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If I Had Only $500 per Month to Invest, These Are the 2 ETFs I'd Buy
Key Points
U.S. stocks are no longer in a "buy anything" position.
Investors should look for concrete catalysts that can keep pushing prices higher.
These two groups still look particularly attractive to me.
The S&P 500 is still sitting near all-time highs, but that doesn't mean that every equity ETF is a buy right now.
Here are two that I believe are still worth investing in, with bullish narratives backing them up.
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue »
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1. VanEck Semiconductor ETF
The VanEck Semiconductor ETF (NASDAQ: SMH) has unquestionably been one of the biggest winners of the artificial intelligence (AI) boom. Despite returns leveling off recently, the fund is still up 59% over the past six months and 89% over the past year.
But the AI investment cycle looks like it's still far from over. Capex spending from the five largest hyperscalers -- Microsoft, Alphabet, Amazon, Meta Platforms, and Oracle -- is expected to hit $1.37 trillion by 2030. The rate of growth may slow, but the absolute level of what's being spent should continue driving revenues and earnings higher.
2. Avantis U.S. Small Cap Value ETF
The Avantis U.S. Small Cap Value ETF (NYSEMKT: AVUV) has been a solid value story for a while, trading at around 12 times forward earnings. Its real advantage is that it uses fundamental measures, such as cash flow and revenue, to ensure balance sheet strength alongside the portfolio's value.
The catalyst for this ETF is rapidly accelerating earnings growth for small caps overall. 2026 earnings-per-share growth is expected to come in around 20% year over year. For the first time in several years, the growth/value trade-off of small caps is starting to look better than that of large caps. The small-cap value group has significantly underperformed for a while, but I think that's about to change.
David Dierking has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Amazon, Meta Platforms, Microsoft, and Oracle. The Motley Fool has a disclosure policy.