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5 Hot Stocks Driving the Nasdaq ETF Rally

Sweta Killa
Conagra (CAG) has an impressive earnings surprise history and currently possesses the right combination of the two key ingredients for a likely beat in its next quarterly report.

Higher hopes of the tax reform of being passed have acted as the latest catalyst in driving the Wall Street to new highs. In particular, the Nasdaq Composite Index gained 0.8% on the day, outperforming the other two benchmarks, the S&P 500 and Dow Jones, and hit the major milestone of 7,000 for the first time.

The surging technology sector, which accounts for nearly half of the index, as well as broad bullish sentiments helped Nasdaq to lead higher with a gain of 30% this year compared with gains of 25.5% for the Dow Jones and 20.2% for the S&P 500 (read: 5 Tech ETFs That Crushed FANG ETFs in 2017).

A combination of factors like improving global fundamentals, strong corporate earnings, a rising interest rate scenario, and the emergence of cutting-edge technology are acting as the key catalysts to these stocks. Consumer discretionary and industrial stocks on the index are also gaining on accelerating economic growth and rising consumer confidence. Rising oil prices, pick up in activities in most part of the world as well as improved global sentiments have added to the strength.

As a result, PowerShares QQQ QQQ, which serves as a proxy for the index, has climbed nearly 34% this year so far. Let’s take a closer look at the fundamentals of QQQ.

QQQ in Focus

This ETF provides exposure to the 107 largest domestic and international non-financial companies listed on the Nasdaq by tracking the Nasdaq-100 Index. It is one of the largest and the most popular ETF in the large-cap space with AUM of $59.4 billion and average daily volume of around 32.7 million shares. It charges investors 20 bps in annual fees. The fund has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook (see: all the Large Cap ETFs here).

Though most of the stocks in the fund’s portfolio delivered strong returns, a few were the real stars, having gained more than 80%. Below we have highlighted those five best-performing stocks in the ETF with their respective positions in the fund’s basket:

Top Performing Stocks of QQQ

Align Technology Inc. ALGN: This stock makes up for just 0.25% allocation in the fund’s basket and has delivered incredible returns of nearly 145% this year. It has seen solid earnings estimate revision of 22 cents for this year over the past 90 days with an expected earnings growth rate of 50.32%. Align Technology has a Zacks Rank #1 (Strong Buy) and a VGM Style Score of D. Additionally, it belongs to a solid industry, having a Zacks Rank in the top 31% (read: Sector ETF & Stock Winners 10-Years Since Great Recession).

Mercadolibre Inc. MELI: The stock has surged nearly 109% this year but currently carries a Zacks Rank #5 (Strong Sell) and a VGM Style Score of D. The stock has seen negative earnings estimate revision of 52 cents for this year over the past three months with an expected earnings decline of 30.36%. Further, Mercadolibre has an ugly Zacks Industry Rank in the bottom 38%. The stock accounts for 0.2% share in QQQ.

Micron Technology Inc MU: The stock has gained about 99.4% this year. It has seen solid earnings estimate revision $1.45 over the past three months for this year with an expected earnings growth rate of 54.71%. Micron Technology currently has a Zacks Rank #2 and a top VGM Style Score of A. It also boasts a solid Zacks Industry Rank in the top 45%. The stock makes up for 0.64% share in the fund’s basket.

Vertex Pharmaceuticals VRTX: The stock has surged 97.4% this year and carries a Zacks Rank #3 (Hold) with a VGM Style Score of C. The company has seen a solid earnings estimate revision of 24 cents for this year over the past three months with an expected earnings growth of 124.39%. The stock belongs to the industry having a Zacks Rank in the top 42% and accounts for just 0.5% share in QQQ (read: Value Biotech ETFs to Buy Now).

Wynn Resorts Limited WYNN: This stock has gained 90.9% so far this year and has 0.2% exposure in the fund’s basket. It has seen solid earnings estimate revision of 49 cents over the past three months for this year with an expected earnings growth rate of 57.37. Wynn Resorts has a Zacks Rank #1 and a VGM Style Score of C. Additionally, it has a solid Industry Rank in the top 15%.

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