Buy This, Not That: These Sectors Are BUYS

Shah Gilani|January 10, 2024

A rising tide lifts all boats, right? That isn’t necessarily true in the stock market.

Certain stocks do better than others… and the same goes for certain sectors…

All depending on the kind of market we’re in.

That’s why in today’s Buy This, Not That… I’m looking at the Select Sector SPDR ETFs.

Which sectors are BUYs… and which ones are NOT?

In my latest video, I tell you which sectors I like for 2024… which ones you should stay away from… and which ones require a different strategy altogether.

I’m talking about financials… healthcare… industrials… consumer discretionary…

I go through all 11 Select Sector SPDR ETFs and tell you exactly what moves to make.

Click on the image below to check it out.

Transcript

Hey, everybody. Shah Gilani here with your weekly BTNT, as in By This, Not That.

Today, I want to cover the SPDRs. Yeah, SPDR, the State Street SPDR ETFs… sector ETFs to be specific. I’m going to get into the industry ETFs at some point, but now I’m going to hit the SPDR Sector ETFs, so hang on to your hat.

First up is XLC, the Communication Services SPDR. XLC is the symbol. And the answer is, yeah, it’s a BUY. Why is it a buy? Because it is communication services. And who’s in that sector? Well, some small companies you might’ve heard of, like Meta. It’s about 23% of XLC. Google… 12.4%. Netflix… 4.66%. Charter Communications… 4.5%. Yes.

Listen, I’m looking at the chart right here. XLC doesn’t pay much of a dividend, people. Nothing. And… just a rocket ride up, steady as she goes. Beautiful trajectory. So yes, it’s a buy.

It doesn’t mean you shouldn’t look into the holdings and maybe pick one or two of them. Because I think the whole… this is true for all the SPDRs, all of the sector SPDRs, and probably all of the industry SPDRs… you’re better off going into the holdings and picking one or two and adding those than the SPDR itself.

But I’m giving you sector BTNTs for the most part and using the SPDRs to do it. So communication services, yeah, it’s a BUY.

Next up is XLU. That’s the Utilities SPDR ETF. Now, I’m not a big utilities guy… because if you’re looking for yield, there’s plenty of other places to get better yield than something like, yeah, XLU has got a 3.3% dividend yield. You can do better than that.

So the XLU… sloppy, sliding, nothing, uneventful. Don’t put your capital in there. It’s a waste of money, people. NOT a buy, XLU.

Next up is the XLK, the Technology Sector SPDR Fund. What’s not to like about XLK, people… besides the fact that it’s gone through the roof and probably needs to come down a little bit? So I say, definitely buy on the dip. But XLK, the Tech Sector SPDR… Microsoft, Apple, Broadcom, Nvidia, Adobe, Salesforce. What’s not to like? Yes, you can go in there and pick one or two names yourself. Yeah, that’s what I would do. I wouldn’t buy the whole spot. I’d pick a couple of primo names or one that you really like and follow that, invest in that. That’s how I would diversify my sectors, by picking one or two names in each. I said that… I’m going to say it again… because you’re better off.

Next up is XLE, the Energy Select Sector SPDR Fund. Now, energy has been all over the place. So as far as the SPDR XLE, I’m going to say NOT. Is this a sloppy mess yield-wise? It doesn’t cut it for me. And yes, it’s 3.61%, but there’s better yields out there. Biggest position? Exxon Mobil. We’ve got Chevron, we’ve got ConocoPhillips, EOG Resources, Schlumberger. Yeah, all great companies. Go in and pick one of those that’s got a better yield, people, if you want to play energy. But don’t play the XLE. I like energy here, but I like to buy stuff that’s cheap and has a good dividend. Check out Devon, DVN.

All right, next up, I’m going to go with the Consumer Staples SPDR Fund, XLP. Consumer staples have, as far as I’m concerned, underperformed, and I think they’re due for a good 2024. So I like XLP, the SPDR, down here. It’s not bad. Again, you can go into the holdings and probably pick a couple of good names out of it. We got P&G. You got Costco, Pepsi, Coca-Cola, Walmart, Philip Morris, Mondelez, Target. You got a bunch of names in there you might want to take a closer look at. But as far as the Consumer Staples SPDR Fund goes, I would buy the dip here. It’s trading at $72 and change. I would buy the dip. Not much of a dip, I would say. If we slide a little bit here, we can get this down to $68, $69, maybe buy it. But again, I like staples this year in 2024. But take a look through the holdings, and there are a couple of better choices in there.

Next up is the Consumer Discretionary SPDR Fund. Holy mackerel! Consumer Discretionary is XLY. It surprised me, I got to say, for 2023. Been sloppy… but then made a heck of an end-of-the-year run higher. To me, consumers getting tapped down… it doesn’t matter. Consumer discretion, boom. They just bought what they wanted. You got it. Well, part of the reason it did well at the end of the year and held up throughout 2023 is because its biggest holding is Amazon. So when you look at the Consumer Discretionary Fund, No. 1 is Amazon at 20%, almost 23% of the holdings there. Tesla, Home Depot, McDonald’s, Nike and Lowe’s. Some of the big names in there. Again, go into XLY and pick a name like Amazon. You’re better off [doing that] than buying the SPDR.

