The earnings season has been disappointing and weighed on investor confidence through one of the worst starts to a new year. Nevertheless, there are some areas that may pull through the malaise, with decent growth propping up the sector-related exchange traded funds.
Aggregate fourth quarter 2015 S&P 500 earnings-per-share are expected to fall 4.94% year-over-year, according to S&P Capital IQ.
However, the dismal earnings season is largely attributed to the large negative impact that energy companies have on the broader index. The energy sector is expected to generate a -75.1% earnings for the fourth quarter after the plunge in oil prices weighed on profits. Without the oil producers, the remaining S&P 500 companies would generate a 1.5% earnings growth.
Investors may be better off targeting areas of growth instead of holding a broad equities exposure. For instance, Capital IQ calculates that only four of the 10 S&P sectors will post positive earnings growth for the fourth quarter, with Telecom services leading the back on 18.7% expected earnings growth, followed by consumer discretionary 10.4%, health care 9.9% and industrials 0.6%.
Investors seeking broad exposure to the telecom space can look to a number of ETF options, including the iShares U.S. Telecommunications ETF (NYSEArca: IYZ), Vanguard Telecommunication Services ETF (NYSEArca: VOX) and Fidelity MSCI Telecommunication Services Index ETF (NYSEArca: FCOM).