Don't Panic About Virus, Buy 5 Beaten-Down Top-Ranked ETFs

China’s Coronavirus scare took the global market in its grip and stocks skid last week. The SARS-style coronavirus outbreak, in fact, has spread to the other parts of the world too, impacting global travel demand materially. Travel and material stocks took a big hit from the issue.

However, the Coronavirus event may not be as lethal as SARS was in late 2002 and 2003. The World Health Organization recently declared that “it was too early to call the coronavirus a global emergency.”

There were an estimated 8,000 people infected with SARS and the death toll was about 800. But by Jan 26, the death toll from the Coronavirus was 80 among 2744 cases (read: Sector ETFs & Stocks to Gain/Lose on Coronavirus Outbreak).

Chief investment officer at Bleakley Global Advisors expects “any hit to the U.S. market to be less severe than in China’s markets, unless the outbreak intensifies.” Even if the disease intensifies, the impact on the market should not be long-lasting. Notably, Mark Williams (NYSE:WMB), chief Asia economist at Capital Economics, noted that the China’s economy quickly rebounded in 2003 after being impacted by SARS by 5 percentage points.

First Trust Rising Dividend Achievers ETF RDVY – Down 1.9% on Jan 24

Stocks with dividend growth point to quality investing. These companies, known as dividend aristocrats, are usually good for value investing and are in demand when volatility flares up (read: 5 Dividend ETFs That Beat S&P 500 in 2019).

The underlying NASDAQ US Rising Dividend Achievers Index is designed to provide access to a diversified portfolio of companies with a history of paying dividends. The fund yields 1.56% annually and has a Zacks Rank #2 (Buy).

Invesco Dynamic Semiconductors ETF (TSX:PSI) – Down 1.8% on Jan 24

The sector’s underlying strength and upbeat corporate earnings, as evident from Intel’s (NASDAQ:INTC) stellar Q4, should drive the fund ahead. Chip stocks have substantial exposure to China and the phase-one trade deal should bode well for the space. The 5G boom, autonomous cars, cloud computing, video gaming, e-Sports, cryptocurrency mining, wearables and the Internet of Things (IoT) would also boost demand for semiconductors. The fund has a Zacks Rank #1 (Strong Buy) (read: Chip ETFs to Surge on Intel's Solid Q4 Earnings, Upbeat View).

SPDR S&P 600 Small Cap Value (NYSE:SLYV) ETF SLYV – Down 1.8% on Jan 24

Compelling valuation, a dovish Fed, upbeat U.S. economic data points, easing trade tensions, considerable chances of Trump’s re-election in 2020 propel small-cap stocks. However, with uncertainties still lingering, one may find this small-cap value ETF a lucrative bet. The fund has a Zacks Rank #2 (read: Top-Ranked Small-Cap ETFs to Buy for 2020).

Invesco S&P 500 Enhanced Value ETF SPVU – Down 1.6% on Jan 24

A value aspect for the soaring S&P 500 could also be a good bet. The underlying S&P 500 Enhanced Value Index tracks the performance of stocks in the S&P 500 Index that have the highest value score. The fund has a Zacks Rank #2.

Financial Select Sector SPDR ETF (NYSE:XLF) XLF – Down 1.3% on Jan 24

The largest portion of traditional value indexes is held by financial stocks. The sector is known for solid stock buyback and dividend distribution (read: 4 Sector ETFs Sizzling With Solid Buybacks).

Plus, minimal credit risk adds to the positives, according to Bank of America’s Savita Subramanian. High quality and the cash return offered by the sector are largely being unnoticed, per Subramanian.

Banks dominate the fund XLF’s portfolio with 43% while capital markets, insurance and diversified financial services round off the next three spots. The fund has a Zacks Rank #2 (read: 2 Sectors & Their ETFs Are Hot Picks for 2020).

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