If Stagflation Hits, These 3 Analyst-Approved ETFs Could Shine (XLV, VHT, FSTA)

As the crisis in the Middle East continues to escalate, fueling a surge in energy demand at a time when the U.S. job market is softer, analysts have started to warn that 1970s-style stagflation could return to the American economy. This refers to an economic scenario where slowing economic activity is met with racing inflation.

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This article highlights three exchange-traded funds (ETFs) aimed at investors concerned about the threat of stagflation and its impact on their holdings. The funds featured are theHealth Care Select Sector SPDR Fund XLV -0.85% ▼ , the Vanguard Health Care ETF VHT -1.03% ▼ , and the Fidelity Covington Trust MSCI Consumer Staples Index ETF FSTA -0.94% ▼ .

All three ETFs currently carry Buy ratings from analysts and offer notable upside potential.

**Health Care Select Sector SPDR Fund **XLV -0.85% ▼

This leading healthcare ETF offers investors a way to gain exposure to a broad section of the healthcare industry. It achieves this by targeting companies such as drugmakers, medical device establishments, and healthcare services providers.

Analysts currently have a Moderate Buy consensus rating on XLV based on 51 Buys and 10 Holds issued over the past three months. Meanwhile, the ETF currently offers about 25% upside despite having shrunk by 5.29% since the start of the year. The potential gain is based on an average price target of $181.64.

Vanguard Health Care ETF VHT -1.03% ▼

As the name suggests, this ETF is focused on the healthcare industry and targets several submarkets, including pharmacy, biotechnology, and medical device technology. Analysts currently have a Moderate Buy consensus rating on VHT based on 346 Buys, 57 Holds, and three Sells issued over the past three months.

The ETF is currently down about 6% year-to-date but could rise by approximately 29% over the next 12 months, according to analysts’ consensus estimate. This is based on an average price target of $345.93.

**Fidelity Covington Trust MSCI Consumer Staples Index ETF **FSTA -0.94% ▼

The consumer staples industry is one of the most indispensable sectors of any economy, as businesses in the industry produce critical products such as food, beverages, and personal care items required for daily survival. FSTA targets businesses in this industry.

Analysts also currently rate FSTA a Moderate Buy based on 55 Buys, 33 Holds, and five Sells assigned in the last three months. The ETF’s price has gained about 6% since the start of the year and still holds about 18% upside based on its average price target of $60.52.

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