The Most Tradable Stock In Each Sector SPDR ETF

by on December 11, 2012 | Updated December 19, 2012 | ETFs Mentioned:

Sector ETFs give you a convenient way to monitor, analyze and trade different sectors of the economy. When the overall stock market—gauged by an index such as the S&P 500—is moving higher, one, two or possibly three sectors will be the strongest and leading the market higher; other sectors will be laggards. By monitoring which sector ETFs are top performers you’ll continually stay on top of where traders are cashing their cash and where the most profits lie—after all, the strongest sector is producing the largest return, those dropping the most present golden shorting opportunities. Take it one step further and you can isolate the strongest (or weakest) stocks in the strongest sector, zeroing on the stocks that are pushing the market higher (or lower) or holding up the best when the overall market falls. [Download How To Pick The Right ETF Every Time].

Here we look at nine major sector ETFs, their top holdings, and isolate the most tradable stock(s) in each based on performance, volatility and volume.

XLY – Consumer Discretionary Select Sector SPDR

This sector focuses on companies that provide customers with the non-essentials. Included in the sector are companies from retail, media, hotels, luxury goods, cars, leisure and apparel [see our Consumer Centric ETFdb Portfolio].

Top 10 Holdings (as of Nov. 5, 2012)

  1. Comcast Corp Class A (CMCSA): 6.86%
  2. Home Depot, Inc. (HD): 6.77%
  3. Amazon.com Inc (AMZN): 6.29%
  4. Walt Disney Co (DIS): 6.15%
  5. McDonald’s Corporation (MCD): 6.06%
  6. News Corporation Class A (NWSA): 3.46%
  7. Time Warner Inc (TWX): 3.10%
  8. Ford Motor Co (F): 3.01%
  9. Target Corp (TGT): 2.85%
  10. Lowe’s Companies Inc. (LOW): 2.84%

The top stock for the sector ETF over the last two years, in terms of overall performance, is Home Depot. Over that time Home Depot racked up close to an 80% gain, outpacing the other top holdings in the sector ETF, and with average volume near 8 million shares a day, volume is rarely a concern. The runner ups are News Corporation, moving up about 70% over the last two years and averaging about 14.8 million shares a day, and Comcast with similar performance and 12 million shares per day.

Home Depot was also the most volatile stock over the last two years. While it predominately moved higher, it covered the most ground—down 20% at one point to up 88%. Therefore, those looking for investment quality or short-term tradability will find Home Depot one of the top trading stocks in the sector. Figure 1 shows that over the last two years Home Depot consistently moved more aggressively then the next most volatile stocks: News Corporation and Comcast.

Figure 1. Two Year Percentage Movement: HD versus NWSA (blue) and CMCSA (white). Source: Freestockcharts.com


XLP – Consumer Staples Select Sector SPDR

This sector includes companies that have strong demand regardless of economic conditions, including food retailers and products, beverages, personal products and tobacco.

Top 10 Holdings (as of Nov. 5, 2012)

  1. Procter & Gamble Co (PG): 13.68%
  2. Philip Morris International, Inc. (PM): 10.76%
  3. Coca-Cola Co (KO): 10.44%
  4. Wal-Mart Stores Inc (WMT): 8.61%
  5. PepsiCo Inc (PEP): 4.46%
  6. Altria Group Inc. (MO): 4.42%
  7. CVS Caremark Corp (CVS): 4.33%
  8. Colgate-Palmolive Company (CL): 3.56%
  9. Costco Wholesale Corporation (COST): 3.33%
  10. Mondelez International Inc (MDLZ): 3.08%

Over the last two years, three stocks stand out. CVS Caremark, Philip Morris International and Costco Wholesale. Philip Morris gained 48% over that time frame, with CVS and Costco coming at 45% and 37% respectively. CVS has the highest average daily volume – 6 million. Philip Morris averages 5.4 million shares per day and Costco 2.4 million.