But I do like particular names in consumer discretionary. The whole sector… I think I would rather do consumer staples in 2024 than consumer discretionary. So you got that.

Next up is XLV, the Health Care SPDR Fund. I’m a big healthcare advocate as far as 2024. As far as XLV goes, I would say you got to wait to buy a dip. This stock had just made another new high here, and it’s sideways… until all of a sudden you got the late run the end of the year. And then in 2024, already, it’s just made a new high. So to me, you wait for the dip if you want to buy the Health Care XLV fund. You can buy maybe straight around $140 and change. So maybe $133 if you want to buy that dip here. But trust me, you got UnitedHealth, Eli Lilly, Johnson & Johnson, Merck, AbbVie, Pfizer – which has a much better dividend.

Okay. So if you like healthcare, and I like healthcare in 2024, go into the holdings, pick a better position rather than the whole ETF. I think if you pick a good name, you’ll do a lot better. But I do like healthcare.

Next up is XLB, the Materials SPDR Fund. Now, XLB… again, I’m a fan in 2024 materials. I think it is going to be a late-year rally. I think we’re going to have a sloppy year. But I think starting… hopefully it’s the latter part of the second half, maybe into the beginning of the third quarter, mid third quarter, depending on the election, but that’s going to throw a wrench in everything. We could have a good back half of the year. And depending on the election, we could have a really good close to the year, which is what I’m thinking, I’m hoping, will happen. But I like materials.

As far as XLB goes, it’s pretty sloppy, people. It’s like a nothing burger. I wouldn’t buy XLB, but I do like materials in 2024. Go into the names. You got Linde, you got Sherwin-Williams, you got Freeport… Air Products, good company. There are some names within there that you’ll do a lot better with. But the ETF is just pretty much a sideways nothing burger.

Next up is the Financial Sector SPDR Fund, XLF. I get asked a lot about the financials. As far as the SPDR Financials, the XLF, it’s having a day. It just made a new high the other day. So pretty much ugly, flat, choppy in 2023. Really a nothing burger there. I like financials in 2024, select names. And I like buying them on dips. I don’t like chasing anything like JPMorgan. Don’t like chasing that Citi. Great end-of-the-year result. Early 2024… doing well. Don’t chase it.

I think you buy dips. You’re going to get dips in the financials. And buy them, people. But as far as the XLF… NOT.

XLI, the industrials. I like industrials. XLI is the Industrial Sector SPDR Fund. If you were to look at the chart… and I am looking at the chart… same thing. Great end-of-the-year rally… kind of rolling over a little bit now. I like industrials, but I don’t like XLI. Again, this already had a little bit of a run. You can do a lot better with almost all of these by going in and picking a couple of names that represent the sector and adding those to your portfolio. Buy on dips. Don’t go chasing stuff on their highs here. I think we’re going to get a really choppy market. I think you’re going to get opportunities to buy some of these great names on dips.

And speaking of great names, I’m just going to give you a little heads-up. I’m going to go into these sectors, and I’m going to give you my favorite two names, maybe next week. So make sure you hang on to the BTNT stuff because there’s more coming at you. And it’s going to be pretty good because I’m going to give you the names within [several sectors] that I really like, that I think you should buy… and the ones that you shouldn’t.

Last but not least, here is the Real Estate SPDR Fund, XLRE. Now, here’s the thing with real estate: I don’t think we’re out of the woods. Certainly as far as commercial real estate goes, we’re not out of the woods. And XLRE, yeah, late-year rally, hanging in there so far in 2024. It doesn’t look exciting. It’s NOT a buy.

I think real estate is something you kind of have to hold off on. Maybe look at some underlying names in the holdings on dips. But real estate, I think, is going to have a bit of a bumpy 2024.

So that’s it for this week’s BTNT on sector SPDRs. And stay tuned, people. And speaking of sector SPDRs… and speaking of BTNT… I was just on with Chris Johnson on his Money Morning YouTube channel. Check it out. Just put it in your domain finder, put it in Google. Money Morning, with a space, YouTube. And I think he’s going to post our interview on Thursday morning. But check out the Money Morning YouTube channel. There’s some cool stuff on there. And I’ll be back next week with another BTNT.

Cheers, everybody. Be safe out there.

A Note From Amanda: Think you’ve seen all the investing world has to offer? Shah bets not 1 in 50,000 investors knows this exists. Some of the people who’ve heard about it are already banking mind-blowing returns, like 27,049% in just 19 days… 184,720% in just 10 months… and 235,614% in just 60 days! To help spread the word about this new type of investment, Shah has recorded a special video breaking it down. Click here to check it out.