Apple Inc. AAPL rose 7.5% at the close a day after reporting strong fiscal 2022 fourth-quarter results. This represents the best one-day performance since April 2020. The tech giant beat estimates in both top and bottom results and posted record quarterly revenue.
Apple is the only big tech to post strong results last week amid a spate of weak earnings reports from its peers. As such, the ETFs that had the largest allocation to the tech titan enjoyed a surge on the day. Technology Select Sector SPDR Fund XLK, Cutting Edge Information Technology ETF VGT, MSCI ETF Information Technology Index FTEC and iShares US Technology ETF IYW gained more than 4%. These funds have Apple as the top company with a double-digit allocation and have a Zacks #2 (Buy) rank.
Focus on Apple earnings
Earnings per share came in at $1.29, beating the Zacks Consensus Estimate by 3 cents and up 4% from prior year earnings. Revenue rose 8% year over year to a record $90.1 billion and beat the estimate of $88.5 billion.
iPhone sales grew 10% to a record $42.6 billion. Revenue from services, which include iTunes, Apple Music, iCloud, Apple Pay and Apple Care, soared 5% year over year to a record $19.2 billion. Wearables, Home and Accessories revenue, which includes Apple Watch, AirPods, HomePod, Apple TV and Beats headphones, rose 10% to $9.7 billion. Mac sales rose 25% to $11.5 billion, while iPad sales fell 13% to $7.2 billion.
Last month, Apple introduced the iPhone 14 series smartphones with four new models: iPhone 14, iPhone 14 Plus, iPhone 14 Pro, and iPhone 14 Pro Max, as well as products like Apple Watch Series 8, Apple Watch Ultra, and AirPods Pro. last generation. (read: Apple ETF in Focus Post iPhone 14 Launch).
ETFs to buy
Technology Select Sector (XLK) SPDR Fund
Technology Select Sector SPDR Fund targets the broad technology sector and tracks the Technology Select Sector Index. He has around 75 stocks in his basket, with Apple offsetting a 24.1% share. Technology Select Sector SPDR Fund has key holdings in software, technology hardware, storage and peripherals, semiconductors and semiconductor equipment, and IT services.
Technology Select Sector SPDR Fund is the most popular and most traded ETF, with AUM of $38 billion and average daily volume of 7.8 million shares. The fund charges 10bp in fees per year.
Leading Edge Information Technology (VGT) ETF
Vanguard Information Technology ETF manages around $39.4 billion in its asset base and provides exposure to 371 technology stocks. It currently tracks the MSCI US Investable Market Information Technology 25/50 Index. Here, Apple accounts for a 22.4% stake (see: all tech ETFs here).
Vanguard Information Technology ETF has an expense ratio of 0.10% while volume is solid at nearly 837,000 shares.
MSCI ETF Information Technology Index (FTEC)
MSCI Information Technology Index ETF houses 385 technology stocks with AUM of $5 billion. Follows the MSCI USA IMI information technology index. Apple represents an allocation of 22.3%.
MSCI Information Technology Index ETF has an expense ratio of 0.08% while volume is solid at 200,000 shares per day.
iShares US Technology ETF (IYW)
iShares Dow Jones US Technology ETF tracks the Russell 1000 Technology RIC 22.5/45 Capped Index, giving investors exposure to 143 US electronics, computer hardware and software, and information technology companies. Apple accounts for 20.3% of assets (read: least damaged tech ETFs from the worst tranche since the COVID outbreak).
iShares Dow Jones US Technology ETF has AUM of $8 billion and charges 39 bps in fees and expenses. The volume is good as it trades almost 1.1 million shares a day.
Want the latest recommendations from Zacks Investment Research? Today you can download the 7 best stocks for the next 30 days. Click for this free report