Communication Services Select Sector SPDR ETF (XLC)
Don't Overlook the Potential of Communication Services ETFs
When the topic of sector tilts enters the conversation, one sector that might currently be flying under the radar is the communication services sector. Key Takeaways: The communication services sector has not had a breakout performance as of yet this year, but investors may be overlooking the sector's value.
XLC Is Down 8.78% Year to Date and the Catalysts That Matter Most Are Still Ahead
Communication Services Select Sector SPDR Fund (NYSEARCA:XLC) is down 8.78% year to date, and the two stocks most responsible for that slide are the ones you need to watch most closely over the next 12 months.
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XLC: Further TMT Downside Possible, Here's Where To Buy (Rating Downgrade)
XLC: Further TMT Downside Possible, Here's Where To Buy (Rating Downgrade)
Capturing Investment Themes By Mixing Sector ETFs
Today's market continues to evolve at a rapid clip. That said, traditional broad market exposure is unable to accurately capture long-term secular trends.
XLC Holds 46% in Just Three Stocks, Creating An Unusual Risk for Sector ETF Buyers
When investors buy a sector ETF, they want exposure to a specific corner of the market without picking individual stocks.
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XLC: Even The Dogs Are Rallying
XLC is outperforming in 2024, with broad-based rallies beyond just mega-cap names like Alphabet, Meta, and Netflix. The sector's diverse composition and reasonable valuation (P/E ~18) provide room for multiple expansion and continued outperformance. Recent earnings and macro trends suggest markets were too pessimistic, and the economic backdrop supports further gains for XLC.
XLC: The Valuation And Technicals Lining Up After The 20% Plunge (Rating Upgrade)
I am upgrading the Communication Services Select Sector SPDR ETF Fund from a hold to a buy, due to compelling valuation and technical indicators suggesting a near-term bottom. XLC's valuation is attractive at 17x forward earnings, significantly below its 5-year average, and its technicals indicate potential support around the $82-$83 zone. XLC is heavily weighted towards megacaps like GOOG, META, and NFLX, which command 35% of the portfolio, making their fundamentals and technicals crucial.
XLC: 2025 Could Be Third Consecutive Year Of Lofty Return For Communication Services Sector
The Communication Services Select Sector SPDR ETF Fund is poised for significant returns due to strong earnings growth, cheap valuations, and diversification. The communication services sector, led by Meta, Alphabet, and Netflix, is expected to benefit from increased internet usage, AI technology, and economic trends in 2025. XLC offers a balanced portfolio of growth and defensive stocks, with lower downside risk and higher risk-adjusted returns compared to peers.
Be careful of sector based investing themes: Strategist
As Big Bank earnings beat Wall Street's expectations, Charles Schwab chief investment strategist Liz Ann Sonders adds the financials sector (XLF) to her list of growth sectors: communication services (XLC), consumer discretionary (XLY), and tech (XLK). Despite her expectations that these four sectors will grow, the strategist tells Catalysts Co-Hosts Madison Mills and Seana Smith that only two sectors have an Outperform rating and outlines why sector-based investing may not be the best strategy.
S&P 500 Delivers Impressive 2024 Return, XLC Tops Charts: Netflix, Meta, Fox Steal The Show
The S&P 500 delivered a 23.31% return in 2024, but the communications services sector stole the spotlight.
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XLC: Hold On, But Be Prepared To Sell
I recommend holding the Communication Services Select Sector SPDR® ETF Fund due to strong momentum since the Fed's first rate cut in September. Despite positive momentum, historical data shows the communications sector averages -8% returns in the 12 months following initial rate cuts. The ETF's current valuation at 18x earnings suggests a 5.5% downside, supporting a hold recommendation rather than a sell.
XLC: A Major Change To Fund Composition And An End To The High Concentration
State Street Global Advisors have revamped the weighting and rebalancing methodology for their 11 Select Sector SPDR® Funds, significantly impacting funds like XLK and XLC. The new system mitigates extreme rebalancing by capping weights at 24% and ensuring a more balanced distribution among top holdings. These changes aim to lower turnover and create smoother rebalancing, benefiting all Select Sector SPDR ETFs and potentially improving performance.
XLC: Meta And Google Domination Has Helped
XLC offers targeted exposure to top communication services companies like Meta, Alphabet, and Netflix, balancing growth and stability with a competitive 0.09% expense ratio. The ETF's sector-focused strategy can benefit from both value and growth investment styles, but high concentration risks and sector cyclicality are concerns. Compared to Vanguard's VOX, XLC has outperformed due to its concentrated holdings in leading tech companies, making it a strong contender in a "Mag 7" world.
Analysts Recommend These 3 Sector ETFs for Long-Term Growth
Sector-oriented exchange-traded funds (ETFs) offer a way to gain exposure to an entire portfolio of companies that may be benefiting from trends in the market. They provide diversification from the business-specific risk of investing in just individual companies.
XLC: A Worth Considering ETF With Cheap Valuations And Solid Earnings Growth To Face Uncertainty
While the US stock market recovered recent losses, the risk of a downtrend is still high due to lofty valuations. However, the outlook for double-digit growth, rate cuts, and soft landing could drive market higher. As the market can swing either way, investment vehicles like the Communication Services Select Sector SPDR® ETF Fund could be the best option to deal with uncertainty.
Communication Services ETF (XLC) Hits New 52-Week High
The Communication Services Select Sector SPDR Fund XLC is probably on the radar for investors seeking momentum. The fund just hit a 52-week high and is up 36.6% from its 52-week low of $62.82 per share.