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Best Sector ETFs & Stocks from Trump's First-Year Win

Trump no doubt has fueled strong optimism in the economy in his one-year of victory with his proposed pro-growth agenda aimed at accelerating economic growth, reducing regulation, increasing spending, slashing taxes, and boosting jobs and corporate profits. However, many of his policies are in a political gridlock, which is the biggest drag in his administration.

Trump’s Achievements to the Economy

The U.S. economy has been on a solid growth path with GDP growth expanding 3% annually in the third quarter following 3.1% growth in the second quarter. This represents the best back-to-back quarters of at least 3% growth since 2014. Employers have added 1.8 million jobs in a year since Trump won and unemployment dropped to the lowest level since December 2000 to 4.1% from 4.6% last November (read: 5 ETFs to Soar After Solid Q3 GDP Data).

Americans have an optimistic view of the economy with confidence hitting the highest level in almost 17 years. This is especially true as the Conference Board consumer confidence index jumped to 125.9 in October from a revised 120.6 in September. Meanwhile, consumer spending, which accounts for more than two-thirds of U.S. economic activity, recorded its biggest increase in more than eight years in September.

Coming to Trump’s policies, his tax reform proposal is closer to reality following the Senate’s passage of the $1.4 trillion budget resolution. Tax cuts have been the biggest legislative moves after the failure of the healthcare bill (read: 5 Biggest ETF Winners of Trump Trade Resurgence).

Trump’s Achievements to the Stock World

Since Trump’s win, the U.S. stock market has been on a gigantic ride with the S&P 500, the Dow Jones and the Nasdaq Composite Index rising 21.6%, 28.5% and 30.3%, respectively. The post-election stock market rally has been the fourth largest since 1936, according to Goldman Sachs.

Notably, the S&P 500 has hit 60 all-time highs since the election, unmatched any other first-year tenure of a president, according to CFRA. Per Sam Stovall of CFRA Research, the S&P 500 rally during Trump’s first year is the third best since World War II, behind only President George H. W. Bush and President John F. Kennedy.

The Dow Jones is the biggest beneficiary of the rotation in leadership in the large-cap domestic space as the index notched 1,000-point gains for four times post-election. This represents the largest number of such 1,000-point moves within a calendar year in the benchmark’s more than 120-year history, according to WSJ Market Data Group. The index topped the 20,000 mark on Jan 25, 21,000 on Mar 1, 22,000 on Aug 1 and 23,000 on Oct 17. Notably, the journey from 20,000 to 21,000 came in just 24 trading sessions, marking the fastest move of 1,000 points since 1999 (read: Dow ETFs Soar as the Index Hits 23,000).

Winners

While there were winners in every corner, a few sectors have easily outperformed on Trump’s policies since election. Aerospace, industrial products and construction are leading the way as per Zacks sectors, soaring 47.7%, 34.1%, and 33.5%, respectively, in one year. Aerospace, industrial products and construction currently have a solid Rank in the top 44%, top 38%, and top 19%, respectively.

Below, we have highlighted the best ETFs & stocks from these sectors that could be better plays as we move into the second year of Trump presidency.

Aerospace

SPDR S&P Aerospace & Defense ETF XAR: This product offers equal-weight exposure to 35 stocks by tracking the S&P Aerospace & Defense Select Industry Index. It has been able to manage $1 billion in its asset base while trades in average daily volume of around 120,000 shares. It charges 35 bps in annual fees and has surged 40% post election. The fund has a Zacks ETF Rank #1 (Strong Buy) with a Medium risk outlook (read: Beyond North Korea, 4 More Reasons to Buy Defense ETFs).

The Boeing Company BA: The company designs, develops, manufactures, sells, services, and supports commercial jetliners, military aircraft, satellites, missile defense, human space flight, and launch systems and services worldwide. The stock has seen solid earnings estimate revision of 26 cents for this year in the last three months and has an expected earnings growth rate of 30.89%. It has a Zacks Rank #3 (Hold) and a VGM Style Score of A. The stock has gained 87.2% since Trump’s win.

Industrials

First Trust RBA American Industrial Renaissance ETF AIRR: The ETF offers exposure to small and mid-cap securities in the industrial and community banking sectors by tracking the Richard Bernstein Advisors American Industrial Renaissance Index. Holding 58 stocks in its basket, the fund is well spread across components with none holding more than 3.5% share. The product has $203.9 million in AUM and trades in a moderate volume of around 70,000 shares per day on average. It charges 70 bps in annual fees and has a Zacks ETF Rank #3 with a High risk outlook. The ETF has risen 34.5% since Trump won election (read: Here's an ETF to "Make America Great Again").

H&E Equipment Services Inc. HEES: This company is one of the largest integrated equipment services companies in the United States with full-service facilities throughout the Intermountain, Southwest, Gulf Coast & Southeast regions of the United States. The stock has seen solid earnings estimate revision of 49 cents for this year in the last one month and has an expected growth rate of 53.33%. It has a Zacks Rank #1 (Strong Buy) and a VGM Style Score of A. Shares of HEES are up 154.2% since election.

Construction

iShares U.S. Home Construction ETF ITB: This fund provides a pure play to home construction stocks by tracking the Dow Jones U.S. Select Home Construction Index. It holds a basket of 47 stocks with heavy concentration on the top three firms with a combined 32.5% share. The product has amassed $2.2 billion in its asset base and trades in robust volume of around 2.7 million shares a day on average. It charges 44 bps in annual fees and has a Zacks ETF Rank #2 with a High risk outlook. ITB has gained 53.2% in a year (read: Construction ETF Hits New 52-Week High).

TopBuild Corp. BLD: This company is the installer and distributor of insulation products to the construction industry primarily in the United States. The stock saw positive earnings estimate revision of a couple of cents over the past 60 days for this year, representing substantial growth of 40.05%. It a Zacks Rank #3 and a VGM Style Score of B. BLD has surged 102.6% post election.

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Boeing Company (The) (BA): Free Stock Analysis Report
 
TopBuild Corp. (BLD): Free Stock Analysis Report
 
ISHARS-US HO CO (ITB): ETF Research Reports
 
FT-RBA AMER IND (AIRR): ETF Research Reports
 
SPDR-SP AER&DEF (XAR): ETF Research Reports
 
H&E Equipment Services, Inc. (HEES): Free Stock Analysis Report
 
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