5 ETFs to watch this week

Keep an eye on the industrial, telecommunications, consumer and energy sectors.

By TheStreet Staff Jan 24, 2011 11:55AM

Image: Exchange-traded funds (© ThinkStock/SuperStock)By Don Dion, TheStreet


Here are five ETFs to watch this week.


1.Industrial Select Sector SPDR (XLI)

General Electric's (GE) quarterly earnings beat analysts' estimates last week, indicating once again that the U.S. conglomerate remains steadily on the road to recovery.


The strong showing from GE sets the stage for this week's industrial-heavy week of earnings. On tap are household names including 3M (MMM), Boeing (BA), Caterpillar (CAT), Honeywell (HON) and United Technologies (UTX). These companies represent some of the largest slices of XLI's index and together account for over 30% of its portfolio.


Risk-tolerant investors looking for a more volatile play on industrials this week may find a subsector fund such as the iShares Dow Jones U.S. Aerospace & Defense Index Fund (ITA) attractive. Earnings reports from Boeing, UTX, General Dynamics, Lockheed Martin (LMT) and L-3 Communications (LLL) will heavily influence this fund's performance next week.


2.iShares Dow Jones U.S. Telecommunications Sector Index Fund (IYZ)

Telecom goliaths Verizon (VZ) and AT&T (T) are scheduled to release their quarterly earnings reports this week. Their performance and outlook for the year will heavily influence the performance of IYZ, which dedicates over a quarter of its portfolio to these two entities.

Given the dominance of VZ and AT&T, it is not surprising that these two companies represent such large percentages of telecom ETFs. IYZ boasts some of the lowest exposure to these players. Rival fund Vanguard Telecommunication Services ETF (VOX) sets aside nearly half of its portfolio to the two companies.


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3.First Trust Dow Jones Internet Index Fund (FDN)

EBay(EBAY) and Google (GOOG) topped analyst estimates, starting the earnings season off on a high note. While the numbers were good, they were largely overshadowed by another major shakeup in the tech world. Late last week, Google announced that co-founder Larry Page would take over the firm's reins from Eric Schmidt as CEO. It will be interesting to see what changes will be in store in the coming months.


This week, FDN will be of interest as other major holdings step up to the earnings plate. Netflix (NFLX), Amazon (AMZN) and Yahoo! (YHOO) are all scheduled to report.


4.Consumer Staples Select Sector SPDR (XLP)

The consumer will be in focus this week as a number of household names report their quarterly performance. Top XLP positions on the earnings calendar include top holding, Proctor & Gamble (PG), Altria Group (MO) and Colgate-Palmolive (CL).


Consumer discretionary notables will be on tap as well. Investors looking to gauge the state of the consumer will want to keep an eye on earnings reports from both Coach (COH) and McDonalds (MCD) which will announce on Monday and Tuesday respectively.


5.Market Vectors Coal ETF (KOL)

Top KOL components, Peabody (BTU) and Consol Energy (CNX) will release their earnings results this week, providing insight into the state of the coal industry over the past three month period.

The coal industry has been an exciting region as Australia battles devastating floods and the Chinese government continues to mull the possibility of taking steps to cool the nation's rapid economic expansion. Both issues are sure to play a part in influencing the performance of KOL in the coming days and weeks.


TheStreet contributor Don Dion is president of Dion Money Management. At the time of publication, he owned shares of FDN.


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