The Q4 earnings season is underway with a few major banks set to report this week. Earnings for the S&P 500 index are expected to grow 8.8% from the same period last year on 6.9% higher revenues. This is higher than the Q3 earnings growth of 6.7% on 5.9% revenue growth.

Additionally, the revision trend has been favorable with earnings estimates holding up better relative to other comparable periods. The earnings estimates for Q4 have moved up 2 percentage points from 8.6% at the start of the period. Further, the dollar amount of total earnings is on track to reach a new all-time quarterly record.

Of the 16 Zacks sectors, 13 are likely to be contributors to earnings growth, with energy leading the way. Like the last two reporting cycles, the energy sector has the strongest growth projection of 174.9% for Q4, primarily reflecting easier comparisons. This is followed by double-digit earnings growth of 27.3% for basic materials, 22.1% for industrial products, 18.8% for construction, 14% for technology and 12.2% for autos.

Given this, we have highlighted one ETF and one stock from some of these sectors that could make great plays as the Q4 earnings season unfolds. Each of these ETFs and stocks have a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). For stocks, we have added the extra flavor of a positive Earnings ESP. This is because stocks with this combination have a 70% chance of beating estimates when their earnings are released, and a VGM Style Score of B or better.

Energy

Energy Select Sector SPDR (XLE – Free Report): This is the largest and most popular ETF in the energy space with AUM of $19.5 billion and average daily volume of around 12.3 million shares per day. Expense ratio comes in at 0.14%. The fund follows the Energy Select Sector Index and holds 32 securities in its basket. In terms of industrial exposure, oil, gas & consumable fuels accounts for nearly 85.7% of the portfolio while energy equipment & services takes the remainder. The product has a Zacks ETF Rank #3.