Markets
IYW

Apple Crosses $700B Mark: 3 ETFs to Ride the Uptrend - ETF News And Commentary

Apple Inc. ( AAPL ) has done it again. After reporting the biggest quarterly profit ever made by a public company for the final quarter of 2014, the tech behemoth became the first U.S. company to notch up a market capitalization of above $700 billion at close of trading on February 10. The company had been hovering around the $700 billion mark for quite some time, but Tuesday was the first time that it managed to hold those gains and close above that level.

Apple's stock prices closed roughly 2% higher at $122.02 on Tuesday, lifting its market capitalization to a little under $711 billion. The company's current value is now more than double that of the market valuation of Microsoft ( MSFT ) and nearly twice that of Google ( GOOGL ).

The company's share price has been riding high post its spectacular first quarter fiscal 2015 results wherein the company reported profits of a staggering $18 billion. Huge successes of the company's larger screen iPhones 6 and 6 plus during the holiday shopping season and Apple's strong sales in China have been money minters for the company.

Sales of iPhones surged 46% year over year to a record $74.5 million during the quarter. Apple's sales in greater China, which includes the mainland, Hong Kong and Taiwan, grew 70%, thanks to a rising Chinese middle class (read: 3 Apple ETFs for Juicy Returns on Record Earnings ).

"Given Apple's powerful iPhone cycle, a big 4G ramp in China and the upcoming launch of Apple Watch in April, we believe there is still plenty to look forward to at Apple during this transformational cycle," beams Brian White, an analyst at Cantor Fitzgerald.

Moreover, speaking at the Goldman Sachs Technology & Internet Conference, Apple CEO Tim Cook announced that the company will buy roughly $850 million of power from The First Solar Inc ( FSLR ), a California based solar firm, to cut its energy bill. "We expect to have a very significant savings because we have a fixed price for the renewable energy, and there's quite a difference between that price and the price of brown energy," Cook said (read: Obama Budget Plan Drives Up These Sector ETFs ).

Apple has seen solid earnings estimate revisions for the current fiscal and the next over the past month as about 80% of the analysts have revised their estimates upward for this year and 70% of analysts for next year. In fact, over the past one month, the consensus estimate for fiscal 2015 has risen from $7.77 to $8.41 per share while fiscal 2016 estimates climbed from $8.69 to $9.05 per share. This suggests a bright future for the company.

Apple currently has a Zacks Rank #2 (Buy), indicating that the stock is expected to outperform the broader markets in the near term. Further, the stock has a solid Zacks Industry Rank in the top 43%, indicating smooth trading in the days ahead.

Apple ETFs in Focus

Given that the bullish trend is likely to continue in the months ahead, we have highlighted three ETFs with heavy exposure to this tech giant for investors seeking to bet on the stock with a much lower risk.

iShares U.S. Technology ETF ( IYW )

IYW is quite popular in the tech space with an AUM of $3.1 billion while charging 43 bps in fees and expense. Moreover, the fund trades in good volumes of roughly 780,000 shares a day (see: all the Technology ETFs here ).

The product tracks the Dow Jones US Technology Index, giving investors exposure to a basket of 140 stocks. Apple occupies the top position in the basket with 20% of assets. The product is heavily skewed toward the software and services segments, as these make up roughly half of the portfolio. Technology hardware and equipment take the remaining portion in the basket. The fund has added nearly 20% in the past one year and currently has a Zacks ETF Rank #1 or Strong Buy rating.

Select Sector SPDR Technology ETF ( XLK )

XLK is the most popular product in the technology space and tracks the S&P Technology Select Sector Index, managing an asset base of $12.8 billion. This fund trades in heavy volume of roughly 8.2 million shares and charges 15 bps in fees per year from investors. In total, the fund holds about 71 securities in its basket. Of these firms, AAPL takes the top spot, making up roughly 17.4% of the assets.

In terms of industrial exposure, the fund is widely spread out across hardware storage & peripherals, software, IT services, Internet software & services and diversified telecom services that make up for double-digit allocation. The fund is up over 20% in the past one year and currently has a Zacks ETF Rank #2 or Buy rating (read: 3 IBM Proof Tech ETFs for 2015 ).

Vanguard Information Technology ETF ( VGT )

This fund manages about $6.8 billion in assets and trades with moderate volumes of roughly 430,000 shares. VGT provides exposure to a large basket of 393 technology stocks by tracking the MSCI US Investable Market Information Technology 25/50 Index.

Even here, AAPL is the top firm with 15% allocation. From a sector perspective, technology hardware & storage takes the largest share at 22%, closely followed by software & programming (20%) and IT Consulting & Data Services (17%). VGT has added 18.6% in the past one year and currently has a Zacks ETF Rank #2.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days . Click to get this free report >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

APPLE INC (AAPL): Free Stock Analysis Report

MICROSOFT CORP (MSFT): Free Stock Analysis Report

GOOGLE INC-CL A (GOOGL): Free Stock Analysis Report

FIRST SOLAR INC (FSLR): Free Stock Analysis Report

ISHARS-US TECH (IYW): ETF Research Reports

SPDR-TECH SELS (XLK): ETF Research Reports

VIPERS-INFO TEC (VGT): ETF Research Reports

To read this article on Zacks.com click here.

Zacks Investment Research

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

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.

In This Story

IYW MSFT FSLR GOOGL AAPL

Other Topics

ETFs