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From electric cars to solar power to online retail and beyond, hot stocks in the so-called new economies are game changers.
But how do you select and keep track of the hottest companies? SPDR S&P Kensho New Economies Composite ETF (KOMP) can help.
The $1.2 billion fund, launched in October 2018, tracks the S&P Kensho New Economies Composite Index. The index is composed of companies that disrupt “traditional industries by leveraging advancements in exponential processing power, artificial intelligence, robotics, and automation,” according to SSGA, the company that runs the fund.
Application software was the biggest sector weight as of Tuesday, at nearly 8% of assets. Semiconductor stocks were next at more than 7%, and electrical components and equipment, 6%. Aerospace and defense, interactive media and services, and automakers made up about 5% each.
Health care equipment, auto parts and equipment, and biotech stocks accounted for over 4% apiece. Smaller positions in more than 50 other sectors made up the rest.
Top 10 holdings represented roughly 13% of the 395-stock fund. They included Nio (NIO), Workhorse Group (WKHS), Tesla (TSLA), Overstock.com (OSTK), Zoom Video (ZM), Sunrun (RUN), Vivint Solar (VSLR) and Plug Power (PLUG), through Wednesday’s close
Hot Stocks: Triple-Digit Gains
What do these eight hot stocks have in common? All have scored gains of more than 300% this year. That’s quite a feat.
Overstock, up 930%, takes the lead. At the end of last year, shares were trading near 7. They closed at 72.65 on Wednesday. The online retailer’s stock is consolidating below its 50-day moving average, after a steep 53% drop from its August high to early September low.
Workhorse Group, a maker and seller of battery-electric vehicles and aircraft, has rallied 732% this year. In the solar space, Vivint Solar, up 483% this year, is at record highs. Sunrun has surged 458%.
Zoom Video, up 591%, has been a leading Covid-19 play. Workers, students and other users have been relying on the online meeting platform amid stay-at-home orders. It earns a best possible 99 Composite Rating, which gives investors a quick way to gauge a stock’s key growth traits.
Setting Up Buy Point?
Holding a big basket of such stocks is often less risky than taking big stakes in individual names. That’s the advantage of an ETF, and KOMP is in a buy zone. The ETF is finding support at its 10-week moving average. KOMP could also go on to complete a flat base, in which case the potential buy point would be 44.50.
KOMP returned 30.6% the past year, according to Morningstar Inc., well ahead of SPDR S&P 500 ETF Trust’s (SPY) 14.7% gain. The New Economies ETF is up 19.5% this year through Tuesday’s close vs. SPY’s 4.8% return.
KOMP charges a 0.20% expense ratio.