Looking toward first-quarter earnings, in addition to telecom, S&P Capital IQ sees strong EPS growth out of the consumer discretionary sector.
“Despite bad weather during the holiday shopping season, the sector is expected to show 8.9% growth in the first quarter on the heels of a 7.4% gain in the fourth quarter. From an industry perspective, Internet and Catalog Retail (22%), Multiline Retail (14%), Media (14%) and Specialty Retail (10%) should be some of the better areas,” said S&P Capital IQ.
The overweight-rated Consumer Discretionary Select Sector SPDR (NYSEArca: XLY) allocates 12.1% of its weight to Intenet and catalog retailers and nearly 30% of its weight to media names, including Dow component Walt Disney (NYSE: DIS) and cable giant Comcast (NasdaqGS: CMCSA).
Materials Select Sector SPDR
