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5 Best-Performing Stocks of the Best ETF of January

Sweta Killa

In a coronavirus infected economy, the technology sector has been on a tear on the initial phase of the U.S.-China trade deal. In particular, the technology companies have huge exposure to China. ARK Next Generation Internet ETF ARKW has topped the list of the best-performing ETFs of January, with impressive returns of about 9.7%.

The impressive rally was mainly driven by the rapid emergence of cutting-edge technology, including cloud computing, big data, Internet of Things, wearables, VR headsets, drones, virtual reality, artificial intelligence and machine learning. The growing adoption of 5G technology — the next wireless revolution — is creating further opportunities. The wave of mergers and acquisitions is also providing further impetus to the space (read: 10 ETFs Crushing the Market to Start 2020).

Let’s take a closer look at the fundamentals of ARKW.

ARKW in Focus

This is an actively managed fund focusing on companies that are expected to benefit from the shift in technology infrastructure to the cloud, enabling mobile, new and local services. These include companies that rely on or benefit from the increased use of shared technology, infrastructure and services, Internet-based products and services, new payment methods, big data, the internet of things, and social distribution and media.

The fund holds 43 stocks in its basket with none holding more than 10.8% share. From a sector look, ecommerce makes up for 24% of the portfolio while big data & machine learning, cloud computing & cyber security, Internet of Things and digital media round off the next four spots with double-digit exposure each. The ETF has amassed $454.7 million in its asset base and trades in a good average daily volume of around 110,000 shares. The expense ratio comes in at 0.75%.

Though most of the stocks in the fund’s portfolio delivered strong returns, a few were the real stars, having gained more than 20%. Below we have highlighted those five best-performing stocks in the ETF with their respective positions in the fund’s basket (see: all the Technology ETFs here):

Best Performing Stocks of ARKW

Tesla Inc. TSLA: Shares of TSLA soared about 55.5% in January. It saw solid earnings estimate revision of 92 cents over the past one month for this year with an estimated earnings growth rate of 5038.5%. The stock currently has a Zacks Rank #3 (Hold) and a VGM Score of C. It falls under a bottom-ranked Zacks industry (bottom 26%). The stock occupies the top position in the fund’s portfolio, making up for 10.8% share (read: Tesla Crosses $100B Ahead of Q4 Earnings: ETFs in Focus).

Twilio Inc. TWLO: This stock occupies the 11th position in the fund’s basket with 2.9% allocation. It has also delivered incredible returns of 26.5% past month. Twilio saw negative earnings estimate revision by a penny for this year over the past one month and has an estimated earnings growth rate of 57.05%. The stock has a Zacks Rank #3 and a VGM Score of D. It belongs to the top-ranked Zacks industry (top 40%).

Atlassian Corporation PLC TEAM: This stock gained 22.2% and saw positive earnings estimate revision of 6 cents over the past month for fiscal year (ending June 2020). Its earnings are expected to increase 25.6%. Atlassian Corporation sports a Zacks Rank #1 (Strong Buy) and has a VGM Score of D. It belongs to a top-ranked Zacks industry (top 40%) and accounts for 1.1% of ARKW. You can see the complete list of today’s Zacks #1 Rank stocks here.

Zscaler Inc. ZS: The stock has surged 20.6% in January and has a Zacks Rank #4 (Sell). The stock saw no earnings estimate revision for fiscal year (ending July 2020) over the past month, with an expected earnings decline of 31.82%. Zscaler belongs to a bottom-ranked Zacks industry (bottom 33%) and has a VGM Score of D. The stock makes up for 1.25% share in ARKW portfolio.

Square Inc. SQ: This stock takes the second spot in the fund’s basket with 8.4% of assets. It gained 19.4% in January and witnessed no earnings estimate revision activity over the past one month for fiscal year (ending July 2020). The company’s earnings are expected to decline 31.8% year over year. Square also has a Zacks Rank #4 and belongs to a bottom-ranked Zacks industry (bottom 33%). It has a VGM Score of D.

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