Cautious on Big Tech & AI? Try These Value-Focused Sector ETFs
In the dynamic world of investing, strategies come and go, but one that has consistently proven its resilience is value investing. Value investing is a time-tested approach that involves seeking out stocks trading below their intrinsic value, with the expectation that the market will eventually recognize and correct this undervaluation.
Are Cautious on Big Tech & AI?
Investors should note that full-fledged AI boost will take time to materialize.While Meta, Microsoft and Alphabet are all about AI, Apple still doesn’t seem to be into it. Microsoft already told investors that growth from its AI services will be "gradual” (read: Is It Time for Rotation Into Broad ETFs From Tech-Heavy Ones?).
Against this backdrop,healthcare and utilities stocks stand out as compelling options as both sectors offer value, per Brian Arcese of Foord Asset Management, as quoted on CNBC.
Healthcare Stocks: Offers Wellness to Your Portfolio
The healthcare sector is a foundation of any economy, providing essential services irrespective of market conditions. From pharmaceutical giants developing life-saving drugs to companies advancing medical technologies, the healthcare sector offers a breadth of investment opportunities.
Moreover, healthcare stocks often offer the benefit of dividend income. Companies in this sector tend to have stable cash flows, allowing them to sustain and even grow dividends over time.
Value investors can identify healthcare stocks that are trading below their intrinsic value due to short-term market fluctuations, regulatory concerns, or other transient factors. If you are unsure about stocks, the broad-based ETF approach could be a winning one.
Below we highlight a few ETFs that have a lower P/E than that of the S&P 500 (i.e. 17.86X).
SPDR S&P Pharmaceuticals ETF XPH – 10.54X; Up 5.9% Past Month
SPDR S&P Health Care Services ETF XHS – 15.31X; Up 5.9% Past Month
VanEck Pharmaceutical ETF PPH – 15.43X; Up 4.8% Past Month
Utilities Stocks: Enhancing Portfolio Stability
Utilities are often referred to as "defensive stocks" due to their inherent stability and predictable cash flows. These companies provide essential services such as electricity, water, and natural gas to consumers and businesses alike. Regardless of economic fluctuations, individuals and companies continue to rely on these basic services, making utilities stocks a valuable addition to a value-focused portfolio.
One of the key benefits of utilities stocks is their steady dividend distribution. Utilities companies are known for distributing a considerable share of their earnings as dividends, making them attractive for income-focused investors.
iShares U.S. Infrastructure ETF IFRA – 13.29X; Up 1.94% Past Month
Global X US Infrastructure Development ETF PAVE – 15.49X; Up 3.41% Past Month
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
SPDR S&P Health Care Services ETF (XHS): ETF Research Reports
SPDR S&P Pharmaceuticals ETF (XPH): ETF Research Reports
VanEck Pharmaceutical ETF (PPH): ETF Research Reports
Global X U.S. Infrastructure Development ETF (PAVE): ETF Research Reports
iShares U.S. Infrastructure ETF (IFRA): ETF Research Reports
