4 ETF & Stock Charts To Tap Revenue Growth

The Q1 earnings reporting cycle is on its last leg with results from 92.6% of the total S&P 500 components on board. While earnings normally are enough to catch the attention of investors, we would like to emphasize that sales also deserve equal attention.

This is because sales are harder to be influenced in an income statement than earnings. A company can land up on decent earnings numbers by adopting cost-cutting or some other measures which do not speak for its core strength. But it is harder for a company to mold its revenue figure.

So far in Q1, we have noticed a considerable improvement in revenue growth. The companies that have reported so far have logged in 7.3% growth, as per the Earnings Trends issued on May 18, 2017. Total revenue is expected to grow 6.2% this reporting cycle.

This is well above the growth rates we have seen in the past – 4.7% in Q4, 2.1% in Q3, negative 0.3% in Q2 and negative 0.9% in Q1. Revenue growth, in fact, is likely to remain stable in the upcoming quarters, with 4.7% expected for Q2 and Q3 each, and 5.3% for Q4.

Below, we highlight four sectors and their related ETFs that could be used to book some profits on revenue growth. Each sector has seen solid revenue growth so far in the Q1 earnings season and offers intriguing fundamentals to protect investors’ portfolios if a Trump slump takes over the market.

Also, we highlight one stock from each sector that saw decent revenue growth last fiscal year compared to the sector average and price/sales ratio lower than the S&P 500 median. These also flaunt a Zacks Rank #1 (Strong Buy). We further compare these picks with the S&P 500-based ETF (AX:SPY) and the respective sector ETF.

Oil/Energy

The expected Q1 revenue growth for the sector is 31.6%, as per the Earnings Trends published on May 18.

VanEck Vectors Global Alterative Energy ETF (HN:GEX)

The fund looks to track the overall performance of companies involved in the business of alternative energy. Alternative energy includes power derived principally from biofuels (such as ethanol), biomass, wind, solar, hydro and geothermal sources, and also takes into consideration several technologies that support the production, use and storage of these sources, as per the issuer (read: Energy ETFs Fall Despite Strong Q1 Earnings).

Renewable Energy Group Inc. (NASDAQ:REGI)

This is a biodiesel manufacturer and marketer. Its value score is ‘A’. Price/sales ratio is 0.20 times and annual sales growth was 47.13% in 2016.

Consumer Discretionary

Expected Q1 revenue growth for the sector is 11.4%.

Amplify Online Retail ETF IBUY

The underlying index of the fund utilizes a rule-based methodology to select a globally diversified group of companies with 70% or more of revenues from online and virtual sales. The fund charges 65 bps in fees (read: 5 ETFs & Stocks to Shrug Off Sluggish Retail Sales).

JD.com Inc. (NASDAQ:JD)

It operates as an online direct sales company in China. Its price/sales ratio is 1.41 times and revenue growth is 33.91%. Its Zacks Industry Rank is in the top 15%.

Industrial Products

The sector’s expected revenue growth for Q1 of 2017 is 8%.

ARK Industrial Innovation ETF ARKQ

It is an actively managed ETF that targets primarily domestic equity securities and U.S. exchange-traded foreign equity securities of companies that are in line with its investment theme of industrial innovation (read: Political Turmoil Triggers Sell-Off: 5 Sector ETFs Hit Hard).

Kadant Inc. (NYSE:KAI)

It is a renowned supplier of a range of products and systems for the global papermaking and paper recycling industries. Its price/sales ratio is 1.87 times and revenue growth is 6.16%. Its Zacks Industry Rank is in the top 12%.

Technology

The sector’s expected revenue growth for Q1 is 6.1%.

SPDRÂ S&P Internet ETF XWEB

The underlying index of the Internet segment of the S&P Total Market Index. The Internet segment of the S&P TMI comprises the Internet retail sub-industry and Internet software & services sub-industry. The fund charges 35 bps in fees (read: 5 Hot Tech ETF Charts with Upside Potential).

YY Inc. (NASDAQ:YY)

YY Inc. is a communication social platform. Its price/sales ratio is 2.29 times and revenue growth is 29.80%. Its Zacks Industry Rank is in the top 15%.

Want key ETF info delivered straight to your inbox?

Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>