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S&P 500 Posts Best Q2 in Decades: 10 Best Stocks in ETF

Sweta Killa
·6-min read

Wall Street wrapped up its best quarterly performance in decades with the S&P 500 logging in the best quarter since 1998. The benchmark jumped nearly 20% in the second quarter. The strong rally was driven by a combination of unprecedented levels of fiscal and monetary stimulus, hopes of a coronavirus vaccine and easing of lockdown measures.

The quarterly performance marks an impressive comeback for the stocks from the worst first quarter since the 2008 financial crisis due to the coronavirus pandemic, which had halted economic activities and resulted in millions of people losing their jobs (read: Top & Flop Zones of First-Half 2020 and Their ETFs).

The slew of recent data indicates that economic activity has started to pick up and economic damage from the coronavirus pandemic has been less severe than anticipated. However, the second wave of coronavirus infection and U.S.-China tensions continued to weigh on the stocks lately.

Even though most of the corners of the broader market have witnessed strong gains, optimism related to reopening and economic recovery drove consumer discretionary stocks higher and a digital shift in consumer behavior led to a surge in technology stocks.

Against such a backdrop, the proxy version of the S&P 500 Index, SPDR S&P 500 ETF Trust SPY, has gained 20.2 over the past 13 weeks. Let’s take a closer look at the fundamentals of SPY and its best stocks:

Inside the SPY

The ETF holds 505 stocks in its basket with each accounting no more than 6.02% of assets. This suggests a nice balance across each security and prevents heavy concentration. The fund is widely spread across sectors with information technology, healthcare, consumer discretionary, communication services and financials with double-digit allocation each. It has AUM of $274.4 billion and charges 9 bps in fees per year from investors. The product trades in heavy volume of around 131.6 million shares a day on average, ensuring higher liquidity with a tight bid/ask spread, leading to lower trading costs for investors (see: all the large Cap Blend ETFs here).

SPY has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook. Though most stocks in the fund’s portfolio were in green in the second quarter, we have highlighted 10 stocks that are leading the way in the ETF and have a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold):

Best-Performing Stocks of SPY

Apache Corporation APA: It is one of the world's leading independent energy companies engaged in the exploration, development and production of natural gas, crude oil and natural gas liquids. The stock skyrocketed 223% in the second quarter and saw positive earnings estimate revision of 30 cents for this year in the past month. It has a Zacks Rank #3 (Hold).

Halliburton Company HAL: This company is one of the largest oilfield service providers in the world, offering a variety of equipment, maintenance, and engineering and construction services to the energy, industrial and government sectors. Having a Zacks Rank #3, the stock rose 89.5% in the second quarter. Its earnings are expected to decline 116.1% this year (read: Best Energy ETFs & Stocks of Q2).

Marathon Oil Corporation MRO: It is a leading oil and natural gas exploration and production company with operations in the United States and Africa. The stock climbed 86% in the same time frame and saw positive earnings estimate revision of 10 cents for this year over the past month. Marathon Oil has a Zacks Rank #3.

PayPal Holdings Inc. PYPL: It operates as a technology platform and digital payments company that enables digital and mobile payments on behalf of consumers and merchants worldwide. The stock climbed 82% in the second quarter and has estimated earnings growth of 7.1% for this year. PayPal Holdings has a Zacks Rank #3.

The Gap Inc. GPS: This company is a premier international specialty retailer offering a diverse range of clothing, accessories, and personal care products. It has gained 79.2% in the second quarter and has an estimated earnings decline rate of 216.2% for fiscal year (ending Jan 2021). The stock has a Zacks Rank #3.

eBay Inc. EBAY: This company operates the marketplace and classifieds platforms that connect buyers and sellers worldwide. It saw solid earnings estimate revision of 38 cents for this year in a month and has estimated earnings growth of 22.6%. eBay is up 74.5% in the second quarter and has a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

DISH Network Corporation DISH: It offers pay-TV services under the DISH brand and Sling brand. The stock has risen 72.6% in the quarter and has an estimated earnings decline rate of 26.5% for this year. It has a Zacks Rank #3.

FreeportMcMoRan Inc. FCX: This Zacks #2 Ranked company is engaged in mineral exploration and development; mining and milling of copper, gold, molybdenum and silver; as well as the smelting and refining of copper concentrates. It has gained 71.4% last quarter and has an estimated earnings growth rate of 50% for this year.

ViacomCBS Inc. VIAC: It is a media and entertainment company which creates premium content and experiences for audiences. It has gained 66.4% in the same time frame and saw positive earnings estimate revision of 3 cents for this year in a month. ViacomCBS has a Zacks Rank #3 (read: Video Gaming ETFs to Continue Gaining Amid Coronavirus Crisis).

CarMax Inc. KMX: This Zacks #3 Ranked company operates as a specialty retailer of used and new vehicles. It has gained 66.3% in the second quarter and saw positive earnings estimate revision of 13 cents for fiscal year (ending Feb 2021) in a month. The stock has a Zacks Rank #3.

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Marathon Oil Corporation (MRO) : Free Stock Analysis Report
 
Apache Corporation (APA) : Free Stock Analysis Report
 
Halliburton Company (HAL) : Free Stock Analysis Report
 
eBay Inc. (EBAY) : Free Stock Analysis Report
 
DISH Network Corporation (DISH) : Free Stock Analysis Report
 
The Gap, Inc. (GPS) : Free Stock Analysis Report
 
FreeportMcMoRan Inc. (FCX) : Free Stock Analysis Report
 
SPDR SP 500 ETF (SPY): ETF Research Reports
 
CarMax, Inc. (KMX) : Free Stock Analysis Report
 
PayPal Holdings, Inc. (PYPL) : Free Stock Analysis Report
 
ViacomCBS Inc. (VIAC) : Free Stock Analysis Report
 
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Zacks Investment Research
 
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report