAST) : Free Stock Analysis Report
Invesco Ltd. (IVZ) : Free Stock Analysis Report
Deckers Outdoor Corporation (DECK) : Free Stock Analysis Report
Arista Networks, Inc. (ANET) : Free Stock Analysis Report
Globe Life Inc. (GL) : Free Stock Analysis Report
