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Fun fact about South Florida: The 1960 movie “Where the Boys Are” put Fort Lauderdale on the map as a Spring Break mecca. Legions of real-life college students followed the movie’s fictional main characters there in search of sun, fun, surf, and romance.
For investors like you, though, it’s more important to know “Where the BUYS are.” That’s where the Weiss Ratings can help.
This table shows all 11 of the S&P 500’s main sectors, as well as the number of BUY-rated stocks and TOTAL stocks in those sectors. I used that data to compute the BUY percentage for each sector. I also listed the ticker symbol for the benchmark ETF that tracks each sector.
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| Data Date: 6/21/2017 |
Sitting right at the top is one of my favorite higher-yielding, “safety” sectors: Utilities, as represented by the Utilities Select Sector SPDR Fund (XLU, Rated “B”). Call them boring. Call them stodgy. Call them whatever you want. But the Ratings model rates 73 out of 192 stocks in the sector a BUY, good for a market-leading 38% BUY percentage. It helps that they pay generous, market-beating dividends.
The XLU is up a little more than 12% year-to-date, exceeding the SPDR S&P 500 ETF (SPY, Rated “B”) return of 9.8%. In fact, the investment screening system I use in my High Yield Investing newsletter identified a specific utility that yields more than the XLU, and 70% more than the SPY, as one of the inaugural picks. You can find out more (and get on board with that recommendation) by clicking here.
Waaayyyy down at the bottom of the BUY percentage list is energy, as represented by the Energy Select Sector SPDR Fund (XLE, Rated “D+”). Only 20 of the 860 sector stocks that we grade earned a BUY Rating. That’s just 2.3% of the coverage universe.
Falling oil prices, toothless OPEC production cuts, overflowing inventories, debt repayment problems, and more have pummeled the sector. That has left the XLE sitting on a year-to-date loss of almost 14%.
What about other sectors? Fnancials are represented by the Financial Select Sector SPDR Fund (XLF, Rated “B”). Despite having a 31.3% BUY percentage, financials as a group have underperformed the market (XLF was recently up 4.6% YTD). But they’ve started to perk up in June, and if that trend continues, XLF will close the gap quickly.
Meanwhile, the second-worst sector (materials) is tracked by the Materials Select Sector SPDR Fund (XLB, Rated “B-”). Only 4.2% of the materials stocks we rate have earned BUYS, and XLB has in fact lagged the S&P with an 8.7% YTD gain.
Our Weiss Ratings are dynamic, so these counts and percentages will change based on incoming information. But as of now, if you’re looking for where the BUYS are, you’ll find the most of them in utilities, financials, real estate, and consumer staples … and the least in energy and materials. Focus on the winning sectors and maybe you’ll make enough profit to enjoy a nice South Florida getaway, too!
Until next time,
Mike
ETF Spotlight Edition, by Mike Larson, Senior Analyst Mike Larson is a Senior Analyst for Weiss Ratings. A graduate of Boston University, Mike Larson formerly worked at Bankrate.com and Bloomberg News, and is regularly featured on CNBC, CNN, Fox Business News and Bloomberg Television as well as many national radio programs. Due to the astonishing accuracy of his forecasts and warnings, Mike Larson is often quoted by the Washington Post, Chicago Tribune, As-sociated Press, Reuters, CNNMoney and many others. |