These stocks, as well as Altria Group have provided ample swings over the last two years, making them ideal trade candidates for short- to medium-term traders. Philip Morris was the most volatile over the two years, but so far in 2012 Costco has been the biggest mover—at one point down almost 6%, to a peak of being up 26%. Altria the next most volatile in 2012, went from being down just slightly in May, to up 27% at its 2012 peak. [see also 101 ETF Lessons Every Financial Advisor Should Learn].

Figure 2. 2012 Percentage Price Movements: PM versus MO (white) and COST (yellow). Source: Freestockcharts.com


XLE – Energy Select Sector SPDR

What fuels the economy and transportation is included in this sector — oil, gas and consumable fuel companies as well as related products, equipment and services [try our Free ETF Stock Exposure Tool].

Top 10 Holdings (as of Nov. 5, 2012)

  1. Exxon Mobil Corporation (XOM): 19.30%
  2. Chevron Corp (CVX): 14.88%
  3. Schlumberger NV (SLB): 6.97%
  4. Occidental Petroleum Corporation (OXY): 3.74%
  5. ConocoPhillips (COP): 3.59%
  6. Anadarko Petroleum Corp (APC): 2.99%
  7. EOG Resources (EOG): 2.72%
  8. Halliburton Company (HAL): 2.61%
  9. National Oilwell Varco, Inc. (NOV): 2.60%
  10. Apache Corporation (APA): 2.45%

EOG Resources racked up the highest gain over the last two year—30%–and was also one of the most volatile stocks in the top holdings. Chevron increased 23% over the same time frame but its sell-offs and rallies were less dramatic than EOG Resources. Chevron averages 6 million shares a day, compared to 1.7 million for EOG Resources.

Those favoring price stability are better off in a stock like Chevron, while those who are looking for big price swings will find EOG, Apache, Halliburton and National Oilwell Varco highly tradable. The two year chart shows how these stock performed relative to each other over that time frame—EOG was only marginally more volatile than the others, and had more of an upward bias.

Figure 3. Two Year Percentage Price Movements: EOG versus APA (yellow), HAL (purple) and NOV (blue). Source: Freestockcharts.com

During certain times, any of these stocks can be very volatile. Note in mid-January when Halliburton (purple) was up nearly 40% for the year, and then crashed, erasing all gains and ending up being down more than 25% in a matter of months.

XLF – Financial Select Sector SPDR

This sector ETF reflects financial companies, including insurance companies, banks, capital markets, trusts, consumer finance and real estate [see our Financials Free ETFdb Portfolio].

Top 10 Holdings (as of Nov. 5, 2012)

  1. Wells Fargo & Co (WFC): 8.53%
  2. Berkshire Hathaway Inc Class B (BRK.B): 8.50%
  3. JPMorgan Chase & Co (JPM): 8.21%
  4. Bank of America Corporation (BAC): 5.59%
  5. Citigroup Inc (C): 5.33%
  6. U.S. Bancorp (USB): 3.22%
  7. American Express Co (AXP): 2.90%
  8. Goldman Sachs Group Inc (GS): 2.79%
  9. Simon Property Group Inc (SPG): 2.43%
  10. American International Group Inc (AIG): 2.03%

Simon Property Group is the run-away leader over the last two years, moving up 55%. This stock moved steadily higher, along with U.S. Bancorp which is up 21% over the same period. Volume in Simon Property Group is on the lower side at 1.2 million shares per day, versus U.S. Bancorp at 8.7 million.

Simon Property provided many of the best trading opportunities over the last two years, but if you could get a short position, AIG, Bank of America, Goldman Sachs and Citigroup has some big sell-offs in 2011, and big price swings, both up and down, in 2012. Looking at 2012 alone, Bank of America rallied off the 2011 lows and had the most aggressive rallies and declines of the major movers.

