Top 10 Small Cap Stocks To Invest In 2014
Signs of gradual improvement in the economy have increased the chances of the Fed tapering its monetary support at some point this year. Accordingly, investors are moving from defensive sectors like utilities and consumer staples and to cyclical sectors like technology and industrials (read: Buy These ETFs to Profit from “Sector Rotation”).
Cyclical or high growth stocks have largely been ignored by investors. But since these stocks are now attractively priced and promise bright long-term growth, investors can pay more attention to this space. A popular choice in this space is of course the technology sector.
Though the technology sector has been broadly mixed so far this year due to uncertainty surrounding some of the top tech players, it could well emerge as the winner as we progress into the second half of the year (read: Winning ETF Strategies For the Second Half).
While the sector enjoys virtual monopoly on several services in many countries, in o thers such as the U.S., an oligopoly is predominant. A lack of competition under both circumstances and high start-up costs that deter new entrants, make this space an obvious choice for investors seeking high long-term returns.
Cloud computing and mobility add to the long-term growth prospects of the sector. Further, since the technology firms have been dividend growth leaders, investors can depend more on these for income.
A look at the top ranked ETFs in the space that have a lower level of risk, could be a good idea for investors in the current volatile environment. One way to find a top ranked ETF in the tech space is by using the Zacks ETF Ranking system (read: Zacks ETF Rank Guide).
About the Zacks ETF Rank
The Zacks ETF Rank provides a recommendation for the ETF in the context of our outlook for the underlying industry, sector, style box, or asset class. Our proprietary methodology also takes into account the risk preferences of investo rs. ETFs are ranked on a scale of 1 (Strong Buy) to 5 (Stron! g Sell) while they also receive one of three risk ratings, namely Low, Medium, or High.
The aim of our models is to select the best ETFs within each risk category. We assign each ETF one of five ranks within each risk bucket. Thus, the Zacks ETF Rank reflects the expected return of an ETF relative to other products with a similar level of risk (see more in the Zacks ETF Center).
For investors seeking to apply this methodology to their portfolio in the tech sector, we have taken a closer look at the top ranked VGT below. This product has a Zacks ETF Rank of 1 or
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