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Apple Rallies on Earnings Beat: Top-Ranked Tech ETFs to Buy

Sweta Killa

After the closing bell yesterday, Apple Inc. AAPL reported first-quarter fiscal 2019 results wherein it topped both earnings and revenue estimates. The technology giant also outpaced its guidance, which it had previously reduced in early January. This provided some relief to Apple investors and swept away negative sentiments from the stock (read: Apple Tanks, Lowers Q4 Revenue Outlook: Tech ETFs in Focus).

Apple Q1 Results in Focus

Earnings per share came in at $4.18, beating the Zacks Consensus Estimate by a penny and improving 7.5% from the year-ago earnings. Revenues dropped 5% year over year to $84.3 billion but edged past the estimate of $84.1 billion.

Though iPhone sales declined 15% year over year on lower demand in China amid an economic slowdown in the world’s second-largest economy as well as fewer iPhone upgrades, revenues outside the iPhone business grew 19% year over year, including all-time record revenues from Services, Wearables and Mac (read: Is Falling iPhones Demand an Entry Point to Apple ETFs?).

Services revenue, which consists of iTunes, Apple Music, iCloud, Apple Pay and Apple Care, climbed 19% to $10.9 billion while revenue from Mac, and Wearables, Home and Accessories are up 9% and 33%, respectively. iPad revenues increased 17%. Apple's device install base also hit a new all-time high of 1.4 billion, an increase of 100 million from last year.

Management touted its Services offerings as a new growth driver for the company amid lagging device demand and reiterated that it is on track to achieve the goal of doubling Services revenues from 2016 to 2020.

The gadget-maker foresees total revenues in the range of $55-$59 billion for the second quarter of fiscal 2019. The high-end of the guidance is below the current Zacks Consensus Estimate of $59.62 billion.

Market Impact

Following the results, shares of Apple climbed nearly 6% in aftermarket hours on elevated volume. Though the stock currently has a Zacks Rank #4 (Sell), it belongs to a top-ranked Zacks industry (top 41%) and flaunts a top Growth Score of A, suggesting some smooth trading based on quarterly results (see: all the Technology ETFs here).

ETFs to Tap

Given this, investors could consider the following ETFs with the largest allocation to the tech titan. These funds have Apple as the top or the second firm with a double-digit allocation and have Zacks Rank #1 (Strong Buy) or #2 (Buy) with a Medium risk outlook.

Select Sector SPDR Technology ETF XLK

This most-popular technology ETF has $17.7 billion in AUM and charges 13 bps in fees per year from investors. AAPL makes up for roughly 15.8% of assets.

iShares Dow Jones US Technology ETF IYW

This ETF provides investors exposure to the broad technology stocks, with 13.7% allocation in Apple. The fund has AUM of $3.6 billion and charges 43 bps in fees and expenses (read: Top-Ranked Sector ETFs & Stocks to Buy for 2019).

Vanguard Information Technology ETF VGT

This fund also targets the broad tech sector with 15.2% allocation in Apple. It has amassed $17.2 billion in its asset base while charging 10 bps in annual fees.

MSCI Information Technology Index ETF FTEC

With AUM of $1.9 billion, the product allocates 14.2% in Apple and has 0.08% in expense ratio.

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Vanguard Information Technology ETF (VGT): ETF Research Reports
iShares U.S. Technology ETF (IYW): ETF Research Reports
Technology Select Sector SPDR Fund (XLK): ETF Research Reports
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