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Apple ETFs Set to Surge Post Strong Q3 Results

Zacks Investment Research

Apple (NASDAQ:AAPL) once again cheered investors with robust third-quarter fiscal 2018 results, after the closing bell yesterday. The technology giant topped the earnings and revenue estimates and projected upbeat revenue outlook.

Apple ETFs Set to Surge Post Strong Q3 Results

Source: iphonedigital via Flickr

Apple Q3 Results in Focus

Earnings per share came in at $2.34, beating the Zacks Consensus Estimate by 17 cents and improving 40% from the year-ago earnings. Revenues grew 17% year over year to $53.3 billion and edged past the estimate of $52.37 billion. This represents the fourth consecutive quarter of double-digit revenue growth.

The impressive results were driven primarily by a 20% increase in iPhone revenues and a 31% increase in revenues from the service unit, which includes App Store, AppleCare, Apple Pay, iTunes and cloud services. Notably, Apple Watch delivered a record quarter performance with growth in the mid 40% range and continued to hold the lead in the wearables market.

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Apple sold 41.3 million iPhones in fiscal third quarter, up from 41.03 million units in the year-ago quarter but below the Wall Street estimate of 41.79 million units. Revenues of other products, such as Apple TV, Watch and AirPods, increased 37% while iPad and Mac revenues dropped 5% each.

The gadget-maker foresees revenues in the range of $60-$62 billion for the fourth quarter of fiscal 2018. This is much above the current Zacks Consensus Estimate of $58.66 billion.

Market Impact

Given solid results, the stock jumped as much as 4% in after-hours trading to record highs on elevated volumes. With this, the iPhone maker is heading to become the world’s first trillion-dollar company.

Apple currently has a Zacks Rank #2 (Buy) and belongs to a top-ranked Zacks industry (top 20%), suggesting significant upside for the stock over the coming days. Further, Apple flaunts a solid VGM Score of B.


ETFs to Tap

Given this, investors seeking to tap the bullishness in the tech titan could consider the following ETFs. These funds have Apple as their top firm with a double-digit allocation.

iShares Dow Jones US Technology ETF (NYSEARCA:IYW)

This ETF provides investors exposure to the broad technology stocks, with 16.7% allocation in Apple. The fund has AUM of $4.2 billion and charges 44 bps in fees and expenses. It has a Zacks Rank #2 with a Medium risk outlook.

Vanguard Information Technology ETF (NYSEARCA:VGT)

This fund also targets the broad tech sector with 15.4% allocation in Apple. It has amassed $21 billion in its asset base while charges 10 bps in annual fees. VGT has a Zacks Rank #1 (Strong Buy) with a Medium risk outlook.

Select Sector SPDR Technology ETF (NYSEARCA:XLK)

This most-popular technology ETF has $22.6 billion in AUM and charges 13 bps in fees per year from investors. AAPL makes up for roughly 14.2% of assets. It has a Zacks Rank #2 with a Medium risk outlook.

MSCI Information Technology Index ETF (NYSEARCA:FTEC)

With AUM of $2.2 billion, the product allocates 13.7% in Apple. The ETF has 0.08% in expense ratio and has a Zacks Rank #1 with a Medium risk outlook.

iShares Morningstar Large-Cap ETF (NYSEARCA:JKD)

With AUM of $965.3 million, this product provides exposure to the large, established U.S. companies with Apple making up for 12.9% of assets. It charges 20 bps in fees per year and has a Zacks Rank #3 (Hold) with a Medium risk outlook.

iShares Global Tech ETF (NYSEARCA:IXN)

This ETF provides global exposure to electronics, computer software and hardware, and informational technology companies, with Apple making up for 12.03% share in the basket. It has $2.3 billion in AUM and charges 47 bps in fees per year.

Invesco QQQ (NASDAQ:QQQ)

This ETF provides exposure to the largest domestic and international nonfinancial companies listed on the Nasdaq Stock Market based on market capitalization, with Apple accounting for 11.2% share in the basket. It has $65.5 billion in AUM and charges 20 bps in fees per year. The fund has a Zacks Rank #1 with a Medium risk outlook.

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