Wall Street has been on the second-longest bull run in U.S. history with the major bourses hitting new milestones. Notably, the Dow Jones industrial Average hit another landmark 23,000 last week. Resumption of Trump trade, upbeat economic data, and deluge of solid earnings reports are instilling optimism in the world’s largest economy.
Manufacturing activity, as measured by the Institute for Supply Management, reached a 13-year high in September while non-manufacturing activity or the service sector expanded to the highest level since August 2005. Additionally, auto sales strongly rebounded in September posting the best month of the year, following the eighth consecutive month of decline. Consumer confidence soared to highest level since 2004 in early October, per the preliminary University of Michigan reading.
Further, the Senate’s passage of the $1.4 trillion budget resolution has paved the way for tax cuts later this year or early next year. The reform will likely create an economic surge, boosting job growth in manufacturing and other sectors. The step toward the tax overhaul sparked a strong rally in the stocks lately and is a key catalyst to the likely future market boom.
While the rally is broad-based, there is still some bargain hunting for investors. Additionally, any dip in the stock market could be an attractive entry point. This is especially true for now as the stock market pulled back slightly on Wednesday and saw its worst day in two months. Notably, the Dow Jones witnessed the biggest one-day fall since Sep 5.
As a result, we have highlighted five ETFs and five stocks that have been selling at a bargain price. Investors could definitely look at these products for outperformance in the coming weeks.
How to Find Bargain ETFs?
Using our database, first we selected the ETFs with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). This is because these ranks suggest strengthening fundamentals and superior weighting methodologies that could allow them to lead higher than their cousins in a booming market. Then we narrowed down the list to funds having a lower P/E ratio than 18.67 for the broad market fund (SPY – Free Report) , expense ratio of less than 0.30% and dividend yield of at least 2%.
