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2 Growth ETFs Worth Considering Ahead Of Earnings Season

Published 07/07/2022, 08:39

Many growth stocks and exchange-traded funds (ETFs) are currently changing hands around 52-week or even multi-year lows and the impending earnings season could bring more volatility to markets.

However, research suggests that:

“Stocks lose 36% on average in a bear market. By contrast, stocks gain 114% on average during a bull market.”

Put another way, investing in robust growth shares is crucial to create long-term wealth. So, here are two ETFs that are worth a look in Q3.

1. Vanguard S&P 500 Growth Index Fund ETF Shares

  • Current Price: $223.82
  • 52-week range: $208.10 - $306.64
  • Dividend yield: 0.79%
  • Expense ratio: 0.10% per year

The Vanguard S&P 500 Growth Index Fund ETF Shares (NYSE:VOOG), which was first listed in September 2010, invests in growth shares in the S&P 500. Criteria include EPS, sales growth, and price momentum. Its net assets are $6.9 billion.

VOOG Weekly

VOOG, which tracks the S&P 500 Growth Index, holds 240 stocks in sectors including information technology, IT (44.10%), consumer discretionary (15.80%), communication services (11.30%), health care (11.80%), financials (7.0%), consumer staples (1.60%) and energy (1.30%).

During the pandemic, we all discovered the importance of technology and in 2022, global information technology (IT) spending should reach $4.4 trillion, up 4% year-over-year (yoy). So, it is not surprising to see IT shares comprise a large part of the portfolio.

VOOG is a concentrated fund with over half the ETF comprising 10 stocks including Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT), Amazon (NASDAQ:AMZN), Alphabet (NASDAQ:GOOGL), Tesla (NASDAQ:TSLA), and NVIDIA (NASDAQ:NVDA).

VOOG saw a record high in late December 2021 but is down about 25.8% year-to-date.

Trailing price-to-earnings (P/E) and price-to-book (P/B) ratios stand at 23.8x and 7.0x. Readers who expect large-cap technology stocks to fare better during this earnings season should put VOOG on their radar screen.

2. ProShares MSCI Transformational Changes ETF

  • Current Price: $32.58
  • 52-Week Range: $30.83 - $48.25
  • Dividend yield: 0.16%
  • Expense Ratio: 0.45% per year

With net assets close to $29.68 million, the ProShares MSCI Transformational Changes ETF (NYSE:ANEW) currently invests in firms that focus on four themes: the future of work, genomics & telehealth, digital consumer, and food revolution.

ANEW Weekly Chart

ANEW, which began trading in October 2020 has 176 holdings. It tracks the returns of the MSCI Global Transformational Changes Index. Over 80% of its holdings are US-based, followed by China (6.19%), Germany (3.78%), Ireland (2.04%) and Japan (1.33%).

Health care and IT sectors each account for 28% of assets followed by consumer discretionary (11.56%), materials (11.08%), communication services (10.66%), and consumer staples (5.21%).

At present, no stock has a weighting larger than 3.6% so price changes in a given stock are unlikely to affect the price of ANEW.

Its investment in the digital consumer sector is through stocks including online travel platform Booking Holdings (NASDAQ:BKNG); Chinese tech heavyweights Tencent Holdings (HK:0700) (OTC:TCEHY) and Alibaba (NYSE:BABA); Amazon; and Meta Platforms (NASDAQ:META).

Chemical and agritech name Corteva (NYSE:CTVA); spice and condiment giant McCormick (NYSE:MKC); farm equipment manufacturer Deere (NYSE:DE); diverse food, beverage, nutrition, and scent group International Flavors & Fragrances (NYSE:IFF) are among the top names in the food revolution sector.

For exposure to the future of work the ETF holds Apple, Microsoft, Alphabet, and software company Adobe (NASDAQ:ADBE).

Finally, its investments in genomics & telehealth include Abbott Laboratories (NYSE:ABT), AbbVie (NYSE:ABBV), Roche Holding (SIX:ROG), Danaher (NYSE:DHR), and Johnson & Johnson (NYSE:JNJ).

Since January, ANEW is down over 27.6% of its value with a trailing P/E and P/B ratio of 39.92x and 5.02x respectively. We like the diversity of ANEW ETF and it might be worth investing at $32 or below.

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