Figure 4. 2012 Percentage Price Movements BAC versus AIG, GS, C, SPG and USB. Source: Freestockcharts.com


XLV – Health Care Select Sector SPDR

If it is health related, it is likely included in this sector. XLV includes healthcare providers and equipment, pharmaceuticals, biotechnology, and health and science tools/services.

Top 10 Holdings (as of Nov. 5, 2012)

  1. Johnson & Johnson (JNJ): 12.47%
  2. Pfizer Inc (PFE): 12.12%
  3. Merck & Co Inc (MRK): 8.75%
  4. Abbott Laboratories (ABT): 5.61%
  5. Amgen Inc (AMGN): 4.44%
  6. Gilead Sciences Inc (GILD): 3.68%
  7. UnitedHealth Group Inc (UNH): 3.67%
  8. Bristol-Myers Squibb Company (BMY): 3.57%
  9. Eli Lilly and Company (LLY): 3.25%
  10. Express Scripts (ESRX): 2.98%

Gilead Sciences took off in 2012, and over the last two years is up just over 100%. Strong volume of 8 million shares a day makes this stock the most tradable of the ETF’s top holdings. Amgen is also a strong performer; in 2012 it is up 40% with 4.2 million in daily volume [see Baby Boomers ETFdb Portfolio].

For tradable volatility, nothing compares to Gilead in this sector. Figure 5 shows how Gilead dwarfed the moves made by other major healthcare stocks in 2012. It is worth noting though that Express Scripts and Eli Lilly both rallied into peaks in October and then fell from mid-October to early November, providing quick cash for those nimble enough to get short for the more than 20% declines.

Figure 5. 2012 Percentage Price Movements GILD versus LLY (white), ESRX (yellow) and AMGN (blue). Source: Freestockcharts.com


XLI – Industrial Select Sector SPDR

This sector reflects companies that build–or are involved in the production of—products. Aerospace, machinery, railroads, construction, engineering, airlines and logistics companies are all included.

Top 10 Holdings (as of Nov. 5, 2012)

  1. General Electric Co (GE): 12.53%
  2. United Technologies Corp (UTX): 5.30%
  3. Union Pacific Corp (UNP): 4.80%
  4. Caterpillar Inc (CAT): 4.50%
  5. 3M Co (MMM): 4.50%
  6. United Parcel Service Inc (UPS) Class B (UPS): 4.06%
  7. Boeing Co (BA): 3.89%
  8. Honeywell International, Inc. (HON): 3.83%
  9. Emerson Electric Co. (EMR): 2.93%
  10. Deere & Co (DE): 2.79%

Union Pacific is up 36% over the last two years, making it the top all round performer for the time frame. The stock does 1.9 million in daily volume, giving enough liquidity for both short- and long-term traders to enter and exit with relative ease.

For those seeking out the biggest price swings, 2011 found many of the stocks closely correlated. That broke down in 2012 though. Caterpillar had the biggest swing—up 22.5% in March only to give it all back and be down 16% for the year in July—a very large tradable move on the short side. General Electric also had a large swing from June to early October, rallying almost 28%. CAT averages 7 million shares per day and GE 43.5 million.

Figure 6. 2012 Percentage Price Movements: GE versus CAT. Source: Freestockcharts.com


XLB – Materials Select Sector SPDR

This sector focuses on materials used for the production of products. Chemical, mining, forestry products, packaging and construction materials companies are included.

Top 10 Holdings (as of Nov. 5, 2012)

  1. Monsanto Company (MON): 10.89%
  2. E.I. du Pont de Nemours & Company (DD): 8.95%
  3. Freeport-McMoRan Copper & Gold Class B (FCX): 8.26%
  4. Dow Chemical Co (DOW): 8.07%
  5. Praxair, Inc. (PX): 7.13%
  6. PPG Industries, Inc. (PPG): 4.29%
  7. Ecolab, Inc. (ECL): 4.23%
  8. Newmont Mining Corporation (NEM): 4.09%
  9. Air Products & Chemicals Inc (APD): 3.97%
  10. LyondellBasell Industries NV (LYB): 3.76%

This sector is full of big swinging stocks. LyondellBasell is the top performer over the last two years, up 70%. PPG Industries gained 60%, Monsanto 48% and Ecolab 43% and Freeport-McMoRan lost 42%. PPG Industries and Ecolab do less than 1.4 million per day in volume though. With 5.1 million in daily volume, LyondellBasell is currently this sector ETF’s clear leader. It was also the most volatile over the time frame, down 24% in October 2011 to up 75% in October 2012.

