5 Secret Santa ETFs & Stocks This Christmas

Stock markets are sizzling this holiday season with all the three major U.S. bourses hitting new all-time highs. This is especially thanks to U.S.-Sino trade deal optimism and rounds of upbeat economic data, which point to a healthier economy.

In particular, the phase one trade deal reached between Washington and Beijing has erased fears of global slowdown and bolstered confidence in the market. Meanwhile, the U.S. economy is on a strong growth path with job additions at the fastest pace this year, unemployment dropping to the lowest level since 1969 and third-quarter GDP growth being revised upward from 1.9% to 2.1%.

The housing market is also showing signs of a strong recovery as lower mortgage rates and slower home price growth are acting as catalysts. Easing of Brexit tensions have also added to the strength (read: 5 Best Stocks in the Hot Homebuilding ETF).

Internationally, things are looking in a better shape. The latest data from China shows acceleration in industrial output and retail sales growth in November while Japan's economy expanded more rapidly than initially reported in the third quarter.

The uptrend has also been powered by the Fed’s accommodative interest-rate policy and the holiday fervor. The central bank has slashed interest rates three times this year, providing consumers extra spending power. Further, Santa rally is coming up and would provide further boost to stocks. A Santa rally refers to the increase in stock prices in the final week of the calendar year (i.e. between Christmas and New Year’s Day) that extends into the first two days of the New Year (read: Merry Christmas for Wall Street: Bet on These Momentum ETFs).

Against such a backdrop, while most of the ETFs and stocks have been surging over the past one month, there are some hidden gems or Secret Santa as we call them that could surprise investors with big returns this Christmas based on the current trends. We have highlighted some of these in detail below:

ETFs

Here, we have chosen five ETFs that have underperformed the broad market fund (SPY (NYSE:SPY)) in a month but have a Zacks ETF Rank #1 (Strong Buy) or 2 (Buy), suggesting their outperformance in the final weeks of 2019.

iShares U.S. Aerospace & Defense ETF (HM:ITA)

This fund provides investors with exposure to 34 U.S. companies that manufacture commercial and military aircrafts and other defense equipment by tracking the Dow Jones U.S. Select Aerospace & Defense Index. It has AUM of $5.4 billion and charges 42 bps in fees a year. Volume is good at around 160,000 shares. The ETF has lost 4.3% in a month and has a Zacks ETF Rank #2 with a Medium risk outlook (read: Boeing (NYSE:BA) to Halt 737 Production: ETF Losers & One Likely Winner).

Invesco Dynamic Software ETF PSJ

This ETF offers exposure to 30 companies that are principally engaged in the research, design, production or distribution of products or processes that relate to software applications and systems and information-based services by tracking the Intellidex Index. The product has amassed $494.5 million in its asset base and trades in good volume of around 65,000 shares a day. It charges investors 58 bps in fees per year and shed 1.2% in a month. The product has a Zacks ETF Rank #1 with a High risk outlook.

Industrial Select Sector SPDR XLI

This is the most-popular ETF in the industrial space with AUM of $10.6 billion and average daily volume of around 10.2 million shares. The fund follows the Industrial Select Sector Index, holding 70 stocks in its basket with key holdings in aerospace & defense sector. It charges 13 bps in fees per year and lost 0.04% in a month. XLI has a Zacks ETF Rank #1 with a Medium risk outlook (read: A Look Back At S&P 500 Sector ETFs in 2019).

First Trust Large Cap Growth AlphaDEX Fund (ASX:FTC)

This fund tracks the NASDAQ AlphaDEX Large Cap Growth Index, holding a basket of 188 stocks with key holdings in information technology. It has $1.1 billion in AUM and charges 61 bps in annual fees. The ETF trades in average daily volume of 57,000 shares and has added 0.3% in a month. It has a Zacks ETF Rank #2 with a Medium risk outlook (read: Bet on Growth Investing Now: Top-Ranked ETFs & Stocks).

Invesco DWA Technology Momentum ETF (TSXV:PTF)

This fund follows the Dorsey Wright Technology Technical Leaders Index and provides exposure to technology companies that are showing relative strength (momentum). Holding 42 stocks in the basket, it charges 60 bps in annual fees. The product is illiquid and relatively unpopular with AUM of $205.3 million and average daily volume of 54,000 shares. It has a Zacks ETF Rank #2 with a High risk outlook (read: Top-Ranked ETFs to Buy on the Dip This December).

Stocks

Here, we have used the Zacks Stock Screener to find five picks that are in the red from a one-month look but carry a Zacks Rank #1 or 2, VGM Score of B or better, and a top-ranked Zacks Industry in the top 25%, and have witnessed positive earnings estimate revision for the current quarter in a month.

Charah Solutions Inc. (NYSE:CHRA)

With a market cap of $63.39 million, this company is a provider of environmental and maintenance services to the power generation industry with operations in coal-fired and nuclear power generation. It has seen positive earnings estimate revision of a penny for the ongoing quarter in a month and belongs to the top-ranked Industry (top 35%). The stock has a Zacks Rank #2 and VGM Score of A.

Dillard's Inc. (NYSE:DDS)

This is a large departmental store chain featuring fashion apparel and home furnishings. The stock has seen positive earnings estimate revision of 5 cents for the ongoing fiscal quarter in a month and has a market cap of $1.72 billion. It belongs to a favorable Zacks industry (placed at the top 18% of 250+ industries). The stock has shed about 6.3% in a month. Dillard's has a Zacks Rank #2 and VGM Score of A (read: 3-Year Scorecard of Trump Presidency: 5 ETFs Up At Least 100%).

Legg Mason Inc. (NYSE:LM)

It is a global asset management firm focused on the growth and preservation of its clients' capital through its proprietary mutual funds and separately-managed accounts (SMAs). The stock has seen positive earnings estimate revision of a penny for the ongoing quarter over the past 30 days. It has a market cap of $3.20 billion and belongs to a favorable Zacks industry (top 37%). Legg Mason has a Zacks Rank #2 and VGM Score of A.

H&R Block Inc. (NYSE:HRB)

It is a leading provider of tax preparation services. The Zacks Consensus Estimate for the current quarter has been revised upward from a loss of 60 cents to a loss of 54 cents. With a market cap of $4.57 billion, the stock belongs to the top-ranked industry (top 6%). It has a Zacks Rank #1 and VGM of B. You can see the complete list of today’s Zacks #1 Rank stocks here.

Phillips 66 (NYSE:PSX)

It operates as an energy manufacturing and logistics company. The stock saw solid earnings estimate revision of 11 cents for the ongoing quarter over the past 30 days and falls in the top-ranked Industry (top 12%). It has a market cap of $50.23 billion and carries a Zacks Rank #2. PSX has a VGM Score of A.

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Legg Mason, Inc. (LM): Free Stock Analysis Report

Industrial Select Sector SPDR Fund (XLI): ETF Research Reports

iShares U.S. Aerospace & Defense ETF (ITA): ETF Research Reports

Invesco DWA Technology Momentum ETF (PTF): ETF Research Reports

Phillips 66 (PSX): Free Stock Analysis Report

Dillard's, Inc. (DDS): Free Stock Analysis Report

H&R Block, Inc. (HRB): Free Stock Analysis Report

Charah Solutions, Inc. (CHRA): Free Stock Analysis Report

Invesco Dynamic Software ETF (PSJ): ETF Research Reports

First Trust Large Cap Growth AlphaDEX Fund (FTC): ETF Research Reports

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Zacks Investment Research