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3 Mutual Funds to Buy on Apple's Robust Earnings

The tech sector has performed favorably in recent times on the back of encouraging earnings results.Although Trump's proposed trade and immigration policies are expected to weigh on big technology companies, his corporate tax repatriation plans could benefit technology companies that hold a lot of cash overseas. These tech companies could repatriate that cash and use it for investments, dividends and buybacks.

Tech behemoth Apple Inc AAPL made a strong rebound on the back of strong fiscal first-quarter earnings results. The good show was driven by impressive iPhone 7 and 7 Plus sales. Following these promising trends, investing in technology mutual funds with a significant holding in the iPhone maker and other tech giants will be a prudent decision.

Q1 Earnings in Focus

Apple's fiscal first-quarter earnings of $3.36 per share and revenues of $78.4 billion easily topped the respective Zacks Consensus Estimate of $3.22 and $76.9 billion. On a year-over-year basis, earnings and revenues registered growth of 2.4% and 3.3% respectively. Services, which include revenues from Internet Services, App store, Apple Music, AppleCare, Apple Pay, licensing and other services, surged 18% year over year to nearly $7.2 billion.

Additionally, total iPhone unit sales came in at about $78.3 million, up 5% year over year. Revenues from iPhone also grew 5% from the year-ago quarter to $54.4 billion (69.4% of total revenue). Moreover, optimism of the tech behemoth's forthcoming series of iPhone upgrades in the coming months encouraged some analysts to raise their price targets.

Apple Rally Boosts Tech Sector

Gains in Apple came as a breather for the broader technology sector. The iPhone maker remained the biggest company in the index in terms of market capitalization. Along with Apple some other big tech companies like Microsoft MSFT , Alphabet GOOGL , Netflix NFLX and Facebook FB reported solid earnings results.

Microsoft's earnings per share (EPS) and revenues for fiscal Q2 beat our estimates, while Alphabet reported higher-than-expected revenues for the Q4. Both Netflix's and Facebook's top and bottom line for the Q4 beat our respective estimates.

For the overall Technology sector, we now have Q4 results from 84% of the sector's total market cap. Total earnings for these companies are up +7.4% from the same period last year on +5.4% higher revenues, with 71.1% beating EPS estimates and 78.9% beating revenue estimates.

In the past three months, the tech sector jumped 9.8%, remaining one of the best performers among the S&P 500 sectors. In the last one month, the tech sector rose 2.7%, way above the S&P 500's gain of 0.7%. Additionally, mutual funds related to this sector registered strong returns. According to Morningstar, technology mutual funds have returned 10.6% over the last three months.

Buy These 3Mutual Funds

Here, we have selected three mutual funds that have significant exposure to the tech sector and have Apple as one of its top three holdings. Moreover, these funds carry a Zacks Mutual Fund Rank #1 (Strong Buy) or #2 (Buy). We expect these funds to outperform their peers in the future. Remember, the goal of the Zacks Mutual Fund Rank is to guide investors to identify potential winners and losers. Unlike most of the fund-rating systems, the Zacks Mutual Fund Rank is not just focused on past performance, but also on the likely future success of the fund.

These funds have encouraging three-month and year-to-date (YTD) returns and minimum initial investment is within $5000. Also, each of these funds has a low expense ratio.

Fidelity Select ComputersFDCPX seeks growth of capital by investing in common stocks. FDCPX invests majority of its assets in equity securities of companies involved in research, development, and distribution of products or services with relation to the current hardware technology in the computer industry. The fund invests both in U.S. and non-U.S. companies.

The fund has three-month and YTD returns of 13.1% and 6.5%, respectively, and an expense ratio of 0.79% as compared to the category average of 1.47%. FDCPXhas a Zacks Mutual Fund Rank #2. Further, as of the last filing, Apple Inc, Alphabet Inc and EMC Corp were the top holdings for FDCPX.

Janus Global Technology T JAGTX invests the lion's share of its assets in equity securities of those companies that are expected to gain from any improvements or advances in technology. JAGTX seeks capital appreciation for the long run. The fund invests in both domestic and foreign companies with stable growth potential. It generally invests in companies from different nations including the U.S.

The fund has three-month and YTD returns of 8.6% and 7.6%, respectively, and an expense ratio of 0.94% as compared to the category average of 1.47%. JAGTXhas a Zacks Mutual Fund Rank #2. Further, as of the last filing, Alphabet Inc, Microsoft Corp and Apple Inc were the top holdings for JAGTX.

Fidelity Select TechnologyFSPTX seeks capital growth over the long run. FSPTX invests a large chunk of its assets in common stocks of companies primarily involved in production, development and sale of products used for technological advancement. The fund invests in both U.S. and non-U.S. companies. Factors including financial strength and economic condition are considered before investing in a company.

The fund has three-month and YTD returns of 11% and 9%, respectively, and an expense ratio of 0.76% as compared to the category average of 1.47%. FSPTXhas a Zacks Mutual Fund Rank #2. Further, as of the last filing, Alphabet Inc, Apple Inc and Facebook Inc were the top holdings for FSPTX.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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