Inflation Cools in April: 5 Sector ETFs & Stocks to Thrive

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In April, inflationary pressures showed signs of easing, with the Consumer Price Index (CPI) on a “core” basis rising 3.6% year over year, in line with expectations. This marked a cooling from the 3.8% increase observed in March. Monthly core price increases also aligned with expectations at 0.3%, down from 0.4% in the previous three months.

Despite this cooling, below we highlight a few sector ETFs and stocks that may gain in the near term as the price gains remained steady in those business areas.

Sector ETFs to Gain

Transportation – SPDR S&P Transportation ETF (XTN)

The transportation index jumped 0.9% sequentially in April and rose 11.2% year over year.

The fund XTN tracks the S&P Transportation Select Industry Index, which represents the transportation segment of the S&P Total Market Index. The fund has a Zacks Rank #2 (Buy).

As far as important stocks are concerned, Zacks Rank #3 (Hold) FedEx FDX may be played. It is the leader in global express delivery services. The company provides a broad portfolio of transportation, e-commerce and business services through companies competing collectively, operating independently and managed collaboratively, under the FedEx brand.

Real Estate – Real Estate Select Sector SPDR ETF (XLRE)

Weighted shelter makes up 32.77% of CPI, of which 7.8% is rent and 23.68% is private housing, per data from MacroMicro. The shelter index jumped 0.4% in April. Index increased 5.5% annually.

The underlying Real Estate Select Sector Index includes securities of companies from the following industries real estate management and development and REITs, excluding mortgage REITs. The fund yields 3.49% annually and charges 9 bps in fees.

Meanwhile, Host Hotels & Resorts HST, has a Zacks Rank #3. It is one of the leading lodging real estate investment trusts (REITs), which engages in the ownership, acquisition and redevelopment of luxury and upper-upscale hotels in the United States and abroad.

Restaurants – AdvisorShares Restaurant ETF (EATZ)

The food-away-from index jumped 0.3% in April. Price index increased 4.1% annually.

The AdvisorShares Restaurant ETF is an actively managed exchange-traded fund that seeks to achieve its investment objective by investing at least 80% of its net assets in securities of companies that derive at least 50% of their net revenue from the restaurant business.

CAVA Group Inc. CAVA, which has a Zacks Rank #2, is a category-defining Mediterranean fast-casual restaurant brand.

Healthcare – Health Care Select Sector SPDR ETF (XLV)

The medical care index rose 0.4% sequentially in April. The index has advanced 2.7% annually. The index grew 0.6% sequentially in March, indicating strong momentum in price gains.

The underlying Health Care Select Sector Index includes companies from the following industries: pharmaceuticals; health care providers & services; health care equipment & supplies; biotechnology; life sciences tools & services; and health care technology.

HCA Healthcare HCA, which has a Zacks Rank #2 deserves a mention. It is the largest non-governmental operator of acute care hospitals in the United States.

Retail Apparel – SPDR S&P Retail ETF (XRT)

The apparel price index rose 1.2% sequentially in April. The index has gained 1.3% annually. The index grew 0.7% sequentially in March and 0.6% in February, again pointing to a strong price gain trend.

The fund gives exposure to US retail stocks. Apparel retail takes about 21% of the fund. The fund charges 35 bps in fees.

The Gap GPS is a premier international specialty retailer offering a diverse range of clothing, accessories, and personal care products. The fund has a Zacks Rank #1 (Strong Buy).

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Host Hotels & Resorts, Inc. (HST) : Free Stock Analysis Report

The Gap, Inc. (GPS) : Free Stock Analysis Report

FedEx Corporation (FDX) : Free Stock Analysis Report

HCA Healthcare, Inc. (HCA) : Free Stock Analysis Report

Health Care Select Sector SPDR ETF (XLV): ETF Research Reports

SPDR S&P Retail ETF (XRT): ETF Research Reports

SPDR S&P Transportation ETF (XTN): ETF Research Reports

Real Estate Select Sector SPDR ETF (XLRE): ETF Research Reports

AdvisorShares Restaurant ETF (EATZ): ETF Research Reports

CAVA Group, Inc. (CAVA) : Free Stock Analysis Report

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