Figure 7. Two Year Percentage Price Movements: LYB versus MON (blue), ECL (yellow), FCX (white), PPG (purple). Source: Freestockcharts.com


XLK – Technology Select Sector SPDR

This ETF captures the overall performance of the technology sector. Companies include computers and related software/hardware manufacturers, telecommunications services and equipment, semiconductors, IT and wireless services, and Internet and office electronics [see 3 ETF Plays For Technology Growth Stocks Flying Under The Radar].

Top 10 Holdings (as of Nov. 5, 2012)

  1. Apple Inc (AAPL): 19.20%
  2. International Business Machines Corp (IBM): 7.15%
  3. Microsoft Corporation (MSFT): 7.03%
  4. AT&T Inc (T): 6.89%
  5. Google, Inc. Class A (GOOG): 6.47%
  6. Verizon Communications Inc (VZ): 4.42%
  7. Oracle Corporation (ORCL): 4.30%
  8. Qualcomm, Inc. (QCOM): 3.82%
  9. Cisco Systems Inc (CSCO): 3.50%
  10. Intel Corp (INTC): 2.92%

Likely not a surprise, Apple is the most tradable stock of the top holdings in the technology sector ETF. The stock is up 85% over the last two years, and was up 125% at its high point in September. Even with a price tag over $500, more than 19 million shares change hands each day. Whether a long-term investor or short-term trader, Apple is the clear leader when it comes to price swings, performance and volume.

The most aggressive swings in the stock came in early 2012 when the stock rallied from the $420 area to $644. Starting in September the stock saw a drastic decline, dropping from the all-time high of $705.07 back toward the $500 level.

Figure 8. 2012 Apple Stock Performance. Source: Freestockcharts.com


XLU – Utilities Select Sector SPDR

XLU includes companies involved in electrical and gas utilities, as well as power producers and energy traders [see 5 High Yielding Utilities ETFs].

Top 10 Holdings (as of Nov. 5, 2012)

  1. Duke Energy Corporation (DUK): 9.54%
  2. Southern Co (SO): 8.76%
  3. Dominion Resources Inc (D): 6.74%
  4. NextEra Energy Inc (NEE): 6.68%
  5. Exelon Corp (EXC): 5.93%
  6. American Electric Power Co Inc (AEP): 4.78%
  7. FirstEnergy Corp (FE): 4.09%
  8. PG&E Corp (PCG): 4.04%
  9. PPL Corp (PPL): 3.94%
  10. Consolidated Edison, Inc. (ED): 3.79%

NextEra Energy led this sector ETF, as the stock climbed 35% over the last two years. Volume of 1.8 million shares is enough for most investors, but very active traders may prefer higher volume.

Those seeking volatility will find First Energy and Exelon prone to large price swings. First Energy rallied through the first half of 2012, racking up a 21% gain, but then gave it all back in the latter part of the year. Exelon drifted lower into late October and was then struck by even more aggressive selling, resulting in a slide of more than 30% from the start of the year.

Figure 9. 2012 Percentage Price Movements: FE versus EXC (white). Source: Freestockcharts.com


Stocks Worth A Look

“Most tradable” or even performance measures can be a subjective topic. Your personal situation will determine which stocks are better for you to trade, and which you should avoid. Past performance, volume and volatility are elements to consider when making these choices. And it is always important to remember that past data may not reflect what will happen in the future.

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Disclosure: No positions at time of writing.