For Immediate Release
Chicago, IL - June 12, 2017 - Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Amazon (NASDAQ: AMZN- Free Report ), Alphabet (NASDAQ: GOOGL- Free Report ), Select Sector SPDR Technology ETF (NYSEARCA: XLK-Free Report ), VanEck Vectors Retail ETF (BMV: RTH-Free Report ) and First Trust Cloud Computing ETF (NASDAQ: SKYY-Free Report ).
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Here are highlights from Friday's Analyst Blog:
Tech Face-Off: Amazon vs. Alphabet ETFs
The technology sector is piping hot and leading the market rally this year buoyed by the surging FANG stocks. Additionally, the emergence and extensive adoption of new technology such as cloud computing, big data, Internet of Things, wearables, drones, virtual reality devices, and artificial intelligence are fueling growth in the sector. The combination of other factors including improving global fundamentals, strong corporate earnings, a rising interest rate scenario, and Trump's proposed corporate tax reform are acting as additional catalysts (read: 5 Ways to Play Unstoppable Tech Rally with ETFs ).
In particular, FANG stocks have gained more than 30% on average in the year-to-date timeframe with Amazon (NASDAQ: AMZN- Free Report ) and Alphabet (NASDAQ: GOOGL- Free Report ) recently joining the $1,000 club. Amazon is the fifth company and Alphabet is the sixth to have a quadruple digit price tag after Berkshire Hathaway, Seaboard, NVR and Priceline.
Amazon has surged 34.7% this year thanks to solid e-commerce sales and the fast-growing cloud computing business - Amazon Web Services. Additionally, the online e-commerce behemoth has started to make bigger moves into media and advertising and other streams of revenue generation by building air cargo hubs, leasing planes, purchasing trucks and designing drones. The ramp up of its brick-and-mortar business is also encouraging.
Increased usage of YouTube, Google Play, and Google search led to Alphabet's share price soaring to $1000. Further, expansion in the emerging markets of artificial intelligence, fiber networks, and self-driving vehicles are fueling growth opportunities that are pushing the price up. Shares of online advertisement giant are up 26.7% so far this year.
Amazon versus Alphabet
Both stocks have a top Growth Style Score of A, suggesting that they are primed for strong growth. However, Alphabet looks cheaper at the current levels as it is currently trading at a P/E ratio of 29.14 versus 153.71 for Amazon. Based on this metric, GOOGL looks attractive, creating an opportunity for investors to tap the highflying stock at this level.
Alphabet has a solid Zacks Rank #2 (Buy) and a solid Zacks Industry Rank in the top 26% with an average target price of $1042.36, as per the analysts compiled by Zacks. Further, about 92% of the analysts have a Strong Buy or Buy rating on Alphabet. While the company's earnings are expected to grow 23.41% this year compared with the industry average of 30.51%, revenues will likely increase 19.45%, much higher than the industry growth of 5.65% (read: ETFs in Focus After Alphabet's Impressive Q1 Show ).
On the other hand, Amazon has a Zacks Rank #3 (Hold) with a solid Zacks Industry Rank in the top 23% . Earnings and revenues are estimated to grow 34.1% and 22.2%, respectively, much higher than the respective average industry growth of 20.82% and 4.59%. According to the analysts compiled by Zacks, AMZN has an average target price of $1056.13, with about 80.6% of the analysts having a Strong Buy or a Buy rating.
ETFs to Bet On
Based on the above discussion, Alphabet seems like a more solid choice given its Zacks Rank #2 and relatively cheap valuation. As such, investors could bet on GOOGL in a basket form with Select Sector SPDR Technology ETF (NYSEARCA: XLK-Free Report ), among others. Alphabet accounts for 5.56% share in XLK, which has gained 19.2% year to date.
IYW has a Zacks Rank #1 (Strong Buy) while XLK and FTEC have a Zacks Rank #2 each. Here, XLK is the ultra-popular play and provides exposure to the broad tech space (see: all the Technology ETFs here ).
Meanwhile, investors could bet on Amazon's growth story with the help of VanEck Vectors Retail ETF (BMV: RTH-Free Report ) and others. AMZN occupies the top position in this ETF with double-digit exposure. RTH has gained 9.5%.
Investors seeking to invest in both companies at the same time could look at First Trust Cloud Computing ETF (NASDAQ: SKYY-Free Report ). Amazon accounts for a 5.2% share in SKYY. Meanwhile, Alphabet makes up for and 4.9% in SKYY. This fund is up 21.4%. (Read: Inside the 5 Top Performing Stocks of the Nasdaq ETF ).
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