Momentum ETFs & Stocks in Focus as Trump Delays Tariff Hike

President Donald Trump delayed the next planned tariff increase of 5% on $250 billion of Chinese goods by two weeks from Oct 1 to Oct 15 as “a gesture of goodwill”. The tariff delay request was made by the Vice Premier of China, Liu He, on account of the 70th anniversary of the People’s Republic of China on Oct 1.

The move came following China's decision to exempt some U.S. goods from its tariffs, scheduled to take effect from Sep 17. Beijing revelead its first batch of tariff exemptions for 16 types of U.S. products, including some anti-cancer drugs and lubricants, as well as animal feed ingredients including whey and fish meal, according to a Ministry of Finance statement on its website (read: China ETFs Surge: Will the Upside Continue?).

The latest development in the tariff war has been welcomed by the global stock markets, leading to increased demand for riskier assets. It signals that the two countries are trying to diffuse the prolonged trade war, which has been roiling the global markets for more than a year. Notably, top officials from the United States and China are expected to resume talks in early October.

While the broader stock market is expected to move higher, momentum investing will likely take charge as investors seek higher returns in a short span. Momentum investing looks to fetch profits from buying hot stocks that have shown an uptrend over the past few weeks or months. As such, we have presented five ETFs and stocks that could lead to outperformance on tariff delay news. Further, these could even beat broader market returns in the coming months if these trends prevail.

iShares Edge MSCI USA Momentum Factor ETF MTUM

This fund provides exposure to large and mid-cap stocks that exhibit relatively higher price momentum by tracking the MSCI USA Momentum Index. It charges 15 bps in fees per year and is a popular choice with AUM of $10.5 billion (read: Momentum ETFs to Buy as US-China Adopt Peacemaking Tone).

Invesco DWA Momentum ETF PDP

This fund tracks the Dorsey Wright Technical Leaders Index, which measures the performance of companies that demonstrate powerful relative strength characteristics. It has amassed $1.6 billion in its asset base and charges 63 bps in annual fees.

Invesco S&P MidCap Momentum ETF XMMO

This ETF follows the S&P Midcap 400 Momentum Index, which is designed to identify mid-cap firms having the highest momentum scores. XMMO has AUM of $574.2 million and expense ratio of 0.39%.

VictoryShares USAA MSCI USA Value Momentum ETF ULVM

This fund tracks the MSCI USA Select Value Momentum Blend Index, which offers exposure to large and mid-cap companies that have higher exposure to value and momentum factors while also maintaining moderate turnover and lower realized volatility than traditional capitalization weighted indexes. It has accumulated $476.7 million in AUM and charges 0.20% in expense ratio (read: A Spread of Top-Ranked Value ETFs for the Current Market).

SPDR Russell 1000 Momentum Focus ETF ONEO

With AUM of $433.1 million, this product targets large-cap securities with a combination of core factors (high value, high quality, and low size characteristics) and a focus factor comprising high momentum characteristics. It follows the Russell 1000 Momentum Focused Factor Index and charges an annual fee of 20 bps. The fund has a Zacks ETF Rank #3 (Hold).

Kirkland Lake Gold Ltd. KL

This company is engaged in the acquisition, exploration, development, and operation of gold properties. It has witnessed solid earnings estimate revision of 16 cents for this year over the past 30 days and has an expected earnings growth rate of 75%. The stock has a Zacks Rank #1 (Strong Buy) and a Momentum Score of A. You can see the complete list of today’s Zacks #1 Rank stocks here.

Lululemon Athletica Inc. LULU

This company designs and retails athletic clothing for women, men, and female youth. It witnessed solid earnings estimate revision of 10 cents for this year over the past 30 days with an expected growth rate of 23.18%. The stock has a Zacks Rank #2 (Buy) and Momentum Score of A.

Merck & Co. Inc. MRK

This company provides healthcare solutions worldwide. It offers therapeutic and preventive agents to treat cardiovascular, type 2 diabetes, chronic hepatitis C virus, HIV-1 infection, intra-abdominal, fungal infection, insomnia, and inflammatory diseases. The stock saw positive earnings estimate revision of a penny for this year in a month and has an estimated growth rate of 12.67%. It has a Zacks Rank #2 and Momentum Score of A.

Ally Financial Inc. ALLY

It provides various financial products and services to consumers, businesses, automotive dealers, and corporate customers primarily in the United States and Canada. The stock has an estimated earnings growth of 11.98% for this year. The stock has a Zacks Rank #1 and a Momentum Score of A (read: Bank ETFs Benefit From Steepening Yield Curve, But How Long?).

Zumiez Inc. ZUMZ

It operates as a specialty retailer of apparel, footwear, accessories, and hardgoods for young men and women. The stock witnessed solid earnings estimate revision of 27 cents for fiscal year (ending Jan 2020) in a month with an expected growth rate of 20.67%. Zumiez has a Zacks Rank #1 and Momentum Score of A.

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Merck & Co., Inc. (MRK) : Free Stock Analysis Report
 
Ally Financial Inc. (ALLY) : Free Stock Analysis Report
 
SPDR Russell 1000 Momentum Focus ETF (ONEO): ETF Research Reports
 
Invesco DWA Momentum ETF (PDP): ETF Research Reports
 
iShares Edge MSCI USA Momentum Factor ETF (MTUM): ETF Research Reports
 
Zumiez Inc. (ZUMZ) : Free Stock Analysis Report
 
lululemon athletica inc. (LULU) : Free Stock Analysis Report
 
Kirkland Lake Gold Ltd. (KL) : Free Stock Analysis Report
 
Invesco S&P MidCap Momentum ETF (XMMO): ETF Research Reports
 
VictoryShares USAA MSCI USA Value Momentum ETF (ULVM): ETF Research Reports
 
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