5 Hot Stocks in the Dow ETF Last Week

After being hurt badly by the Turkey crisis early last week, the 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, Dow Jones Industrial Average closed at its highest level since February (read: Profit From Turkish Turmoil With These Global Inverse ETFs).

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 total market capitalization that have reported so far are up 25.5% from the same period last year on 9.9% higher revenues, with 79.2% of the companies beating EPS estimates and 72.8% surpassing 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, SPDR Dow Jones Industrial Average ETF 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 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 #2 (Buy) with a Medium risk outlook (read: Dow Springs Back: More Upside for ETFs?).   

Though 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 best-performing stocks in the ETF with their respective positions in the fund’s basket:

Wal-Mart WMT: The stock surged nearly 9.2% over the past week and accounts for 2.6% share in DIA. It carries a Zacks Rank #3 (Hold) and has a VGM Score of A. The company has seen solid earnings estimate revision of 4 cents for the year (ending January 2019) over the past week, and has an expected earnings growth rate of 8.82%. The stock is part of a bottom-ranked Zacks industry (bottom 8%) (read: Wal-Mart Blockbuster Q2 Earnings Pushes Consumer ETFs Higher).

Verizon Communications VZ: This stock accounts for 1.4% of the assets in the fund’s basket. It has gained 4.9% and witnessed no earnings estimate activity for this year over the past week. Its earnings are expected to grow 24.6%. Verizon has a Zacks Rank #3 and a VGM Score of A. It belongs to a top-ranked Zacks industry (top 24%).

Cisco CSCO: The stock gained 4.8% over the past week and has 1.2% exposure in the fund’s basket. It saw positive earnings estimate revision of seven 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 #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).

Apple Inc. AAPL: The stock has gained about 4.2%. It saw no earnings estimate revisions in the past week for the fiscal year (ending September 2018) and has an expected growth rate of 26.82%. Apple currently has a Zacks Rank #2 (Buy) and a VGM Score of C. The stock falls under a top-ranked Zacks industry (top 9%) and occupies the fourth position in DIA with 5.7% exposure. You can seethe complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Johnson & Johnson JNJ: This stock takes 3.5% allocation in the fund’s basket and has added 3.3% in the same time frame. The stock saw no earnings estimate revision activity for this year over the past week and 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 #3 and a VGM Score of A.

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Cisco Systems, Inc. (CSCO) : Free Stock Analysis Report
 
Johnson & Johnson (JNJ) : Free Stock Analysis Report
 
Verizon Communications Inc. (VZ) : Free Stock Analysis Report
 
Apple Inc. (AAPL) : Free Stock Analysis Report
 
SPDR-DJ IND AVG (DIA): ETF Research Reports
 
Walmart Inc. (WMT) : Free Stock Analysis Report
 
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