Here is the trend in the S&P 500’s expected, full-year, 2015 sector earnings growth over three time-frames:
Column 1 is as of Friday, January 16th, 2015; Column 2 is as of January 1, 2015; Column 3 is as of October 1, 2014:
- Consumer Discretionary: +16,6%, +16.9%, +18%
- Consumer Staples: +6%, +6.6%, +9%
- Energy: -34.9%, -23.3%, +6.9%
- Financials: +17.8%, 17.8%, +16.7%
- Health Care: +10.3%, +10.5%, +11.6%
- Industrials: +9.5%, +9.7% +11.5%
- Materials: +12.7%, +14.7%, +19.1%
- Technology: +10.9%, +11.3%, +12.5%
- Telco: +5.3%, +4.9%, +6.5%
- Utilities: +2.3%, +2.5%, +2.8%
- S&P 500: +6.6%, +8.1%, +12.4%
Conclusion / Summary: Financials remain my top sector pick for 2015, as even though all of the Big 3 banks saw their stocks hit this past week on earnings reports, the expected growth for the sector for full-year 2015 has not only remained unchanged since January 1, but expected sector earnings growth for 2015 has risen slightly, the only sector of the 10 to do so since October 1, 2014.
Our top holdings remain JPMorgan Chase & Co (NYSE:JPM), Bank of America Corporation (NYSE:BAC), The Charles Schwab Corporation (NYSE:SCHW) and the CME Group Inc (NASDAQ:CME) within the financial sector. Berkshire Hathaway (NYSE:BRKb) remains the top weighting in the Financial Select Sector SPDR Fund (ARCA:XLF), the SPDR Financial ETF. We have never been big insurance company investors, but the XLF will give you Berkshire exposure, if you want it.
Financials are a pretty diverse group, as you can see from this spreadsheet (detail courtesy of Thomson), which shows the earnings distribution within the sector: FC – Financials.
Compared to Energy which we looked at yesterday here, the Financials' top 5 weights sum to just 6.6%.
We’ll flush this out further as Q1 ’15 moves along.